Are you considering starting your own business? click for more info You can manage your business as a sole proprietor or form a corporation or another type of formal entity. A sole proprietor is inexpensive and the easiest way to start a business. Or you can choose to form a corporation, partnership, or limited liability company. You might want to talk to a certified public accountant and/or an attorney to make sure you choose the type of entity that is the best fit for your business. Here is some information that will help you start a new business.
1. Sole Proprietor. Most small business owners choose to start their business as a sole proprietor. Being a sole proprietor is the cheapest, easy way to get your business started. Research your county requirements. You will need to file a Certificate of Fictitious Firm Name or Assumed Business Name. Those two documents are the same, just simply called a different name depending on your locale. Some counties offer filing online or you may have to visit your local county clerk’s office. If you are working from home, you may also need to get a home use permit. Ask your county clerk of city business license department if getting a home use permit is a requirement.
2. Formal Entity. You can start your own business by forming a corporation, a partnership, or a limited liability company (LLC). Should you choose a formal entity, you can do this on your own, hire a resident or registered agent, a CPA, or an attorney. The forms needed are available at your Secretary of State’s office or on their website. Most Secretary of States websites have the information readily available online, including a fee schedule.
If you decide to start a new business as a corporation, you will also need to understand how a corporation works. Your corporation will need a set of bylaws and there is a requirement that you keep corporate minutes. You can probably find a form bylaws on the internet or your resident agent, CPA or attorney can prepare bylaws for you.
Keeping corporate minutes is a legal requirement. Corporate minutes are very easy to prepare and you can either do this on your own, or once again, utilize the services of an attorney or resident or registered agent. Corporation minutes simple document the decisions of your board of directors and officers. It only takes one person to form a corporation. Document the decisions your board makes (you can be the sole director of your board of directors and all the officers, i.e. president, secretary, treasurer). Prepare annual minutes, every year, and also document any major decision your board of director makes on behalf of your corporation. For example, if your corporation decides to enter into a lease, buy property, hire employees, etc., document those decisions in the form of corporate minutes. When you hold annual meetings or special meetings, document it. Type up corporate minutes that states the board met and made the following decisions, then state the decisions.
You can also start a new business for forming a limited liability company. It only takes one person to form an LLC. An LLC uses an operating agreement instead of bylaws to reflect how the company will be operated. There are no shares of stock in an LLC, but rather, membership interests. There are no officers in an LLC, but rather members.
3. Taxpayer ID Number. After you form your company, you will apply for a taxpayer ID number with the IRS. Although you can use your social security number if you choose the sole proprietor route, obtaining a taxpayer ID number, a number separate from your social security number, will identify your business as a sole and separate entity. The form used to get the taxpayer ID number is called an IRS Form SS-4. You can get this number online or call the toll free IRS telephone number, they will ask you questions to help you complete the form and get your number.
4. Bank account. Opening up a separate bank account for your business is essential. You do not want to commingle funds. If your business makes a sale, that money is deposited into your business account. Any expenses you incur should be paid for out of your business account.
5. Taxes. Unless you are very familiar with the tax code, it is a good idea to hire a CPA. The tax code is extremely complicated and it is in your best interest to take advantage of every tax deduction available. You might think you can save money by doing your own taxes, and you probably can. Remember, CPAs study the tax code, keep themselves abreast of the changing laws, and it could be in your best interest to hire a CPA to make sure you take advantage of all available tax deductions.