The purpose of an employer identification number (EIN)—also known as a "taxpayer identification number" or "TIN"—is to allow the IRS to track wages and other payments from your business to the business's employees and owners. An EIN is also helpful in establishing a business bank account that's separate from your personal bank account.
Whether you're required to get an EIN for your business depends on how your business is set up. Many businesses must have an EIN. But some businesses—specifically, some single-owner companies—might not be required to get an EIN.
When you don't have an EIN for your company, you instead use your Social Security number (SSN) on your business accounts and government filings.
All C corporations and S Corporations need an EIN.
All general partnerships and limited partnerships need an EIN.
If you have a limited liability company (LLC), then multiple factors will determine whether you need to get an EIN. Many single-member LLCs can simply use their owner's SSN for IRS purposes. But if your LLC will hire employees—or if it'll have multiple members—you need to apply for an EIN for the LLC. Below are the details.
Multiple-member LLCs. If you're forming an LLC with multiple members, your LLC will need to obtain an EIN from the IRS, whether or not you have (or will eventually hire) employees.
Single-member LLCs with no employees. If you're forming a single-member LLC and you don't plan on hiring employees (and you won't have a Keogh plan or run a trucking, transport, or similar company that will owe federal excise taxes), you don't need to apply for an EIN for your business. You can use your own SSN for federal tax purposes (don't worry, you won't need to use your SSN on any public documents). However, know that some lenders and banks that you do business with might require you to have an EIN. You can always get an EIN for your LLC if you wish, either to make doing business with banks easier or just to separate your personal finances from your business's finances as much as possible.
If you're converting a sole proprietorship to an LLC and you already had an EIN for your sole proprietorship, you can use that one for your LLC, as long as your LLC doesn't have employees.
Single-member LLCs with employees. If your one-member LLC plans on hiring employees in the next 12 months, your LLC will need to apply for an EIN. In this case, the IRS might actually assign you two EINs: one for the LLC and one for you, the sole owner. Employment taxes must be reported under the LLC's EIN, and any monies paid from the LLC to the LLC member must be reported under the member's EIN number.
Note that if you're converting your sole proprietorship to an LLC and you've hired (or plan on hiring) employees, but you already have an EIN, you might need to apply for another EIN. Any monies paid from the LLC to you as sole owner must be reported under your EIN as owner. Employment taxes must be reported under the LLC's EIN.
For more guidance, check out our article about when a single-member LLC needs an EIN.
If your LLC elects to be taxed as a corporation. If your LLC elects corporate-style taxation, it'll need to apply for an EIN.
As a sole proprietor, your EIN requirement will depend on whether you have employees.
If your sole proprietorship won't have employees. If you don't plan on hiring employees (and you won't have a Keogh plan or run a company that will owe federal excise taxes), you don't need to apply for an EIN. You can use your own SSN for federal tax purposes. (You won't need to use your SSN on any public documents.) But keep in mind that some lenders you do business with could require you to get an EIN for your business.
If your sole proprietorship will have employees. If your business plans on hiring employees in the next 12 months, you'll need to apply for an EIN.
You can apply for an EIN for any business—regardless of whether it's required. If you plan to have an EIN in the future (perhaps you're considering hiring an employee, but not quite yet), it's a good idea to submit your application now to avoid the hassle of changing account numbers later. An EIN allows you to keep your personal information safe. Without an EIN, you'll use your SSN on your business filings and accounts.
An EIN might benefit your business financially. When reviewing loan applications, some lenders prefer to see an EIN rather than a SSN. Having an EIN also allows you to build the business's credit score, which is separate from your personal credit score. A strong business credit score can lead to better interest rates and loan opportunities.
For single-member LLCs, an EIN can help maintain the personal liability protection for the owner that the single-member LLC normally provides. The added protection is helpful when a court is considering whether the LLC owner treated the business like a sole proprietorship or as a separate business entity. If a judge decides the former, the judge might hold the owner personally responsible for the debts and obligations of the business. While an EIN is no guarantee that liability protection will always result in intact liability protection, having the number is a simple step to take to decrease the likelihood of losing protection.
You can apply for an EIN from the IRS in various ways. The easiest way to apply for an EIN is online through the IRS website. If you apply online or by phone, you'll receive your EIN immediately. For more detailed instructions, read our article on how to get an EIN.
In most cases, you'll be able to figure out whether your business needs an EIN. However, your circumstances might be complicated. Or, you might not be required to get an EIN but you want advice on whether it makes sense for your business. In these instances, it might be a good idea to talk with a business attorney. A lawyer will help you work through your options and advise you on your legal obligations to the IRS.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Vermont Secretary of State (SOS). You can check for available names by doing a business name search on the SOS website. You can reserve an available name for 120 days by using the SOS online filing system. You can renew the reservation up to two times. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Vermont and How to Form a Corporation for more information.
For Vermont sole proprietorships, you must register your business name with the SOS even if you are using your own legal name. For Vermont partnerships, you must register with the SOS if you use a business name that is different from the surnames of the partners. For either kind of register, use the Assumed Name Registration.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Vermont, you must register with the Department of Taxes (DOT) to collect sales tax. If your businesses will have employees, you must register with the DOT for employer withholding taxes. You can register for both types of tax, as well as other business taxes, either online through the Secretary of State website or on paper using Form BR-400, Application for Business Tax Account.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Check the Licenses and Permits section of the state website for more details. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. A good first place to check for information is the Professional Regulation section of the SOS website. The section is maintained by the Office of Professional Regulation (OPR). Some professions, such as optometry, are regulated through a separate board. Others are regulated directly by the OPR.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Vermont taxes every kind of business. See Vermont State Business Income Tax for more information on state business taxes in Vermont.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form IN-111).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Vermont partnerships also must file Form BI-471, Business Income Tax Return. As part of their state tax obligations, Vermont partnerships are required to pay the state’s Business Entity Income Tax.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes (as a partnership or a corporation). A Vermont LLC classified as a partnership is also required to pay the state’s Business Entity Income Tax. Furthermore, Vermont LLCs also are required to file an annual report. See Vermont LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Vermont corporation taxes. And, finally, corporations must file an annual report with the Vermont SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Vermont taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Type of Entity | Main Advantages | Main Drawbacks |
Sole Proprietorship | Simple and inexpensive to create and operate, owner reports profit or loss on his or her personal tax return | Owner personally liable for business debts |
General Partnership | Simple and inexpensive to create and operate, owners (partners) report their share of profit or loss on their personal tax returns | Owners (partners) personally liable for business debts |
Limited Partnership | Limited partners have limited personal liability for business debts as long as they don't participate in management. General partners can raise cash without involving outside investors in management of business | General partners personally liable for business debts More expensive to create than general partnership Suitable mainly for companies that invest in real estate |
Regular Corporation | Owners have limited personal liability for business debts Fringe benefits can be deducted as business expense Owners can split corporate profit among owners and corporation, paying lower overall tax rate |
More expensive to create than partnership or sole proprietorship Paperwork can seem burdensome to some owners Separate taxable entity |
S Corporation | Owners have limited personal liability for business debts Owners report their share of corporate profit or loss on their personal tax returns Owners can use corporate loss to offset income from other sources |
More expensive to create than partnership or sole proprietorship More paperwork than for a limited liability company which offers similar advantages Income must be allocated to owners according to their ownership interests Fringe benefits limited for owners who own more than 2% of shares |
Professional Corporation | Owners have no personal liability for malpractice of other owners | More expensive to create than partnership or sole proprietorship Paperwork can seem burdensome to some owners All owners must belong to the same profession |
Nonprofit Corporation | Corporation doesn't pay income taxes Contributions to charitable corporation are tax-deductible Fringe benefits can be deducted as business expense |
Full tax advantages available only to groups organized for charitable, scientific, educational, literary or religious purposes Property transferred to corporation stays there; if corporation ends, property must go to another nonprofit |
Limited Liability Company | Owners have limited personal liability for business debts even if they participate in management Profit and loss can be allocated differently than ownership interests IRS rules now allow LLCs to choose between being taxed as partnership or corporation |
More expensive to create than partnership or sole proprietorship State laws for creating LLCs may not reflect latest federal tax changes |
Professional Limited Liability Company | Same advantages as a regular limited liability company Gives state licensed professionals a way to enjoy those advantages |
Same as for a regular limited liability company Members must all belong to the same profession |
Limited Liability Partnership | Mostly of interest to partners in old line professions such as law, medicine and accounting Owners (partners) aren't personally liable for the malpractice of other partners Owners report their share of profit or loss on their personal tax returns |
Unlike a limited liability company or a professional limited liability company, owners (partners) remain personally liable for many types of obligations owed to business creditors, lenders and landlords Not available in all states Often limited to a short list of professions |
Here are the key steps to starting your own business in Michigan.
Before filing any paperwork or even naming your business, you should start with an idea. Think about your own skills and resources. Consider the resources available to you and the time you can commit.
You should also look outward. If your business depends on in-person sales or a physical presence, evaluate the landscape. Think about the companies already doing business in your community. Which ones are successful? Is there stiff competition in your industry? Can your business meet an unmet need? If your business will be mostly online and service and isn't restrained to a geographic area, your analysis and strategy will be different. For more tips, read our article on how to evaluate business ideas.
After you've taken the time to select an idea, it's a good idea to come up with a business plan. Your business plan should set out your initial and ongoing business expenses. It should ideally provide a profit forecast and give you a good idea of your chances of making a profit. Apart from the financial information, your plan should also list out your staffing needs, explore different marketing strategies, and examine your competition.
When drafting your business plan, you should also think about how you'll pay for the initial costs of starting a business and survive your business's early months. Will you need to apply for a business loan or raise capital? Check out our section on business financing, loans, and capital for ideas and guidance on financing your small business.
Once you have your business idea and have a written business plan, you should pick a business structure. The entity structure you choose will determine how your business is managed and taxed. It'll also, in general, determine the owners' liabilities for the business's debts and obligations. Some business structures have more upfront filing requirements and costs. So you should weigh the pros and cons of each business type before registering your business.
The most common legal structures for a small business are:
You can also form a limited partnership or a limited liability partnership (LLP), which are types of partnerships where some partners have limited liability. Michigan also gives licensed professionals the option to form a professional corporation (also called a "professional service corporation") or professional LLC (also called a "professional service LLC").
You might have the option of forming an S corporation, a tax entity. Different types of businesses, such as LLCs and corporations, can elect to be taxed as S corporations but legally remain corporations or LLCs. You should talk to a tax attorney or other tax professional about your tax options.
Choosing a business name is an exciting step to starting your business. Your business name should be unique. Michigan law requires that your company's name be distinguishable from the names of other business entities already on file with the Michigan Department of Licensing and Regulatory Affairs (LARA). You can check for available names by using the LARA name availability search webpage.
Entity name designators: Michigan's laws around business names require that your business include an entity designator. Your business name must include certain words or abbreviations that identify your business structure (like “L.C.” for LLCs or “incorporated” for corporations). See our article on how to start a Michigan LLC for more information.
Reserving your business name: In Michigan, you can reserve an available business name for six months by filing an Application for Reservation of Name with LARA. You can also reserve your name online using LARA's Corporations Online Filing System (COFS).
Filing an assumed name certificate: If your Michigan business plans to do business using a name that's different from your legal name, then you must register that name—called an "assumed name," "trade name," or "DBA" (short for "doing business as"). For sole proprietors and general partnerships, your legal name is the business owners' real names. The legal name of corporations, LLCs, and other registered entities is the name that appears on the business's formation paperwork. Sole proprietors and general partnerships must register their assumed names with their county clerk. A corporation, LLC, or other incorporated entity must file a certificate of assumed name with LARA.
If you do business online, you should consider registering your business name as a domain name. In addition, to avoid trademark infringement issues, you should do a federal and state trademark search to make sure the name you want to use isn't the same as or too similar to a name already in use.
Now that you know your business's name and entity structure, it's time to register your business. How you register your business in Michigan depends on your chosen business structure.
