Do you want to start a business? If so, you’ve probably looked into starting a business and realized just how long and complicated it can be. Many business experts recommend that you go through the entire process of getting started with your new business as slowly and methodically as possible. To start your new business fast and simple, many business experts often navigate you through the basic business startup procedure.
To start, you’ll take you through all the steps necessary to properly plan out your small business idea, from choosing the correct business model, choosing a name, and location. Then, it’s time to begin doing some market research. You’ll probably want to use a combination of Internet search engine queries and phone book listings to get some initial information on potential clients or competitors. If your startup company is going to take on a partner, this research will be invaluable in terms of negotiating a partnership and working out the terms of payment.
After you have a basic idea of what you hope to accomplish with your company, it’s time to move on to the next step: business structure. If you’re going to run your own corporation, you have several options, and some are much easier than others. For instance, you can elect to form a limited liability company, also known as a LLC. Forming an LLC instead of a sole proprietorship opens up many tax advantages for the individual or the corporation. Limited liability companies don’t have to pay corporate taxes, so they can pass on those costs to their owners.
Forming a corporation requires paying a nominal annual fee, paying taxes, and giving management and ownership responsibilities to an appointed board of directors. The disadvantages of a corporation include limited liability, lack of voting rights, and inability to write-off debts. Forming a sole proprietorship has its advantages, such as the ability to carry on business without paying taxes. It also gives the owner a substantial amount of time to concentrate on the core aspects of the business. It’s the best choice for most people who want to start a business without being too concerned about complying with many different laws and regulations.
If you’re considering starting a home-based business that will require a bit more time and attention from the owner, consider starting as a sole proprietorship. The upside is that you don’t have to pay income taxes, use up retirement funds, or worry about ongoing business issues. A startup cost for this sort of structure is usually much less than what you’ll pay for a corporation. A good idea is to get advice from business professionals experienced with either an S-corporation or sole proprietorship, so that you can make sure you’re making the right choices.
Forming a corporation requires that you’ll need to get an Employer Identification Number, or EIN, from the IRS. This number will be required if your company anticipates it will have customers and pays income taxes. In order to qualify as an S-corp, your company must register for tax status with the IRS. A sole proprietorship doesn’t have to register, but must file an annual report with the IRS. Always make sure to consult a business lawyer before investing in a startup.