New Business Formation
Follow the American Dream - Get Started with Your Own Business
Are you ready to go off on your own? You've dreamed of owning your own business, and now it is time to act on those dreams. Starting a new business can be the most exciting and one of the scariest things you can do. You depend on yourself for everything.
You will no longer be looking to others to make decisions and bring in customers. As a result, you have a lot to consider. The first and probably one of the most important decisions is how you will organize your business.
What Types of Business Structures are Available?
When beginning a business, you must decide what form of business entity to establish. The type of business you choose determines which income tax return forms your accountants will file for the business. The most common forms of business are the sole proprietorship, partnership, corporation, and S corporation. In addition, a Limited Liability Company (LLC) is a business structure allowed by state statute. As State laws govern LLCs, the IRS does not recognize these businesses as taxable entities.
They are considered a "pass-through" entity, which means your taxes are not filed on a separate business return but are passed through to your individual income taxes. Legal and tax considerations enter into selecting a business structure.
Business Structure for Professionals Requiring a License
Starting a business can be difficult. For example, suppose you are a professional in a regulated field that requires licenses or certifications. In that case, you will need to form a specialized business with different rules governing who can own the company and how you run the company.
For both a Professional Corporation (PC) or a Professional Limited Liability Corporation (PLLC), all business owners must be licensed in the field. For example, law firms must be owned by attorneys. Other examples of businesses that must be formed as a PC or PLLC include doctors, veterinarians, engineers, and architects.
How Do You Decide Which Type of Business to Start?
Each business entity has different rules and requirements that owners must meet. Each also has different laws regarding taxes and how you need to file.
The decision on what form of business to start depends on your requirements and personal circumstances. No one answer fits every situation.
Other Business Formation Tasks
You must work through a million other details once you figure out what type of business you want to start. Some of the decisions can be fun, such as deciding on a company name and logo. However, other decisions require serious consideration and the assistance of experienced professionals.
At Certainty Tax Advisors, some of the items we assist you with a new business formation includes:
Prepare an initial business plan to clarify your marketing, management, and financial plans.
Determine your start-up capital needs.
Identify sources of start-up capital and backup sources if needed.
Evaluate and quantify your borrowing power so you know how much money you can get your hands on if needed.
Prepare a cash flow budget to know exactly how much money you need to keep the business alive each month for the first few years.
Establish billing and collection procedures to maximize your cash flow.
Establish procedures to monitor and control costs.
Prepare and file all required state and local licenses and permits.
Prepare and file your application for your Federal Employer Identification Number.
Provide payroll and payroll tax-filing when you bring on your first employee.
Comply with employment laws, so you don't get hit with fines and unhappy employees.
Identify your business insurance needs.
Develop a solid Partnership Agreement.
Contact Certainty Tax Advisors to Discuss Your New Business Formation
How you start your business will help to set you up for success once you start conducting business.
Getting to the point of hanging a shingle and servicing customers takes time, money, and significant effort. Let Certainty Tax Advisors help you be successful.