You can elect to be taxed as an S corporation after you've registered your business with LARA. File IRS Form 2553, Election by a Small Business Corporation, with the IRS to elect S corporation tax status.
You'll probably need to apply for at least one license, permit, or registration for your business. For more details, read our article on Michigan business licenses.
Tax registration. If you're going to be selling taxable goods or services in Michigan, you must register for a sales tax license with the Michigan Department of Treasury (DOT). If you'll have employees in Michigan, you must register with the DOT for employer withholding tax. You can register your business with the DOT using Michigan Treasury Online.
Employer identification number (EIN). If your business has employees or is taxed separately from you, you must obtain an EIN from the IRS. Even if you're not required to get an EIN, there are often business reasons for doing so. For instance, banks often require an EIN to open an account in the business’s name and other companies you do business with could require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There's no filing fee.
Regulatory licenses and permits. You might need to obtain permits or licenses related to health and safety, the environment, building and construction, and specific industries or services. These types of regulatory licenses are typically issued by state agencies. The State of Michigan’s website has a state license search available on its website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. The Bureau of Professional Licensing (BPL), a division of LARA, regulates and licenses many, but not all, professions and occupations in the state. You can find extensive information related to your license on the BPL website.
Before opening your business, you need a place to put it. You should choose a location that fits your business's needs and budget. You can choose to have a dedicated spot for your business or run your company out of your home. Your decision will likely depend on your local zoning laws and whether you can run your business out of your desired location. You can usually find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department.
You should also consider the amount of space you need and the community you'll serve. If you need a place for a fleet of commercial vehicles, then you should probably choose a commercial space with a designated parking area. If you rely heavily on in-person sales, consider a central, downtown location.
You should pick a place you can afford, especially during your company's early months. If you lease a commercial space, make sure you negotiate terms that'll work for your business in the short and long terms.
Michigan taxes every kind of business. Most new businesses must register with the DOT to file and pay business taxes.
Sole proprietorships: Sole proprietors pay state taxes on business income as part of their personal state income tax returns (Form MI-1040).
Partnerships: Partners pay state taxes on their share of the partnership income on personal tax returns.
LLCs: Members pay state taxes on their share of LLC income on personal tax returns. In addition, the LLC itself must file an annual statement. See our article about Michigan LLC annual report and tax filing requirements for more details.
Corporations: Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on their personal state tax return. Moreover, the corporation itself must pay Michigan's Corporate Income Tax. And, finally, corporations must file an annual report with LARA to renew the corporation's status.
Check out the business taxes section of the DOT website for more information related to your business's tax obligations.
And, apart from Michigan taxes, there are always federal income taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
While not usually recommend, it's a good idea to invest in some type of insurance for your small business. Business insurance can protect your business and your personal assets from unexpected events, such as personal injury lawsuits and natural catastrophes. Some common types of business insurance are general liability insurance, property insurance, and cyber liability insurance.
For more, see our article on what types of insurance your small business needs.
No matter the type of business you form, you should think about opening a bank account for your business. A dedicated business account can make it easier to track your company's income and expenses. For some business types, including LLCs and corporations, a separate bank account is necessary to maintain your liability protection.
LARA's Corporations Division website is a great resource for small business owners. The website is easy to navigate and you can find links and information related to:
LARA also offers an Entrepreneur's Guide, a rich resource for anyone looking to start a business in Michigan. The guide has in-depth instruction and information for forming each type of business structure. The guide also has contact information for various state government authorities and links to the state's business laws.
]]>Below are the steps you need to take to start your Illinois business.
Your first step in starting any business is to choose a business idea. Think about your own interests, skills, and your area of expertise. It's a good idea to have a background in the industry where you plan to build your business. For example, someone who's worked in a restaurant would typically have an easier time opening a restaurant than someone who's never worked at one.
Besides choosing an idea that fits your experience, you should evaluate the likelihood of success based on the interests of your community, and whether your business idea will meet an unmet need. For more tips, check out our article on how to evaluate business ideas.
Once you've got your idea, you should create a business plan. A business plan can help you evaluate your costs and potential for profit. When mapping out your startup costs, consider your financing options. Think about whether your business can raise some capital or whether a business loan is a better option. In general, investors and lenders want to see a business plan before providing financial assistance.
Your second step is picking a legal structure for your business. The most common types of legal structures for a small business are:
In Illinois, you can also choose to form a limited partnership or a limited liability partnership (LLP). Unlike a general partnership, limited partnerships and LLPs offer limited liability protections to some partners. You can also elect to become an S corporation, a tax entity, if you register with the state as a qualified business, such as an LLC or corporation.
If you provide professional services, you can form a professional corporation (also called a "professional service corporation") or a professional LLC in Illinois.
Each business structure has its advantages and disadvantages. Your legal structure will determine how your business is managed and taxed as well as the owners' liability for business debts. Some business structures require registration and have ongoing filing and fee requirements. You should consider what your business needs and can afford to choose the best ownership structure for your business.
Before you register your business under your chosen legal structure, you need to pick a business name. Make sure you pick a name that's unique and marketable.
Under Illinois law, you must pick a name that's distinguishable from any business name already on file with the Illinois Secretary of State (SOS). You can search for business names using the SOS's business entity search.
Entity name designators: Illinois law requires that you include words or abbreviations that identify your business's structure (for example, including a word such as “LLC” for LLCs or “incorporated” for corporations). See our article on how to form an Illinois LLC for more information.
Reserving your business name: You can reserve your business name for 90 by filing a name reservation application with the SOS. There's a separate application form for corporations and LLCs.
Filing an assumed name certificate: If you plan to do business under a name that's different from your legal name, then you must register that name—called an "assumed name," "trade name," or "DBA" (short for "doing business as"). For unincorporated entities (like sole proprietorships and general partnerships), the business's legal name is the owner's personal name. For incorporated entities (like LLCs and corporations), the company's legal name is the name that appears on the company's formation documents. Sole proprietors and general partnerships must register their assumed name with their county clerk and publish notice of their assumed name in a local newspaper. A corporation, LLC, or other incorporated entity must register their assumed name with the SOS.
If you'll do business online, you might want to register your business name as a domain name. In addition, to avoid trademark infringement issues, you should do a federal and state trademark search to make sure the name you want to use isn't the same as or too similar to a name already in use.
To register your business in Illinois, you can complete and mail the appropriate organizational form to the SOS. These forms can be found on the business services publications/forms section of the SOS website. You have the option of registering your corporation or LLC online using the SOS's Online Services.
Here's how to form each type of business:
To form an S corporation, you must first form a qualified entity eligible to elect S corporate tax status. For example, you must first form a corporation or an LLC that's taxed as a corporation. After you form your corporation or other applicable business with the SOS, you can file IRS Form 2553, Election by a Small Business Corporation, with the IRS to elect S corporation tax status. Tax laws can be complicated and differ among business entities. You might want to talk to an Illinois tax attorney before you officially register your business.
Your business will probably need to apply for one or more licenses, permits, or registrations. You can find more detailed information in our article on Illinois business licenses.
Tax registration. If your business will sell goods or provide taxable services in Illinois, you must register with the Department of Revenue (DOR) to collect sales tax. If your business will have employees, you must register with the DOR for employer withholding taxes. You can register for both types of tax, as well as other business taxes, either online via the MyTax Illinois website or on paper using Form REG-1, Illinois Business Registration Application.
Employer identification number (EIN). If your business has employees or is taxed separately from you, you must obtain an EIN from the IRS. Even if you're not required to get an EIN, there are often business reasons for doing so. For instance, banks often require an EIN to open an account in the business’s name and other companies you do business with could require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There's no filing fee.
Regulatory licenses and permits. You might be required to obtain a license or permit related to health and safety, the environment, building and construction, and specific industries or services. Different regulatory licenses are issued by different state agencies. Check the registrations, licenses, and permits section of the Illinois state government website for more information. For information about local licenses and permits, check the websites for any cities or counties where you'll do business.
Professional and occupational licenses. The IDFPR regulates many professions and occupations in Illinois. The IDFPR website has a section covering the professions and industries regulated by IDFPR. Each profession and occupation also is more directly regulated by its related state regulatory board.
You’ll need to decide on a location for your business. When looking at potential spots, check local zoning regulations. Verify that the desired location is zoned for your type of business. You can usually find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department.
In addition to complying with zoning laws, you need to take time to calculate the costs of running your business in the proposed location, including rent and utilities. Refer to your business plan to evaluate whether you can afford your proposed spot during your company's early months. If you lease a commercial space, make sure to negotiate terms that'll work for your business in the long term.
You might not need a designated spot to run your business. You could have the option of running your business out of your home. If you decide to run a home-based business, again check your local zoning laws. You should also review your lease (if you rent your home) and homeowners association rules (if applicable)—either of which might ban some or all home businesses.
Illinois taxes every kind of business. More specifically, Illinois has a corporate income tax, a corporation franchise tax, and a personal property replacement tax. Most businesses (except sole proprietorships) will be subject to at least one of these three taxes. See our article on Illinois state business income tax for more information on state business taxes in Illinois.
Sole proprietorships: Sole proprietors pay state taxes on business income as part of their personal state income tax returns (Form IL-1040).
Partnerships: Partners pay state taxes on their share of the partnership income on personal tax returns. In addition, Illinois partnerships also must file Form IL-1065, Partnership Replacement Tax Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form—either a partnership return or a corporation return—depending on how the LLC is taxed. Illinois LLCs must also file an annual report with the Illinois SOS. Read our article on Illinois LLC annual report and tax filing requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on their personal state tax return. The corporation itself is subject to various Illinois corporation taxes and must file an annual report with the Illinois SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Illinois taxes, you're responsible for federal income and employer taxes. Review IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business for more information.
You should consider investing in business insurance. A business insurance policy can protect both your company and your personal assets from unexpected events, such as personal injury lawsuits and natural catastrophes. Talk to an insurance agent about the different coverage options for your business.
You should consider getting general liability insurance to protect your business against claims relating to bodily injury or property damage. Your business might also benefit from cyber liability insurance to cover litigation and settlement fees following a data security breach.
For more, read our article on what types of insurance your small business needs.
Regardless of your business structure, you should open a business account. Having a separate account will make it easier to track your business's income and expenses. For some business types, including LLCs and corporations, a separate bank account is necessary to maintain your liability protection.
Visit the Illinois Department of Commerce and Economic Opportunity (DCEO) First Stop business resource on the DCEO website. The First Stop website has helpful information and resources for small businesses, including:
In addition, the U.S. Small Business Administration has offices in Springfield and Chicago. These regional offices host seminars, workshops, and other events to help Illinois entrepreneurs.
]]>Here are the key steps to starting your own business in Tennessee.
Before you start your business, you'll, of course, need an idea. Maybe you already have one or have the start of a great idea. You should research your idea now before you invest serious time and money into it. Think about your own interests and skills, how much time you have to put into the business, and what resources are available to you. Consider also the needs of your community and what kinds of businesses do well in your area. (Read our article for more tips on how to evaluate business ideas.)
When you have your business idea, draft a business plan around it. Your business plan should map out your strategy to make a profit. Taking time to create a business plan can help you plan for your costs at the start and as your business grows. You should also list out what employment positions you should fill, the financing options available to your business, and marketing strategies.
The next step in starting your business is deciding on a legal entity structure. There are four common types of entity structures that you might already be familiar with:
Besides these four business structures, you can also form a limited partnership or a limited liability partnership (LLP). These partnership types provide limited liability for limited partners. In Tennessee, you can also form a professional LLC if you provide professional services under a license.
Some businesses choose to be recognized as S corporations for tax purposes. Corporations, LLCs, and other qualified entities can become S corporations by electing S corporation tax status with the IRS. An S corporation is a tax entity, not a legal entity. So your legal entity might, for example, be an LLC, but its tax entity could be an S corporation.
