Starting Your Own Llc Business – Have you caught the entrepreneurial bug? Congratulations – this could be an interesting time for you! You have ideas, plans and goals to implement. However, starting a business can also be a bit difficult if you don’t know about the legal requirements. Check out this business startup checklist to plan everything you need to know before you open your doors.
Do you have a million dollar business idea? Great! Now is the time to tackle the necessary tasks to open your business to the public. These are the seven steps in our startup checklist.
Starting Your Own Llc Business
Before you start, you need to plan ahead. Write down all your questions. These questions can be:
Starting A New Business? Proper Structure Can Save You Thousands
…And much more! Finding answers to all of your questions is essential to creating a small business plan. Without a plan, you can make decisions that will not benefit your business in the long run.
A business plan can be a broad outline of goals to achieve or a formal document. Typically, your business plan will include information about your business, its purpose, and what you plan to sell. As you create your plan, learn how to do market analysis. A market analysis should include information about your industry and target market.
Do you plan to make financial inquiries? Have you already asked friends, relatives, financial institutions or other sources for financing? Include this information in your business plan as well. In the same section, include financial projections to get an idea of how you plan to proceed.
An additional benefit of formalizing a business plan costs money. Lenders, banks, and investors want to see your plan before they finance your business. This will help you launch your startup faster and easier (more on that later).
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The information you gather for your business plan will give you a clear picture of the competition and the market. You can use it to learn small business development strategies that target your ideal customers in a competitive market.
Your legal business structure determines how you pay business taxes, personal protections and income statements. The business structure you choose is one of the most important decisions you will make. Once you have your plan, the structure will tell you how you should begin to shape your business. Consider the most common business structures.
Sole proprietorships are one of the easiest business structures to establish. There are many positive aspects of sole proprietorship, including fewer government regulations.
However, there are some risks. In this structure, the property owner is the same legal entity as the business. Thus, if the company cannot pay its debts, the owner is responsible for them. Thus, the owner’s personal property is at risk.
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If you and at least one other person are thinking of starting a business, you can choose to form a partnership. Two or more persons may own a partnership. When you form a partnership, the owners are the same legal entity as the business. So personal assets can pay off business debts if the company can’t pay them off.
Partnerships also experience taxation. Business does not pay tax. Instead, taxes are passed through the business to the owners, so the income is only taxed once.
A corporation is a separate legal entity from its owners. Because the business is separate from the owners, the owners experience limited liability for business debts.
Business integration is the most expensive and complex structure. And corporations are subject to double taxation. Both the business and the owner pay taxes on the income earned by the business.
S Corp Vs. Llc
LLC combines aspects of corporations and partnerships. Like a corporation, an LLC has limited liability, so the owner’s property is protected. And like a partnership, an LLC uses a pass-through tax, so the income is taxed only once.
Just because you have a million dollar idea doesn’t mean you have $1 million to fund it. That’s why financing is next on the checklist for starting a business.
Many businesses are self-financing, but this is not always possible for every new entrepreneur. If that’s not possible, you have several ways to get small business financing.
Small business loans help cover some of the costs of starting a new business. Many banks offer small business loans. However, if the company is new, it may be more difficult to secure bank loans.
Registering A Business
The Small Business Administration (SBA) also offers loans to small businesses. The SBA loan program offers bank financing backed by the SBA. With an SBA guarantee, it can be easier for new companies to secure bank loans.
When applying for a loan, review what you need for a business loan and follow these small business loan tips.
Remember that many lenders require a business plan on loan applications. So, make a plan before applying for a loan.
A business credit card is another common option for financing a company. However, business credit cards can have high interest fees. So don’t look to credit cards to finance your entire business. And pay off the loan to avoid damaging your credit score.
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Simplify the process by learning how to get started right. Download the FREE Business Startup Resources and Checklist for startup essentials, helpful resources, and a handy checklist.
The business name you choose is the first impression potential customers have of your company. Be careful when choosing a unique name and check your state’s website to make sure it’s available. Register your business name if you have one. If it doesn’t exist, go back to the drawing board.
The state and business structure you operate in will determine how you register the name. For example, corporations usually register names when filing business incorporation documents.
You can choose to apply for a small business DBA. A DBA is doing business as a name different from your company’s legal name. For example, the legal name of a sole proprietor is the name of the business owner. To work under a different name, an individual entrepreneur must register a DBA name.
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Taxes are part of business property. Federal and state laws require you to pay taxes on your business income. You also have to report your profit and loss to the government.
The first tax account you need to create is a federal tax identification number. Use this tax ID to file taxes, open business bank accounts, and secure business licenses or permits. If you are self-employed, use your social security number for business taxes.
You may need to file for a separate federal ID number, known as an EIN. An EIN is an employer identification number that you can apply for an EIN through the IRS. Common reasons you may need an EIN include:
Your state may also require you to register for a business tax identification number. A State Tax Identification Number is often used to authorize a seller and register for sales tax. Check with your state to see if you need a state tax ID number.
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Almost every business needs some kind of license or permit to operate. Your requirements vary by state and industry. The SBA provides a list of state licensing regulations.
Most small businesses must register for a basic business license in their city. You may also need zoning and land use permits, especially if your business is home-based or manufacturing.
If you sell items subject to sales tax, you must obtain a sales tax license to collect and remit sales tax. If the products you sell include alcohol, lottery tickets, gasoline or firearms, you will need additional licenses.
If you own your own business, tracking income and expenses is not optional. You need a reliable way to track all incoming and outgoing money. Why? Because you must keep records of your business transactions and report them to the government.
Solved 8 8 Discussion: Chapter 5 Imagine You Are Considering
When it comes to accounting for small businesses, there are several solutions. You can hire an accountant, do manual accounting, or use accounting software.
Hiring an in-house accountant or outsourcing an accountant is often the most expensive accounting solution. You pay employee compensation and pay employer taxes or regular accountant fees.
While outsourcing your books can be expensive, you don’t have to do the bookkeeping. Hiring an accountant will save you the most time.
Manual accounting is the cheapest method of accounting. However, you spend a lot of work hours on accounting tasks. You can record transactions in a spreadsheet.
What Is An Llc (limited Liability Company)?
You will need to calculate numbers and balance accounts, so your books will be more prone to errors. Reporting errors on your tax return can mean IRS fines and penalties. Learning bookkeeping and accounting while simultaneously learning how to start a small business can be difficult.
Using accounting software is a cost-effective way to manage accounting. You can find an inexpensive software program that allows you to enter transactions. The program will automatically create accurate summaries for you. Customer service representatives are often available to answer questions about the software.
Accounting software can save you time and money as you start your new business. However, there are many different programs. Learn how to choose the right accounting software for your business by comparing functionality, features and accounting software costs.
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