| So you have had it with the 9 to 5, your sick of your | | | | To distance yourself from personal liability you need to |
| boss always looking over your shoulder, and the idea | | | | form a corporation (INC, C, or Corp) or a limited liability |
| of you doing all the work so the executives can reap | | | | company (LLC). Both of these allow the business to |
| all the benefits makes you sick to your stomach. So | | | | become a separate entity for tax purposes and liability. |
| you have decided to go out on your own and start a | | | | The downside to these types of businesses is the |
| new business. That is a great idea and I am here to | | | | extra paperwork needed to stay compliant and start |
| help you with some of the tougher questions that may | | | | up costs. You can search the internet for companies |
| come to mind. | | | | that will form your corporation or LLC, but you need to |
| What's next? Well you need to decide how you will | | | | make sure they are reputable and not online scams. |
| structure your business for tax and liability purposes. If | | | | If you start a corporation or LLC you will need a tax |
| you do nothing, and start the business alone, you are | | | | expert that specializes in small business and good |
| considered a sole proprietor. If you do nothing and start | | | | accounting software. The government will send you an |
| the business with someone else, that business will be | | | | Employer Identification Number. This is the company's |
| considered a partnership. You can also form a | | | | unique id number, think of it like your social security |
| corporation or limited liability company (LLC). The last | | | | number. This number needs to be used on all |
| two options are a bit harder to set up, but the liability is | | | | documents pertaining to the company, as well as all |
| passed on to the business and not yourself or your | | | | tax forms. |
| partners. You should seek the advice of an accounting | | | | All parts of the business must to be kept separate |
| expert before making this decision; once the decision is | | | | from your personal life. You need different bank |
| made it is difficult to change the company type and it's | | | | accounts, different phone numbers, and different credit |
| an accounting nightmare. | | | | cards. Next to making a profit this will be your biggest |
| Sole proprietorship and partnerships are taxed on your | | | | and most important challenge. If you mix funds or you |
| normal 1040. You figure out how much money the | | | | are sloppy with book keeping, the corporate veil can |
| business brought in and how much was spent on the | | | | be pierced and that means you can become |
| business. This is the number you add to your 1040. This | | | | personally liable for the company and its actions. |
| option is very easy for taxes very easy to run. The | | | | I recommend a good CPA and a lawyer. These can |
| main problem with sole proprietors and partnerships is | | | | be found online within your area and are well worth |
| you can become personally responsible for all debt | | | | the upfront money. After you are set up it is possible |
| and damages. For example, if you run into credit | | | | to do all the taxes and accounting yourself with |
| problems with your suppliers they can come after you | | | | powerful accounting software, but this is time |
| and your partners for payment. Also, any damage that | | | | consuming and may not be worth it to some. |
| your company may cause and is unable to make | | | | Remember starting a new business can be fun and |
| restitution for could become your personal financial | | | | rewarding; just stick to the rules and laws. |
| obligation. This includes liens on personal property. | | | | |