Business structures vary in their management, taxation, and liability. For example, if you're a sole proprietor, you and your business would be one and the same. You'd be individually taxed on your business's income and you'd be personally responsible for all of your business's debts and obligations. But if your business is a corporation, then it'd be a separate entity from its owners. You'd be taxed separately from your business and wouldn't be responsible for your company's debts. Make sure you weigh the pros and cons of each business structure.
The name you choose for your business is critical. The name will appear on your listings, advertisements, merchandise, signs, and letterhead. You should choose a name that's unique, marketable, and appropriate for the products or services you provide.
In Tennessee, like in many other states, your business's name must be distinguishable from any other names that are already on record with the Tennessee Secretary of State (SOS). The SOS has a business name availability search for you to use on its website.
Entity name designators: For most business entities, Tennessee law requires you to include certain words that identify your business's structure (like including a word such as “LLC” for LLCs or “incorporated” for corporations). See our articles on how to form a Tennessee LLC for more information.
Reserving your business name: You can reserve a business name for 120 days by filing an Application for Name Reservation (Form SS-9425) with the SOS. As of 2023, the filing fee is $20. You can either mail or hand deliver your application.
Filing an assumed name certificate: Sometimes a company will do business under a name that's different from its legal name—that is, the name that's included in its formation paperwork. The alias that the company uses is often called an "assumed name," "trade name," or "DBA" (short for "doing business as"). Sole proprietors and general partnerships use an assumed name when their business name doesn't include the owners' personal names. A corporation, LLC, or other incorporated entity using an assumed name must file an Application for Registration of an Assumed Name (Form SS-4402) with the SOS.
If you plan to do business online, you might want to register your business name as a domain name. Moreover, to avoid trademark infringement issues, you should do a federal and state trademark search to make sure the name you want to use isn't the same as or too similar to a name already in use.
You can register your business online on the SOS website. You can also fill out a paper copy and mail or hand deliver it to the SOS. You can find the forms you need in the business forms and fees section of the SOS website.
Here's how to form each type of business in Tennessee:
To form some of these businesses, you need to appoint a registered agent in Tennessee for service of process. A registered agent agrees to accept legal papers on the company's behalf.
After you form your corporation or other applicable business with the SOS, you can file IRS Form 2553, Election by a Small Business Corporation, with the IRS to elect S corporation tax status.
Your business will probably need to apply for at least one license, permit, or registration. For more details on these requirements, check out our article on Tennessee business licenses.
Tax registration. If you'll be selling goods in Tennessee, you must register with the Tennessee Department of Revenue (DOR) to collect sales tax. You might also need to register for other business taxes.
Employer identification number (EIN). If your business has employees or is taxed separately from you, you must obtain an EIN from the IRS. Even if you're not required to get an EIN, there are often business reasons for doing so. For instance, banks often require an EIN to open an account in the business’s name and other companies you do business with could require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There's no filing fee.
Regulatory licenses and permits. These licenses cover areas such as health and safety, the environment, building and construction, and specific industries or services. Different licenses and permits are issued by different agencies. Some of the most important issuing agencies are:
For information about local licenses and permits, check the websites for any cities or counties where you'll do business.
Professional and occupational licenses. The Department of Commerce & Insurance (TDCI) oversees many (but not all) of the regulatory boards and commissions for licensed professions and occupations.
Before you put up your "open" sign, you need somewhere to hang it. You should select a location that's zoned for your business activities. You can usually find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department.
Apart from being properly zoned, your location needs to be suited to your business needs. If you'll be storing a lot of inventory, make sure you have the space to house it. If your business depends on foot traffic, choose a spot that's central and walkable. Calculate the costs of running your business out of your desired location, including rent or mortgage and utilities. You can consult your business plan to see how much your company can afford now and in the future. If you lease a commercial space, make sure you negotiate terms that'll work for your business in the long term.
You might not need a separate location for your business. Instead, it could make sense to run your business out of your home. Zoning laws might be stricter in residential areas. You should also review your lease (if you rent your home) and homeowners association rules (if applicable)—either of which might ban some or all home businesses.
Because Tennessee doesn't have a personal income tax, owners of some forms of business will not owe state tax on their business income. See our article on Tennessee state business income tax for more details.
Sole proprietorships. Sole proprietors pay federal taxes on business income as part of their personal federal income tax returns.
Partnerships. Partners in general partnerships pay federal taxes on their share of the partnership income. Limited partnerships and LLPs must pay franchise and excise taxes. LLPs also must file an annual report.
LLCs. Members pay federal taxes on their share of LLC income on federal tax returns. The LLC itself must pay excise and franchise taxes and file an annual report with the SOS. See our article on Tennessee LLC annual report and tax requirements for more.
Corporations. A shareholder-employee with a salary must pay federal income tax on their personal federal tax return. The corporation itself is subject to Tennessee franchise and excise taxes. Corporations also must file an annual report with the SOS. Shareholders must also pay federal taxes on the dividends they receive from the corporation.
You should review the DOR's Franchise and Excise Tax Manual when evaluating how to file and pay your business taxes. You can also read IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business for further guidance.
Regardless of your industry or type of business, you should look into getting insurance coverage for your business. Business insurance can protect your business and your personal assets from unexpected events, such as personal injury lawsuits and natural catastrophes. An insurance agent can help you explore the different coverage options for your business.
For more, see our article on what types of insurance your small business needs.
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, including LLCs and corporations, a separate bank account is necessary to maintain your liability protection.
The DOR has a six-step guide for new businesses. The guide includes:
The DOR also provides a checklist for new businesses.
The Tennessee state website has an assortment of resources for small business owners on its new businesses webpage. You can find information and links for online business registration, interactive guides and checklists, and registration and tax requirements, among other resources.
]]>Here are the key steps to starting your own business in Louisiana.
Every great business starts with a great idea. Take time to find your great idea. At this stage, take into consideration your own interests, skills, resources, and availability. You should also think about the needs and demands of your community when determining whether your business will be profitable. (For more in-depth guidance, read our article on how to evaluate business ideas.)
When you have your idea, create a business plan. Use your business plan to get a better idea of:
Investors and lenders will want to review your business plan before providing financial assistance. A business plan will also provide a great roadmap to look back on as your business grows and changes.
Once you have a business idea, you need to choose a structure for your business. The business structure you choose will determine how your business is managed and your taxes are filed. Your structure will also decide your personal liability for business debts.
The most common legal structures for a small business are:
Apart from these common types of businesses, you can also form a limited partnership (called a "partnership in commendam" in Louisiana) or a limited liability partnership (LLP). If you provide special types of professional services, then you can also form specific professional corporations and professional LLCs such as a professional medical corporation or professional dental LLC.
Some businesses decide to form S corporations, which are tax entities. S corporations are only created when you form a corporation, LLC, or other qualified business entity and you elect to be taxed as an S corporation with the IRS.
Read our article on how to choose the best ownership structure for your business for more.
You must pick a name for your business. You'll want to pick a name that fits your business and is unique and registrable. Louisiana requires you to select a name that's distinguishable—that is, different enough—from any business name that's already on file with the Louisiana Secretary of State (SOS). You can search by business name on the SOS website.
Entity name designators: In your business name, you'll need to include words that indicate what entity type you have—for example, you can include "inc." for corporations and "LLC" for LLCs. You can find out more about these naming requirements in our Louisiana LLC article.
Reserving your business name: You can reserve a name for 120 days by filing an application for reservation by mail or online with the SOS. As of 2023, the filing fee is $25.
Filing an assumed name certificate: If you plan to do business using a name that's different from your legal name, then you must register that name—called an "assumed name," "trade name," or "DBA" (short for "doing business as"). Sole proprietors and general partnerships that use business names that don't include the owners' full personal names must register their trade name with their parish. A corporation, LLC, or other incorporated entity should register their DBA by filing an Application to Register Trade Name, Trademark, or Service Mark with the SOS. Louisiana trade name laws are extensive so you should consult a Louisiana lawyer if you have questions. (La. Rev. Stat. § 51:281 (2023).)
If you do business online, you might want to register your business name as a domain name. In addition, to avoid trademark infringement issues, you should do a federal and state trademark search to make sure the name you want to use isn't the same as or too similar to a name already in use.
Your business registration filing requirements depend on your type of business. You can register your business online through Louisiana geauxBIZ. You can also register by mail or in person. You can find the required documents on the forms and fee section of the SOS website.
If you want to elect S corporation tax status, then you must file IRS Form 2553, Election by a Small Business Corporation with the IRS after you register your chosen business entity with the state.
Your businesses will likely need to apply for at least one license, permit, or registration. You can find more detailed information in our article on Louisiana business licenses.
Tax registration. If you'll be selling goods in Louisiana, you must register with the Louisiana Department of Revenue (LDR) to collect sales tax. If your business will have employees, you need to register for withholding tax. You can register with the LDR and receive your revenue account number by completing the registration application online via the Louisiana Taxpayer Access Point (LaTAP).
Employer identification number (EIN). If your business has employees or is taxed separately from you, you must obtain an EIN from the IRS. Even if you're not required to get an EIN, there are often business reasons for doing so. For instance, banks often require an EIN to open an account in the business’s name and other companies you do business with could require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There's no filing fee.
Regulatory licenses and permits. You might need licenses and permits related to specific industries, building and construction, the environment, and health and safety, among other areas. Through the geauxBIZ portal, you can create a business license checklist. For information about local licenses and permits, check the websites for any cities, parishes, or counties where you'll do business.
Professional and occupational licenses. The licenses section of the state government’s website lists these various professions and occupations that require licenses. The list includes links to the regulatory authority's website where you can learn more.
One key task in opening a business is picking a location and checking local zoning regulations. Before you commit to a location, verify that the spot is zoned for your type of business. You can find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department.
You should also take time to calculate the costs of running your business in the desired spot. Weigh the benefits of the location against the operating costs. Refer back to your business plan to evaluate whether you can afford your desired location during your company's early months. If you lease a commercial space, make sure you negotiate terms that'll work for your business in the long term.
An alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again, make sure you check your local zoning laws. You should also review your lease (if you rent your home) and homeowners association rules (if applicable)—either of which could ban some or all home businesses.
Louisiana taxes every kind of business. Your tax obligations will depend on your legal and tax structure. You can file and pay your taxes online with the LDR.
Sole proprietorships: Sole proprietors pay state taxes on business income as part of their personal state income tax returns (Form IT-540).
Partnerships: Partners pay state taxes on their share of the partnership income on their personal tax returns. In addition, some Louisiana partnerships also must file Form IT-565, Partnership Return of Income.
LLCs: Members pay state taxes on their share of LLC income on personal tax returns. In addition, the LLC itself might have to file an additional state tax form. Depending on how your LLC is taxed, your business could need to file a partnership return or a corporation return. Louisiana LLCs are also required to file an annual report with the Louisiana SOS. You can find out more in our article on LLC annual filing requirements.
Corporations: Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, Louisiana corporations must file and pay corporation income and franchise taxes. And, finally, corporations must file an annual report with the Louisiana SOS.
If you have employees, you must also deal with state employer taxes. Refer to the LDR website and the Louisiana Workforce Commission website for more information on your employer tax obligations.
You should also review IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business for more on business taxes.
Business insurance can protect your business and your personal assets from unexpected events, such as personal injury lawsuits and natural catastrophes. You should consider getting general liability insurance to protect your business against claims relating to bodily injury or property damage. Your business might also have a need for cyber liability insurance, which typically covers litigation and settlement fees following a data security breach.
You can talk to a business lawyer or an insurance agent about the different coverage options for your business.
For more, see our article on what types of insurance your small business needs.
No matter the type of business you form, you should think about opening a separate business account to make it easier to track your income and expenses. For some business types, including LLCs and corporations, a separate bank account is necessary to maintain your liability protection.
The SOS has a lot of information and resources to help small businesses find the answers they need. Take a look at the frequently asked questions page under the file business documents section of the SOS website. You can find answers on topics covering name reservations, DBAs, state sales tax identification numbers, annual reports, and more.
The Louisiana Economic Development (LED) website offers information and programs to entrepreneurs on how to start and grow a business in Louisiana. The LED website includes a link to the Louisiana Business Hub where you can find resources specific to your industry, location, and business stage.
]]>Here’s an overview of the basic steps to open a business in Indiana.
The first step to starting a business is coming up with the idea behind the business. Think about the reasons why you want to form a business. You might even have an idea of what you want to do already.
Before you settle on an idea, you need to evaluate your business idea. Consider the competition, the startup costs, and the demand for the product or service you plan to provide. You should also take into account your own:
After you have your business idea, draft a business plan. Your business plan should map out how you plan to execute your idea. For example, you want to cover the basics of where your business will be located, your customer base, your marketing strategy, and employment positions.
Your business plan should also give you an idea of the financial side of the equation. Your plan should cover the costs of forming and maintaining your business, your potential sales numbers, pricing plan, and growth projections. While working on the numbers, think about how you want to finance your business. Will your business need investors, loans, gifts, or other financial assistance?
You need to decide how you're going to structure your business. The most common legal structures for a small business are a:
You can also form a limited partnership or a limited liability partnership (LLP), partnerships where some partners have limited liability. In Indiana, some licensed professionals can form a professional corporation.
Your business structure will determine how your business will be managed and taxed. It'll also determine the business owner's liability for business debts and the upfront and ongoing legal requirements. For example, sole proprietorships and general partnerships have few legal requirements but owners are personally liable for the business's debts. Alternatively, LLCs and corporations have more legal requirements and costs, but owners are mostly protected from the business's creditors.
To help you decide which type of business is the best fit, read our article on how to choose the best ownership structure for your business.
The name you choose for your business should be unique and marketable. Under Indiana law, your business name must be distinguishable from any business name that's already on file with the Indiana Secretary of State (SOS). You can check for available names by doing a business name search on the SOS website.
Entity name designators: Your business's name must include an entity designator that identifies your business structure. For example, your LLC name must include "LLC" or "limited liability company" and your corporation name must include "corporation," "incorporated," "limited," or "company" or an abbreviation of those terms. (Ind. Code § 23-0.5-3-2 (2023).)
Reserving your business name: You can reserve an available name for 120 days by filing a name reservation application with the SOS.
Filing an assumed name certificate: Corporations, LLCs, and other registered business entities that plan to use a name that's different from the name listed on their formation paperwork, must register that name—often called an "assumed name," "trade name," or "DBA" (short for "doing business as")—with the SOS. Sole proprietors and general partnerships that use a name other than the real name of the owners must register their assumed name with the county where their business is located.
If you plan to do business online, you might want to register your business name as a domain name. In addition, to avoid trademark infringement issues, you should do a federal and state trademark search to make sure the name you want to use isn't the same as or too similar to a name already in use.
You can register your business in Indiana through INBiz. You can view the forms and filing options on the business forms section of the SOS website. You won't need to file any organizational documents with the SOS to create some entities.
You can't form an S corporation with the state. Instead, some business entities can elect S corporation tax status. After you form your corporation or other applicable business with the SOS, you can file IRS Form 2553, Election by a Small Business Corporation, with the IRS to elect S corporation tax status.
You'll likely need to apply for at least one license, permit, or registration. Check out our article on Indiana business licenses for more detailed information.
Tax registration. If your business will provide taxable goods or services in Indiana, you must register with the Department of Revenue (DOR) to collect sales tax. If your business will have employees, you must register with the DOR for employer withholding taxes. You can register for both types of tax, as well as other business taxes, by submitting Form BT-1, Business Tax Application, or by registering online through INBiz.
Employer identification number (EIN). If your business has employees or is taxed separately from you, you must obtain an EIN from the IRS. Even if you're not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with could require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There's no filing fee.
Regulatory licenses and permits. Some of the main categories covered by these licenses and permits are:
The state publishes a comprehensive Business Owner’s Guide that includes a section for licensing and permitting issues. For information about local licenses and permits, check the websites for any cities or counties where you'll do business.
Professional and occupational licenses. These cover people who work in various fields. The PLA oversees many—though not all—of the state’s regulatory boards and commissions. Those boards and commissions are in turn responsible for regulating the various licensed professions and occupations. The professions section of the PLA website lists the many professions and occupations that the PLA oversees.
You’ll need to select a location for your business and check the local zoning regulations for that location.
Before you sign a commercial lease or buy land, take time to calculate the costs of running your business in the desired spot, including rent, mortgage, and utilities. Refer back to your business plan to evaluate whether you can afford your desired location during your company's early months. If you lease a commercial space, make sure you negotiate terms that'll work for your business in the long term.
It's important to verify that the spot is zoned for your type of business. You can find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. You should also review your lease (if you rent your home) and homeowners association rules (if applicable)—either of which might ban some or all home businesses.
Business owners and some business entities will need to pay taxes on the income earned from the business. You can report and pay business taxes to the DOR using INBiz. Many of the forms you must file are listed in the corporate tax forms section of the DOR website.
Sole proprietorships: Pay state taxes on business income as part of their personal state income tax returns (Form IT-40).
Partnerships: Partners pay state taxes on their share of the partnership income on their personal tax returns. In addition, Indiana partnerships also must file Form IT-65, Indiana Partnership Return.
LLCs: Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form—either a partnership return or a corporation return depending on how the LLC is classified for federal tax purposes. Indiana LLCs are required to file a biennial report with the Indiana SOS. See our article on LLC annual report and tax filing requirements for more on Indiana LLC filing responsibilities.
Corporations: Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on their personal state tax return. Moreover, the corporation itself is subject to the state corporate income tax. And, finally, corporations must also file a biennial report with the SOS.
And, apart from Indiana taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your business and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits and natural catastrophes. An insurance agent can help you explore the different coverage options for your business. General liability insurance can protect you against claims relating to bodily injury or property damage. Cyber liability insurance can cover litigation and settlement fees following a data security breach.
For more information, read our article on what types of insurance your small business needs.
When you start any kind of business, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, including LLCs and corporations, a separate bank account is necessary to maintain your liability protection.
Anyone starting a new business in Indiana should refer to INBIZ, a one-stop resource for small business owners. INBiz is a partnership between the SOS, DOR, and Department of Workforce Development. The INBiz website has information and resources for starting and managing a business. Through the portal, you can:
Small business owners also have access to Indiana Small Business Centers (ISBDC), which are located around the state. The ISBDC website has information on business registration, planning, financing, and training.
]]>Here are the key steps to starting your own business in Georgia.
Whether you have a business idea in mind or not, you'll need to do your research. Think about whether your business idea will be profitable in your area. Consider your competition, the demand for your goods and services, and your market reach. For more guidance, read our article on how to evaluate business ideas.
After you land on an idea, you should write up a business plan. A business plan can help you sort out:
Your business plan can also help you attract and persuade investors and lenders to provide financial assistance to your business.
The most common legal structures for a small business are:
Each business structure has its advantages and disadvantages. The one you choose will depend on your business's needs and priorities. For example, if you want to make sure you're personally protected from your business's debts, forming an LLC or corporation—two limited liability business structures—might make the most sense. If you want to cut down on costs and formalities, then unincorporated entities like a sole proprietorship or general partnership might be the best fit.
You have other options beyond the most common four entity types. You can form an S corporation, a special corporate tax entity. If you want limited liability in a partnership, then you can form a limited partnership. If you provide a professional service, then you have the option of forming a professional corporation in Georgia.
Check out our article for information on how to choose the best ownership structure for your business.
When deciding on a business name, you should choose one that's unique, marketable, and registrable. Georgia law requires LLC and corporation names to be distinguishable from other business names already on file with the Georgia Secretary of State (SOS). You can look for available names on the SOS's Corporations Division business database.
Reserving your business name: Sometimes, you have a business name but you're not ready to file your business formation paperwork. You can reserve an available name for 30 days by filing a name reservation request with the SOS either online through the eCorp website or on paper with a Name Reservation Request form. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “company” for corporations). See our articles on how to form an LLC in Georgia for more information.
Filing a DBA with the county clerk: If you're doing business under a name that's different from your legal name, then you must register that name—called a "DBA"—with your county's Clerk of the Superior Court. For sole proprietors and partnerships, your legal name is the name of the owner(s). For corporations, LLCs, and other incorporated businesses, your legal name is the name you filed with the SOS when you formed your business. Georgia also requires you to publish notice of your DBA in a local newspaper. (Ga. Code § 10-1-490 (2023).) Check your local superior court website for more information.
If you plan on doing business online, you might want to register your business name as a domain name. In addition, to avoid trademark infringement issues, you should do a federal and state trademark search to make sure the name you want to use isn't the same as or too similar to a name already in use.
Check out our section on business names for tips on how to pick the right name for your business.
The form you file to register your business with the SOS depends on your business structure. Some business structures like sole proprietorships and general partnerships are unincorporated entities and don't require formation paperwork.
You can find some filing templates and transmittal forms on the Georgia business forms section of the SOS website. You can also find filing procedures for corporations, LLCs, and limited partnerships. These procedures guide you through the filing process for each business entity.
You can register your business online through the eCorp website or by delivering the appropriate paperwork by mail or in person.
Almost all businesses will need to apply for at least one license, permit, or registration. You can find more detailed information in our article on Georgia business licenses.
Tax registration. If you'll be selling goods in Georgia, you must register with the Department of Revenue (DOR) to collect sales tax. If your businesses will have employees, you must register with the DOR for employer withholding taxes. You can register online for both types of tax, as well as other business taxes, by going to the Georgia Tax Center (GTC).
Employer identification number (EIN). If your business has employees or is taxed separately from you, you must obtain an EIN from the IRS. Even if you're not required to get an EIN, there are often business reasons for doing so. For instance, banks often require an EIN to open an account in the business’s name and other companies you do business with could require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There's no filing fee.
Regulatory licenses and permits. You might need to apply for a special license or permit that covers areas such as:
Check the SOS’s First Stop Business Guide for information and instruction on professional licensing, industry-specific licensing, tax registration, employer requirements, and other topics. For information about local licenses and permits, such as business tax certificates, check the websites for any cities or counties where you'll do business
Professional and occupational licenses. These cover people who work in various fields. The Professional Licensing Boards Division of the SOS has links to information about most state-licensed occupations and professions, including an online licensing application system.
You’ll need to pick a location for your business and check local zoning regulations. Consider the needs of your customers, and whether you have the kind of business that could benefit from foot or highway traffic.
Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. Refer back to your business plan to evaluate whether you can afford your desired location during your company's early months. If you lease a commercial space, make sure you negotiate terms that'll work for your business in the long term.
It's important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. You should also review your lease (if you rent your home) and homeowners association rules (if applicable)—either of which might ban some or all home businesses.
You must file and pay taxes with the DOR according to your business and tax structure. You can register your business and file taxes online through the GTC.
See our article on Georgia business income tax for more information on state business taxes in Georgia.
Sole proprietorships: Pay state taxes on business income as part of their personal state income tax returns (Form 500).
Partnerships: Partners pay state taxes on partnership income on personal tax returns. In addition, Georgia partnerships also must file Form 700, Partnership Tax Return.
LLCs: Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form—either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Georgia LLCs also are required to file an annual registration and fee with the Georgia SOS. See our article on Georgia LLC annual report and tax filing requirements for more information.
Corporations: Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on their personal state tax return. Moreover, the corporation itself is subject to Georgia corporation taxes. And, finally, corporations must file an annual registration and fee with the Georgia SOS.
If you have employees, you must also deal with state employer taxes. The DOR has an employer's tax guide you can review to learn more.
And, apart from Georgia taxes, there are always federal income taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your business and your personal assets from unexpected events, such as personal injury lawsuits and natural catastrophes. An insurance agent can help you explore the different coverage options for your business. You should consider getting general liability insurance to protect your business against claims relating to bodily injury or property damage. Your business might also benefit from cyber liability insurance to cover litigation and settlement fees following a data security breach.
For more, see our article on what types of insurance your small business needs.
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, including LLCs and corporations, a separate bank account is necessary to maintain your liability protection.
The Georgia state website provides a starting a business guide for entrepreneurs. This guide expands on the basic steps to forming your Georgia business, including registering with the SOS and DOR, applying for licenses and permits, and getting funding.
The DOR has a step-by-step guide for small business owners looking to register a business in Georgia. You can find guidance on what information you need to gather during the startup process and the departments and agencies you need to register with. The guide also has links to important resources. In addition, the Georgia Department of Economic Development has a small business startup information webpage with links to in-depth guidance on getting your business off the ground.
If you need additional help or you have legal questions, consider speaking with a Georgia business attorney. They can help you decide on the best business structure and walk you through the setup process.
]]>Here are the key steps to starting your own business in Texas.
Start by researching your business idea. Ask yourself questions such as:
Write a business plan to help you map out your vision and answer some of these questions. You should be planning for the short and long terms. You'll need to be able to start your business and keep it running.
As you evaluate your business idea, consider your funding options. Be prepared to apply for a business loan, pitch to investors, or reach out to family members. Check out our section on business financing, loans, and capital for ideas and guidance on financing your small business.
Once you've settled on an idea, you'll need to start building your business. You'll need to decide how you want to structure your business. You can form one of the following business entities:
You can also form a limited partnership, a partnership where some partners have limited liability. Texas recognizes both professional corporations and professional LLCs, business structures reserved for licensed professionals.
Each business entity has its advantages and disadvantages. You should choose one that fits your business goals. For example, if you want personal protection from your business debts, consider forming an LLC or corporation. If you want a business that doesn't require you to file paperwork or pay ongoing maintenance fees, think about starting a sole proprietorship or general partnership.
Some businesses are organized as S corporations. An S corporation is a tax entity, not a legal entity. Different types of businesses, such as LLCs and corporations, can elect to be taxed as S corporations but they legally remain corporations or LLCs.
The business name you choose will be the name that appears on your signs, advertisements, merchandise, and in countless other places. From a business perspective, this step can be just as important as filing legal paperwork for your business.
You should pick a name that uniquely identifies your business. Texas law requires that your name be distinguishable—that is, different enough—from any business name that's already on file with the Texas Secretary of State (SOS). You can see which business names are already taken by searching for businesses on Texas's SOSDirect website.
Entity name designators: Laws around Texas business names require you to include certain words that identify your business's structure (like including a word such as “LLC” for LLCs or “incorporated” for corporations). See our articles on how to form a corporation and LLC in Texas for more information.
Reserving your business name: You can reserve an available name for 120 days by filing an Application for Reservation or Renewal of Reservation of an Entity Name form by mail or online with the Texas SOS.
Filing an assumed name certificate: If you plan to do business using a name that's different from your legal name, then you must register that name—called an "assumed name," "trade name," or "DBA" (short for "doing business as"). Sole proprietors and general partnerships that use business names that don't include their personal names must file an assumed name certificate with their county clerk. A corporation, LLC, or other incorporated entity using a name that's different from what's filed in its formation documents must file an assumed name certificate (Form 503) with the SOS.
If you plan to do business online, you might want to register your business name as a domain name. In addition, to avoid trademark infringement issues, you should do a federal and state trademark search to make sure the name you want to use isn't the same as or too similar to a name already in use.
See the Texas name filing FAQ webpage for answers to frequently asked questions about Texas business names and for links to the forms your business might need.
You can register your business online using SOSDirect or by mailing the appropriate formation document to the SOS. You can find the organizational documents under the business and nonprofit forms section of the SOS website. Some business types don't require you to file any paperwork.
Here's how to form each type of business:
You can't form an S corporation with the state. Instead, some business entities can elect S corporation tax status. After you form your corporation or other applicable business with the SOS, you can file IRS Form 2553, Election by a Small Business Corporation, with the IRS to elect S corporation tax status.
Almost all businesses will need to apply for at least one license, permit, or registration. You can find more detailed information in our article on Texas business licenses.
Tax registration. If you'll be selling goods in Texas, you must apply for a sales tax permit with the Comptroller of Public Accounts (CPA). More generally, most businesses should register with the CPA to pay the state franchise tax and other business taxes.
Employer identification number (EIN). If your business has employees or is taxed separately from you, you must obtain an EIN from the IRS. Even if you're not required to get an EIN, there are often business reasons for doing so. For instance, banks often require an EIN to open an account in the business’s name and other companies you do business with could require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There's no filing fee.
Regulatory licenses and permits. These licenses cover areas such as health and safety, the environment, building and construction, and specific industries or services. Regulatory licenses and permits frequently are issued by state agencies. You can find guidance on state licenses and permits from the SOS Guides and Resources webpage. Many business licenses and permits in Texas are issued at the city or county level. For information about these local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. The Texas Department of Licensing and Regulation handles licensing for certain specialized professions and industries. You can also visit the occupational and professional licenses section of the Texas state website to apply for or renew your license.
You’ll need to pick a location for your business and check local zoning regulations. Consider the needs of your customers, and whether you have the kind of business that could benefit from foot or highway traffic.
Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. Refer back to your business plan to evaluate whether you can afford your desired location during your company's early months. If you lease a commercial space, make sure you negotiate terms that'll work for your business in the long term.
It's important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. You should also review your lease (if you rent your home) and homeowners association rules (if applicable)—either of which might ban some or all home businesses.
Because Texas doesn't have a personal or corporate income tax, owners of some forms of business will not owe state tax on their business income. However, Texas does impose a franchise tax on most business types, including corporations, LLCs, S corporations, and partnerships. To learn more, see our article on Texas business income tax.
Sole proprietorships. Sole proprietors pay federal taxes on business income as part of their personal federal income tax returns.
Partnerships. Partners pay federal taxes on partnership income. In addition, most Texas partnerships are subject to the state’s franchise tax, but only owe the tax if total revenue exceeds a certain amount. LLPs and certain limited partnerships must file an annual report with the SOS.
LLCs. Members pay federal taxes on their share of LLC income on federal tax returns. LLCs themselves are subject to the state’s franchise tax, but only owe the tax if total revenue exceeds a certain amount. Unlike other states, Texas doesn't require LLCs to file an annual report. See our article on Texas LLC annual report and tax requirements for more information.
Corporations. A shareholder-employee with a salary must pay federal income tax on their personal federal tax return. The corporation itself is subject to the state’s franchise tax.
Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your business and your personal assets from unexpected events, such as personal injury lawsuits and natural catastrophes. An insurance agent can help you explore the different coverage options for your business. You should consider getting general liability insurance to protect your business against claims relating to bodily injury or property damage. Your business might also benefit from cyber liability insurance to cover litigation and settlement fees following a data security breach.
For more, see our article on what types of insurance your small business needs.
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, including LLCs and corporations, a separate bank account is necessary to maintain your liability protection.
The Governor's Office has a start a business in Texas webpage. The webpage outlines startup steps for small business owners. These steps provide links to helpful resources like the Small Business Administration website, the Small Business Development Centers, and various government offices.
The Texas government website's starting a business in Texas webpage is a great resource for small businesses. You can find information and links for business forms and fees, professional and occupational licenses and permits, and financing.
]]>Here’s an overview of the key steps you’ll need to take to start your own business in California.
Take time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, and availability. Think about the reasons why you want to form a business. You might even have an idea of what you want to do already.
You should evaluate the likelihood of success for your business based on the interests of your community, and whether your business idea will meet an unmet need. You can read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to determine your chances of making a profit. When you create a plan, you'll have a better idea of:
Investors and lenders will want to review your business plan before providing financial assistance, and you can be prepared by drafting a plan before you start soliciting funding.
Choosing a business structure is one of the most important steps. Your business structure will determine how you manage your business and file your taxes and your personal liability for your business's debts. Oftentimes, you can start with one business structure now and convert to another one later on as your business needs change. But it's best to pick an entity structure at the start that can adapt as your business grows.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You might also be limited to a certain business structure based on your industry. For example, California requires—with some exceptions—anyone who provides a service that requires a license, certification, or registration (for example, lawyers, accountants, and engineers) to form a professional corporation. (Cal. Corp. Code §§ 13400 and following (2023).)
You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. For instance, sole proprietorships and general partnerships have few startup and ongoing requirements but owners are personally liable for the business's debts. Alternatively, LLCs and corporations have more legal requirements and costs, but owners are mostly protected from the business's creditors.
Read our article for information on how to choose the best ownership structure for your business to help you make your choice.
Your business name should be unique and registrable. For LLCs and corporations, California requires you to have a business name that's distinguishable from other business names on record with the California Secretary of State (SOS). You'll need to check to see if your name is available by doing a business entity name search on the SOS website.
Reserving your business name: You can reserve an available name for 60 days by filing a Name Reservation Request. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Corporation” for closely-held corporations). See our articles on how to form an LLC and corporation in California for more information. The SOS has a section on name reservations with information on naming requirements for businesses.
Filing a fictitious business name statement: Is your business a sole proprietorship or partnership that uses a business name that's different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you have a fictitious business name (also called a "trade name" or "DBA"). You must register your name by filing a fictitious business name statement in the county clerk’s office for the county where your business is located. California also requires you to publish notice of your statement in a local newspaper. (Cal. Bus. & Prof. Code §§ 17900 and following (2023).) Check county websites for more information. The California Franchise Tax Board (FTB) also has a guide to DBAs.
If you plan on doing business online, you might want to register your business name as a domain name. In addition, to avoid trademark infringement issues, you should do a federal and state trademark search to make sure the name you want to use isn't the same as or too similar to a name already in use.
Check out our section on business names for tips on how to pick the right name for your business.
How you register your business in California depends on your chosen business structure.
You can find all these business formation forms on the SOS website. You can register your business online using bizfile California. You can also register by mail or in person by completing a paper form.
Almost all businesses will need to apply for at least one license, permit, or registration. You can find more detailed information in our article on California business licenses.
Tax Registration. If you'll be selling goods in California, you must register with the California Department of Tax and Fee Administration (CDTFA) to obtain a seller’s permit. You can register online at the CDTFA website. If your business will have employees, you must register with the California Employment Development Department (EDD) for employer withholding taxes. You can register online using the EDD’s Employer Services Online.
Employer identification number (EIN). If your business has employees or is taxed separately from you, you must obtain an EIN from the IRS. Even if you're not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with could require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There's no filing fee.
General Business License. Typically, you'll need to apply for a business license from the city where the business is located. In the case of unincorporated sections of the state, the license is issued by the county where the business is located. Your city might require every business to get a license or only some businesses to get a license.
Regulatory licenses and permits. These licenses cover areas such as health and safety, the environment, building and construction; and specific industries or services. Regulatory licenses and permits frequently are issued by state agencies. For step-by-step guidance about state licenses or permits you might need, check the state’s CalGold website. For information about local regulatory licenses and permits, check the websites for any cities or counties where you'll do business.
Professional and occupational licenses. These licenses and certifications cover people who work in various fields. The state’s Department of Consumer Affairs and the Department of Industrial Relations provide information on professional and occupational licensing.
You’ll need to pick a location for your business and check local zoning regulations. Consider the needs of your customers, and whether you have the kind of business that could benefit from foot or highway traffic.
Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. Refer back to your business plan to evaluate whether you can afford your desired location during your company's early months. If you lease a commercial space, make sure you negotiate terms that'll work for your business in the long term.
It's important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. You should also review your lease (if you rent your home) and homeowners association rules (if applicable)—either of which might ban some or all home businesses.
California taxes every kind of business. For instance, California has a corporate income tax that applies to corporations and other entities that are taxed as corporations, and a franchise tax that applies to corporations, LLCs, and many partnerships. Businesses and owners will report and pay taxes to the FTB on designated income tax forms.
See our article on California business income tax for more information on state business taxes in California.
Sole proprietorships. Sole proprietors pay state taxes with the FTB on business income as part of their personal state income tax returns (Form 540).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, California partnerships also must file Form 565, Partnership Return of Income.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. California LLCs also are required to file a biennial statement of information. You can read about California LLC biennial filing requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to California corporation taxes. And, finally, corporations must file a statement of information with the SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from California taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your business and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits and natural catastrophes. An insurance agent can help you explore the different coverage options for your business, which might include general liability insurance to protect you against claims relating to bodily injury or property damage, or cyber liability insurance to cover litigation and settlement fees following a data security breach.
To learn more, see our article on what types of insurance your small business needs.
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, including LLCs and corporations, a separate bank account is necessary to maintain your liability protection.
The SOS has a section on starting a business. The section has information and links to resources to help small business owners. You can also find sections on frequently asked questions, filing tips, and other business resources. The SOS also provides a starting a new business in California publication and business checklist.
The California Office of the Small Business Advocate (CalOSBA) also offers information and support to small businesses. The CalOSBA has sections on starting, managing, and growing your business. You can also visit a California Small Business Development Center and explore its business services.
]]>Step | Resources |
1. Determine if the type of business suits you. | Evaluating Your Business Idea |
2. Use a break-even analysis to determine if your idea can make money. | Will My Business Make Money? |
3. Write a business plan, including a profit/loss forecast and a cash flow analysis. | |
4. Find sources of start-up financing. | Business Financing, Loans & Capital |
5. Set up a basic marketing plan. | Building Your Business Image |
6. Identify the number of owners of your business. | Business Ownership Structures |
7. Decide how much protection from personal liability you'll need, which depends on your business's risks. | What are the risks of starting my own business? |
8. Decide how you'd like the business to be taxed. | How Sole Proprietors are Taxed How LLC Members are Taxed How Corporations are Taxed |
9. Consider whether your business would benefit from being able to sell stock. | Incorporate Your Business |
10. Research the various types of ownership structures. | Choosing the Best Ownership Structure for Your Business |
11. Get more in-depth information from a self-help resource before you settle on a structure. If you are unsure, talk to a lawyer. | Nolo Store Talk to a Lawyer |
12. Think of several business names that might suit your company and its products or services. | How to Name a Business |
13. If you will do business online, check if your proposed business names are available as domain names. | Choose and Register a Domain Name |
14. Check with your county clerk's office to see whether your proposed names are on the list of fictitious or assumed business names in your county. | Make Sure Your Proposed Business Name Is Available |
15. For corporations and LLCs: check the availability of your proposed names with the Secretary of State or other corporate filing office. | Register Your Business Name |
16. Do a federal or state trademark search of the proposed names still on your list. If a proposed name is being used as a trademark, eliminate it if your use of the name would confuse customers or if the name is already famous. | How to Do a Trademark Search |
17. Choose between the proposed names that are still on your list. | Choosing a Business Name FAQ |
18. Register your business name with your county clerk as a fictitious or assumed business name, if necessary. | Register Your Business Name How to Register a DBA |
19. Register your business name as a federal or state trademark if you'll do business regionally or nationally and will use your business name to identify a product or service. | File a Federal Trademark Application |
20. Register your business name as a domain name if you'll use the name as a Web address too. | Choose and Register a Business Name |
25. Identify the features and fixtures your business will need. | Your Business Space & Commercial Lease How to Start a Home Business |
26. Determine how much rent you can afford. | Tips for Assessing the Cost of the Commercial Rental. |
27. Decide what neighborhood would be best for your business and find out what the average rents are in those neighborhoods. | Determine the Space Your Business Needs. |
28. Make sure any space you're considering is or can be properly zoned for your business. (If working from home, make sure your business activities won't violate any zoning restrictions on home offices.) | Home Businesses and Zoning Laws |
29. Before signing a commercial lease, examine it carefully and negotiate the best deal. | Commercial Leases: Negotiate the Best Terms |
30. Obtain a federal employment identification number by filing IRS Form SS-4 (unless you are a sole proprietorship or single-member limited liability company without employees). | Licenses & Permits for Your Business |
31. Obtain a seller's permit from your state if you will sell retail goods. | How to Get a Seller's Permit |
32. Obtain state licenses, such as specialized vocation-related licenses or environmental permits, if necessary. | Small Business License Requirements: 50-State Guide |
33. Obtain a local tax registration certificate, a.k.a. business license. | 50-State Business Income Tax Requirements |
34. Obtain local permits, if required, such as a conditional use permit or zoning variance. | Local Start-Up Requirements for Small Businesses |
35. Determine what business property requires coverage. | What Type of Insurance Does Your Small Business Need? |
36. Contact an insurance agent or broker to answer questions and give you policy quotes. | |
37. Obtain liability insurance on vehicles used in your business, including personal cars of employees used for business. | |
38. Obtain liability insurance for your premises if customers or clients will be visiting. | General Liability Insurance for Small Businesses |
39. Obtain product liability insurance if you will manufacture hazardous products. | |
40. If you will be working from your home, make sure your homeowner's insurance covers damage to or theft of your business assets as well as liability for business-related injuries. | Homeowners' Insurance |
41. Consider health & disability insurance for yourself and your employees. | The Employer's Legal Handbook |
42. Decide whether to use the cash or accrual system of accounting. | Cash vs. Accrual Accounting |
43. Choose a fiscal year if your natural business cycle does not follow the calendar year (if your business qualifies). | Choosing a Fiscal Year |
44. Set up a recordkeeping system for all payments to and from your business. | Bookkeeping and Accounting Basics |
45. Consider hiring a bookkeeper or accountant to help you get set up. | Choosing the Recordkeeping System for Your Business |
46. Purchase small business accounting software |
47. Familiarize yourself with the general tax scheme for your business structure. | Paying Your Business Taxes Tax Savvy for Small Business |
48. Familiarize yourself with common business deductions and depreciation. | Business Tax Deductions Deduct It! Lower Your Small Business Taxes |
49. Obtain IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business. | Small Business Tax FAQ |
50. Obtain the IRS's Tax Calendar for Small Businesses. | IRS's Tax Calendar |
As you can see, starting a business involves making quite a few initial decisions and getting policies and paperwork in place. For more information about and help with starting a business, consult the following Nolo resources:
California provides a specific process to convert your California LLC to a corporation. The conversion process might vary depending on your specific situation. However, this article will provide general guidance on the process. (For more information, read our overview on converting an LLC to a corporation or S corporation.)
In California, you can convert your LLC to a corporation in two different ways:
Because you have your choice of conversion method, you should choose a statutory conversion. The process is much less complicated and doesn't require you to create a new company to convert your existing one.
To convert your California LLC to a California corporation by statutory conversion, you need to:
Key elements of the conversion procedure are laid out in the following sections of California’s corporation law: Cal. Corp. Code §§ 17710.01-17710.19 (2023).
California's laws on corporations set out the requirements for a statutory conversion. But you might have to follow additional requirements in your LLC operating agreement. For instance, your operating agreement might require all members to approve the conversion in a meeting.
Make sure your operating agreement follows California law. If your operating agreement doesn't cover a particular part of the conversion process, you'll need to follow California’s default rules for converting your LLC.
To convert your LLC, you’ll need to create a plan of conversion. Your plan must include the following information:
(Cal. Corp. Code § 17710.03 (2023).)
Your plan can include additional rules and procedures for the conversion. For example, your plan of conversion can also include the LLC operating agreement.
The LLC members will need to vote to approve the conversion and the plan of conversion. California’s LLC conversion laws don’t explicitly require that you notify LLC members about a meeting to approve a conversion, but you might find that you’re required to do so under your operating agreement or under other California LLC laws.
For manager-managed LLCs, the default law requires approval by all managers and a majority of the members of each class of membership interest. For member-managed LLCs, the default law requires approval by a majority of the members of each class of membership. However, your operating agreement might require more than a simple majority of the voting members. (Cal. Corp. Code § 17710.03 (2023).)
Generally, the plan of conversion can be amended or abandoned prior to filing the conversion paperwork with the SOS. You can modify or abandon the plan in the same way the plan was approved—in other words, with the approval of all managers (for manager-managed LLCs) and a majority of the members of each class of membership. (Cal. Corp. Code § 17710.03 (2023).)
Once your conversion has been approved, you’ll need to file articles of incorporation, including a statement of conversion, with the SOS. California provides a single document containing a cover sheet, articles of incorporation, and statement of conversion that you can complete and mail to the SOS Business Programs Division.
You can also file online. As of 2023, the filing fee is $150.
The statement of conversion provides basic information about your LLC and proposed new corporation, such as:
(Cal. Corp. Code § 17710.06 (2023).)
The statement of conversion must be signed by all members of a member-managed LLC or all managers of a manager-managed LLC unless a lesser number is allowed under the LLC’s articles of organization or operating agreement.
As mentioned above, when using the Secretary of State’s conversion form, the statement of conversion is included within the required articles of incorporation. As the form makes clear, the articles of incorporation can be relatively simple. At a minimum, they should include:
(Cal. Corp. Code § 202 (2023).)
While the statement of conversion and articles of incorporation, which form the document package mentioned above, might appear straightforward, converting your particular business could involve unexpected complications. For that reason, it’s generally a good idea to seek the assistance of a business attorney.
When you convert your LLC to a corporation, generally everything associated with your LLC will transfer to the new corporation as if the conversion didn’t occur.
Specifically, the following that once existed under the LLC will now continue under the corporation:
(Cal. Corp. Code § 17710.09 (2023).)
If your LLC owns a piece of property, your new corporation will now own that property. With real estate, you'll need to file your articles of incorporation with the county recorder of the county where that real estate is located. (Cal. Corp. Code § 17710.07 (2023).)
Apart from the above steps, you’ll also need to take care of all the tasks normally associated with creating and maintaining a new corporation, such as:
You can ensure that your business continues to have limited liability and can take advantage of various tax benefits by following those formalities.
One other critical step in the conversion process is to make sure that no business contracts—such as loan agreements, commercial lease agreements, and licenses and permits—will be affected by your business’s entity change.
Before you start the conversion process, make sure you understand the differences between the business structures and the result of converting your LLC to a corporation. While California’s conversion process is relatively simple compared to other states, it’s important that the conversion process is done correctly.
Moreover, California has additional and distinct legal requirements for corporations that you’ll need to follow. If you need legal assistance with converting your LLC or complying with the state's corporation laws, you should talk to a business attorney.
For a more complete discussion of the steps involved in forming a corporation, consult Incorporate Your Business: A Step-by-Step Guide to Forming a Corporation in Any State, by Anthony Mancuso (Nolo).
]]>The details of how to convert your Texas LLC to a Texas corporation will vary depending on your specific situation. However, here’s some general guidance on the process. (For more general information, read our overview on converting an LLC to a corporation or S corporation.)
In Texas, you can convert your LLC to a corporation in two different ways:
With a merger, you'll need to create a new corporation before your LLC's assets and liabilities can be transferred over to the corporation. With a conversion, your new corporation is formed automatically through the conversion process and the LLC's assets and liabilities are immediately transferred over.
Both methods will convert your LLC to a corporation. But the statutory conversion method is much simpler so you should choose this process over the merger method.
To convert your Texas LLC to a Texas corporation by statutory conversion, you need to:
Key elements of the conversion procedure are laid out in the following sections of Texas law: Tex. Bus. Org. Code §§ 10.101-10.109 (2023).
In addition to Texas's laws on LLC conversions, you'll need to abide by your LLC's operating agreement, if your company has one. Your agreement can set forth rules and procedures for converting your LLC to a different entity. But if you don't have an agreement or your agreement is silent on the conversion process, you must follow Texas's default conversion rules.
To convert your LLC, you’ll need to create a plan of conversion. Your plan must include at least the following information:
(Tex. Bus. Org. Code § 10.103 (2023).)
Your plan can include further rules and procedures for the conversion. But you’re not required to include these extra details in your plan. (Tex. Bus. Org. Code § 10.104 (2023).)
The LLC members will need to vote to approve the conversion and the plan of conversion. In Texas, a majority of the LLC members need to vote to approve the LLC conversion and plan. (Tex. Bus. Org. Code § 101.356 (2023).)
You must give the members advance notice of the special meeting to vote on the conversion. (Tex. Bus. Org. Code § 101.352 (2023).)
Once your conversion has been approved by the LLC members, you’ll need to file a certificate of conversion, including a certificate of formation, with the SOS. Texas provides a single document containing detailed instructions and the certificate of conversion you can complete and mail to the state.
As of 2023, the typical total filing fee for mail-in submissions is $600. This includes a $300 fee for the certificate of conversion and a $300 fee for the certificate of formation. As of 2023, Texas doesn't allow online filings for entity conversions or mergers.
The certificate of conversion provides basic information about your LLC and proposed new corporation, such as:
(Tex. Bus. Org. Code § 10.154 (2023).)
If you attach a plan of conversion to your certificate of conversion, then a certificate of formation for your new corporation should be included as part of the plan of conversion. Otherwise, you'll also need to file a certificate of formation (see below).
As of 2023, the conversion form currently provided by the SOS includes places to enter other items of information. For instance, the form asks you to provide a SOS file number for your LLC, if there is one. The form also asks you to provide a certificate from the comptroller of public accounts that show that all LLC taxes have been paid, or instead of a tax certificate, a statement that the new corporation will pay the due taxes.
The SOS form requires the signature of a person authorized to sign on behalf of your LLC.
As mentioned above, when using the SOS's conversion form, if you choose to attach a plan of conversion, then the plan should include a certificate of formation for your new corporation. If, on the other hand, you don't attach a plan, then you must complete and attach a certificate of formation. The certificate of formation can be relatively simple. At a minimum, it should include:
(Tex. Bus. Org. Code § 3.005 (2023).)
Texas provides a certificate of formation form containing detailed instructions you can complete and include with your certificate of conversion.
While the certificate of conversion, including a plan of conversion and certificate of formation, might appear straightforward, converting your particular business could involve unexpected complications. For that reason, it’s a good idea to seek the assistance of an attorney.
When you convert your LLC to a corporation, generally everything associated with your LLC will transfer to the new corporation as if the conversion didn’t occur.
The following that once existed under the LLC generally will now continue under the corporation:
For example, if there's a judgment against your LLC, then that same judgment will apply to your corporation. Or, if your LLC owns a piece of land, your new corporation generally will now own that property.
Apart from the above steps, you’ll also need to take care of all the tasks normally associated with creating and maintaining a new corporation, such as:
It’s important that you follow all of these formalities to ensure that your business continues to have limited liability and can take advantage of various corporate tax benefits.
One other important step in the conversion process is to make sure that no business contracts—such as loan agreements, commercial lease agreements, and licenses and permits—will be affected by your business’s entity change.
Before you start converting your LLC to a corporation, make sure you understand the differences between the business structures and the effects of such a conversion. It's important that you complete each step of the process correctly for your conversion to be processed and recognized.
Moreover, Texas has distinct legal requirements for corporations that you must comply with. If you need legal assistance with converting your LLC or complying with the state corporation laws, you should talk to a Texas business attorney.
For a more complete discussion of the steps involved in forming a corporation, consult Incorporate Your Business: A Step-by-Step Guide to Forming a Corporation in Any State, by Anthony Mancuso (Nolo).
]]>Sometimes the benefits of becoming a corporation arise after you've already organized your company as an LLC. In that case, it's not too late to build the kind of company you want. You can convert your LLC to a New York corporation. The exact requirements and procedure will depend on your situation but you can follow the general guidance in this article. (For more general information, read our overview on converting an LLC to a corporation or S corporation.)
In New York, unlike many other states, your only option for converting your LLC to a corporation is technically known as a “statutory merger.” With a statutory merger, you’ll need to file to create a new corporation before your LLC’s assets and liabilities can be transferred over. (In most other states, an option exists for a so-called “statutory conversion”—which is a significantly simpler process than a statutory merger.)
New York’s laws for statutory mergers cut across both the state’s Limited Liability Company Law and its Business Corporation Law. More specifically, key elements of the merger procedure are laid out in the following statutory sections: N.Y. Ltd. Liab. Co. Law §§ 1001-1007 (2023) and N.Y. Bus. Corp. Law §§ 901-913 (2023).
To convert your New York LLC to a New York corporation by statutory merger, you need to:
In addition to what's required under New York law, your LLC operating agreement might have rules and procedures for the conversion process. For example, your operating agreement might require your LLC to provide additional information in its plan of merger than what New York law requires.
Your operating agreement can impose additional requirements, but it should comply with New York law. If your agreement does follow state law, you’re safe to follow its merger protocols. But where your operating agreement is silent on merger procedures, New York’s default rules for merging your LLC will apply.
New York's LLC and corporation laws have specific requirements for how to merge your LLC into a corporation. Follow these steps to start operating your LLC as a corporation in New York.
Creating a New York corporation is a multi-step process. However, the initial focus here is on preparing a certificate of incorporation and drafting corporate bylaws. The certificate of incorporation will be filed with the DOS. You generally will keep your corporate bylaws in-house at your business. Together, the certificate of incorporation and the bylaws will indicate that the members of your LLC will also be the shareholders of your new corporation.
The DOS—sometimes referred to as "Secretary of State"—allows you to file a certificate of incorporation on paper or online. Either way, you’ll need to provide the following information:
(N.Y. Bus. Corp. Law § 402 (2023).)
As of 2023, the fee for filing a certificate of incorporation in New York is $125.
The State of New York doesn't provide a form for an agreement of merger for merging an LLC into a corporation. Therefore, to merge your LLC, you’ll need to prepare your own agreement of merger. The agreement of merger must state the terms and conditions of the conversion of LLC membership interests into either shares of stock in the new corporation or some other form of compensation for those interests. (N.Y. Ltd. Liab. Co. Law § 1002 (2023).)
If you have any questions about the specific contents of a legally acceptable agreement of merger, you should consult with a New York business lawyer.
The members of your LLC then need to vote on the agreement of merger. More specifically, those LLC members who are entitled to vote on the agreement must vote. Check your LLC operating agreement for any rules about which members are allowed to vote on a merger.
Unless your LLC operating agreement states otherwise, approval of the agreement requires at least a majority in interest of the LLC members. A "majority in interest" means LLC members whose combined membership interests make up at least 51% of the LLC's interests. (N.Y. Ltd. Liab. Co. Law § 1002 (2023).)
Just as your LLC prepares—and your LLC members must vote to approve—an agreement of merger, so too must your new corporation prepare—and your corporation’s board of directors and shareholders approve—a plan of merger. (Unlike New York’s LLC laws, which refer to an “agreement of merger,” New York’s corporation laws refer to a “plan of merger.”)
Under New York’s corporation laws, your corporation’s plan of merger must at a minimum include:
(N.Y. Bus. Corp. Law § 902 (2023).)
By default, the vote of a majority of directors present at the time of the vote, if a quorum is present, is required to adopt a plan of merger. However, you should check your corporate bylaws for any possible exceptions to the default rule. (N.Y. Bus. Corp. Law § 708(d) (2023).)
After your corporate board adopts the plan of merger, it must be submitted to the corporation shareholders for their approval. You must provide advance notice of the vote along with a copy of the plan to all shareholders, regardless of their right to vote. In most cases, a simple majority of the voting shares is required to adopt the plan of merger. However, in some cases, a two-thirds majority might be required. (N.Y. Bus. Corp. Law § 903 (2023).)
After you've completed the preceding steps, you can file a certificate of merger with the DOS. The State of New York doesn't provide a form for the certificate of merger. Instead, you'll have to draft your own certificate. New York’s LLC laws provide somewhat different guidance than its corporation laws regarding the certificate of merger. Looking at both sets of laws together, your certificate of merger must include:
(N.Y. Ltd. Liab. Co. Law § 1003 (2023); N.Y. Bus. Corp. Law § 904 (2023).)
The certificate of merger must include a completed DOS cover sheet. As of 2023, the fee for filing a certificate of merger in New York is $60. You can find information about how to file and the filing fees on the certificate of merger section of the DOS website.
When you merge your LLC into a corporation, generally everything associated with your LLC will transfer to the new corporation as if the merger didn’t occur.
Generally speaking, the following that once existed under the LLC will now continue under the corporation:
(N.Y. Ltd. Liab. Co. Law § 1004 (2023); N.Y. Bus. Corp. Law § 906 (2023).)
For example, if a creditor has a claim against your LLC, that same creditor will have the same claim against your new corporation. Or, if your LLC owns a piece of land, your new corporation will now own that property.
Apart from the above steps, you’ll also need to take care of all the tasks normally associated with creating and maintaining a new corporation, such as:
By following these formalities, you can help ensure that your business qualifies for the advantages of corporate structure, such as limited liability and tax benefits.
With regard to the first listed item—drafting corporate bylaws—be aware that this is often a complicated process. The bylaws are an internal document that lay out, often in great detail, the rules for running your corporation. If you're unsure about what to include in your bylaws, consult with a business lawyer.
One other essential step in the merger process is to make sure that no business contracts—such as loan agreements, commercial lease agreements, and licenses and permits—will be affected by your business’s entity change.
Before merging your LLC into a corporation, make sure you understand the differences between the business structures and the effects of such a merger. New York doesn't allow for simple “conversions” of LLCs into corporations and the state’s merger process is complicated. It’s important that the process be completed correctly.
Moreover, New York has additional and distinct legal requirements for corporations that you’ll need to follow. In short, if you need legal assistance with merging your LLC or complying with the New York Business Corporation Law, you should talk to a business attorney.
For a more complete discussion of the steps involved in forming a corporation, consult Incorporate Your Business: A Step-by-Step Guide to Forming a Corporation in Any State, by Anthony Mancuso (Nolo).
]]>Delaware's laws provide a process for converting your LLC to a corporation. The procedure might vary depending on your specific situation. But you can generally follow this guidance to convert your business. (For additional information, read our overview on converting an LLC to a corporation or S corporation.)
In Delaware, you can convert your LLC to a corporation in at least two different ways:
(There also is a third option, referred to as “consolidation,” but it's similar to a merger and need not concern us here.)
Statutory conversions involve a much simpler process than mergers. Because Delaware recognizes LLC-to-corporation conversions, it's best to use the statutory conversion process laid out in Delaware's business laws.
To convert your Delaware LLC to a Delaware corporation by statutory conversion, you need to:
Key elements of the conversion procedure are laid out in the following section of Delaware law: Del. Code tit. 8, § 9-265 (2023).
Unlike other states, Delaware has few steps to convert your LLC to a corporation.
In addition to Delaware's corporation laws, you'll need to comply with your LLC operating agreement. Your agreement might contain rules and procedures for converting your LLC to another entity. For instance, your agreement could provide a procedure to convert the owners’ membership shares into corporate shares.
Your operating agreement should comply with Delaware law. Where your operating agreement is silent on conversion procedures, Delaware’s default rules for converting your LLC will apply.
To convert your LLC, you’ll need to prepare a certificate of conversion as well as a certificate of incorporation. (Unlike some other states, Delaware law doesn't explicitly require that you also create a so-called plan of conversion, which often provides more detail about the conversion process.) The certificate of conversion must include the following information:
(Del. Code tit. 8, § 9-265(c) (2023).)
As mentioned above, apart from the certificate of conversion you’ll also need to prepare a certificate of incorporation. The certificate of incorporation can be relatively simple. At a minimum, it should include:
(Del. Code tit. 8, § 1-102 (2023).)
While the certificate of conversion and certificate of incorporation can appear simple to complete, converting your particular business could involve unexpected complications. So, it’s generally a good idea to seek the assistance of an attorney.
The LLC members will need to vote to approve the conversion. Delaware’s LLC laws don’t require you to notify LLC members about a meeting to approve a conversion. However, you may find that you’re required to do so under your operating agreement. (Del. Code tit. 6, § 18-302 (2023).)
Delaware’s LLC laws also don’t explicitly say what proportion of LLC members must vote in favor of the conversion in order for it to be legally approved. If your articles of organization or operating agreement provide a minimum voting requirement, you should follow that rule. If you have any questions about what’s needed, you should consider consulting with a Delaware business lawyer.
Once your conversion has been approved, you’ll need to file the certificate of conversion and certificate of incorporation with the Department of Corporations. Delaware provides a single document containing a cover sheet, certificate of conversion, and certificate of incorporation that you can complete and mail to the Division of Corporations.
As of 2023, the filing fee for a one-page certificate of conversion is $164, the filing fee for a one-page certificate of incorporation is $89, and the fee for any additional pages for either document is $9.
When you convert your LLC to a corporation, generally everything associated with your LLC will transfer to the new corporation as if the conversion didn’t occur.
Specifically, the following that once existed under the LLC will now continue under the corporation:
(Del. Code tit. 8, § 9-265 (2023).)
For example, if a creditor has a claim against your LLC, that same creditor will have the same claim against your new corporation. Or, if your LLC owns equipment, your new corporation will now own that personal property.
Apart from the above steps, you’ll also need to take care of all the tasks normally associated with creating and maintaining a new corporation, such as:
It’s important that you follow all of these required formalities in order to ensure that your business continues to have limited liability and can take advantage of various tax benefits.
One other step in the conversion process is to make sure that no business contracts—such as loan agreements, commercial lease agreements, and licenses and permits—will be affected by your business’s entity change.
When considering whether to convert your LLC to a corporation, make sure you understand the differences between the business structures and how the conversion will affect your business. While Delaware’s conversion process is relatively simple compared to other states, it’s important that you do the conversion process correctly. If you need legal assistance with converting your LLC or complying with the Delaware General Corporation Law, you should talk to a business attorney.
For a more complete discussion of the steps involved in forming a corporation, consult Incorporate Your Business: A Step-by-Step Guide to Forming a Corporation in Any State, by Anthony Mancuso (Nolo).
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You might decide to switch from a corporation to an LLC because an LLC provides advantages that a corporation doesn’t. If you have a small business, you might particularly benefit from an LLC’s customizable structure.
Let’s look at a few of the ways an LLC might be preferable to a corporation:
However, if your corporation is already taxed as an S corp and you don’t need to differentiate between ownership shares and profit shares, then you might not see much benefit from converting your corporation to an LLC.
For more, read about the differences between LLCs and corporations.
First, there isn’t just one tax status for an LLC, one kind of corporation, or one kind of conversion. On the contrary, there are:
With these variables in mind, it’s important to understand the differences in business and tax structures and in conversion methods. Here we’ll try to simplify matters and look mainly at closely-held C corporations converting to multi-member LLCs (the most common scenario).
There are three types of conversion methods that states recognize. You should check your state’s business laws to see which type of conversions your state allows.
A statutory conversion is a relatively new, streamlined procedure that’s available in many states. This method allows you to convert your corporation to an LLC by filing a few forms with the secretary of state’s office. Each state that allows statutory conversions has its own specific forms and rules.
However, generally speaking, steps for a statutory conversion include:
While there are important technical distinctions between a statutory conversion and other types of conversions, the practical effects are the same:
A key point about statutory conversions is that all these effects occur automatically by operation of law rather than through separate, formal agreements. Though you should still address how corporate stock will be exchanged for membership interests in either your plan of conversion or in a separate agreement.
Statutory conversion is usually the quickest and most inexpensive way to convert from a corporation to an LLC. In those states where it’s available, this type of conversion will generally be your best option.
A statutory merger is more complicated than a statutory conversion. However, if your state doesn’t allow for statutory conversions, you’ll likely use this method. While specific details will vary from state to state, the basic steps of a statutory merger usually include:
Like with a statutory conversion, a statutory merger automatically transfers your corporation’s assets and liabilities to the new LLC by operation of law. However, unlike statutory conversions, you’ll likely have to file a form that formally dissolves your corporation.
Apart from the conversions and mergers that are specifically laid out in state law, you can find a workaround solution to convert your corporation into an LLC with a nonstatutory conversion.
A nonstatutory conversion is generally the most complicated and expensive way to convert from an LLC to a corporation. You’ll have to not only legally form your LLC and formally exchange corporation shares for LLC membership interests (as with a statutory merger), but you’ll also have to undertake the process of transferring your corporation’s assets and liabilities to your newly formed LLC.
As part of this process, you’ll need to formally liquidate and then dissolve the corporation, including filing all necessary dissolution documents with the SOS.
If you need to go through a nonstatutory conversion, you’ll need expert legal assistance. However, in most cases, you should be able to avoid using this approach.
The tax consequences of converting your corporation to an LLC could be drastic. When the assets of your old corporation are transferred to your new LLC, you’ll likely be taxed on this transfer. The corporation will be taxed for the sale or transfer of its assets (“liquidation”), and the shareholders, too, are taxed on the assets distributed to them.
While there could be some circumstances that’ll substantially reduce the taxes involved in this type of conversion, in many cases the negative tax consequences will outweigh any potential advantages of the conversion. Before you start the conversion process, you should investigate closely how the conversion would materially benefit the business.
In general, the tax consequences associated with converting from a corporation to an LLC will be complicated. Ultimately, however, for any kind of corporation-to-LLC conversion, you should consult with an experienced tax adviser.
Here are some examples of states’ conversion and merger laws. Every state has different requirements for converting a corporation to an LLC. Check your state’s business laws for specific rules.
While some states have simple forms to fill out, other states don’t provide any forms. It’s simply up to the filer to create articles of conversion or articles of organization. If you need help drafting these documents, talk to a business attorney. They can draft these articles for you or review any documents you draft yourself.
California law allows for statutory conversions. To convert your corporation to a California LLC, you need to:
Plan of conversion. Your plan of conversion will need to include the terms and conditions of your conversion and how corporate shares will be converted to LLC membership interests. You’ll also need to include a copy of your LLC’s articles of organization. (Cal. Corp. Code § 3302 (2023).)
Vote by the directors and shareholders. State law requires the plan of conversion be approved by at least two-thirds of each class of shareholders regardless of whether those stockholders are entitled to vote. You can require a higher percentage for approval through your articles of incorporation or bylaws. In addition to approval by two-thirds of the shareholders, each shareholder that’ll become a manager in the LLC needs to approve the conversion. (Cal. Corp. Code § 3302 (2023).)
You can file the conversion form online with the SOS bizfile Online or by mail.
Delaware law allows for statutory conversions. To convert your corporation to a Delaware LLC, you’ll need to:
Delaware law requires that corporations give the shareholders at least 20 days notice of the meeting where the vote will take place. (Del. Code tit. 8, § 266 (2023).)
The Delaware Division of Corporations provides a combined form that includes both the certificate of conversion and the certificate of formation for your convenience. You should also attach a cover page with your contact information.
Florida law allows for statutory conversions. To convert your corporation to a Florida LLC, you’ll need to prepare and approve a plan of conversion. After the plan is approved, you’ll file a certificate of conversion and articles of organization with the Florida Department of State.
For more information, read about converting your corporation to an LLC in Florida.
New York doesn’t allow statutory conversions. Instead, you’ll need to use the statutory merger method. To convert your LLC to a New York corporation, you’ll:
Plan of merger. The plan of merger needs to include the terms and conditions of the merger, including how the corporation shares will be converted to LLC membership interests along with basic information about the corporation and the merger. (N.Y. Bus. Corp. Law § 903 (2023).)
Vote by the corporation’s directors and shareholders. The rules for shareholder approval of the plan will vary depending on, among other things, when your corporation was formed and whether there are any merger approval provisions in your certificate of incorporation. In many cases, approval will require at least two-thirds of the votes of all outstanding shares entitled to vote on the plan, unless your certificate of incorporation requires a lesser majority vote. (N.Y. Bus. Corp. Law § 903 (2023).)
Vote by the LLC members. On the LLC side of this transaction, the plan must be approved by whatever percentage of members is required by the LLC's operating agreement, so long as it is at least a simple majority. If the operating agreement has no provision for approving mergers, then approval requires a simple majority vote of member interests. (N.Y. Ltd. Liab. Co. Law § 1002 (2023).)
You can draft your own certificate of merger or complete the sample certificate provided by the DOS. If you create your own, you’ll need to include a cover sheet that provides your contact information. You can mail your certificate to the Division of Corporations.
Regardless of which conversion method you choose, you still need to take care of all the tasks normally associated with creating a new LLC, such as:
Also, although various IRS guidance isn’t entirely clear, you might need to obtain a new employer identification number (EIN) as part of the conversion process.
For more information, read our article about how to form an LLC.
One other key step in the conversion process is to make sure that no business contracts—like bank documents, loan agreements, and commercial leases—will be affected by your business’s entity change. Check for any specific provisions in these documents, such as requirements to provide notice of the entity change.
Before you go through the official process of converting your corporation to an LLC, you should make sure it’s the right choice. Talk to a business or corporate attorney about the benefits and drawbacks of the conversion. Because the tax implications of converting your corporation can be tricky and significant, you should also consider talking to a tax attorney or tax adviser as well.
If you do decide to convert your corporation to an LLC, check out your state’s laws on converting corporations. These laws will likely be found under a title or chapter called “businesses and associations” or “corporations.” Some states are more straightforward with their requirements than others. If you have questions about the proper procedure, talk to an attorney. They can walk you through the process, submit your conversion paperwork for you, and draft your articles of organization for your new LLC.
For a more complete discussion of the steps involved in forming an LLC, consult Form Your Own Limited Liability Company: Create an LLC in Any State, by Anthony Mancuso (Nolo). This book has guidance on choosing a management structure for your LLC and writing your articles of organization and operating agreement.
]]>The details of how to convert your Florida LLC to a Florida corporation will vary depending on your specific situation. However, here’s some general guidance on the process. (For more general information, read our overview on converting an LLC to a corporation or S corporation.)
In Florida, you can convert your LLC to a corporation in two different ways:
A statutory merger can be viewed as a work-around and usually doesn’t make sense in states that allow for entity conversions. Effectively, with a merger, you’re simply creating a new entity (your corporation) that can acquire the assets and liabilities of your old entity (your LLC).
Because both methods are available to you under Florida law, you should probably choose the statutory conversion method. The result is the same for both methods, but a statutory conversion creates a cleaner, simpler transfer that doesn’t require you to create a new, separate business entity.
To convert your Florida LLC to a Florida corporation by statutory conversion, you need to:
Key elements of the conversion procedure are laid out in the following sections of the Florida Revised Limited Liability Company Act: Fla. Stat. § 605.1041-1046.
Apart from Florida law, your LLC operating agreement might set out rules and procedures for converting your LLC to another entity. For example, your operating agreement might require all members to approve the conversion in writing. Additionally, your agreement could provide a procedure to convert the owners’ membership shares into corporate shares.
Your operating agreement should comply with Florida law. If it does, you’re safe to follow its conversion protocols. But where your operating agreement is silent on conversion procedures, Florida’s default rules for converting your LLC will apply.
To convert your LLC, you’ll need to create a plan of conversion. Your plan must include the following information:
(Fla. Stat. § 605.1042 (2023).)
Your plan can include additional rules and procedures for the conversion. For example, you can include a deadline for the LLC members to vote on the plan. But you’re not required to include these extra details in your plan.
The LLC members will need to vote to approve the conversion and the plan of conversion. First, you’ll need to notify LLC members in writing about the meeting to approve the conversion—unless the member has waived this notification requirement. You’re only required to notify members who are entitled to vote on the conversion, which could be all members or only members who are managers. You’ll need to notify the members between 10 and 60 days before the meeting.
The notice must include:
By default, the law requires approval in writing by a simple majority of LLC voting members. However, your operating agreement might require more than a simple majority of the voting members.
(Fla. Stat. § 605.1043 (2023).)
Generally, the plan of conversion can be amended or abandoned prior to filing the conversion paperwork with the Department of State. You can modify or abandon the plan either in the same way the plan was approved or in a way that’s set out in the conversion plan. If you decide to abandon the plan of conversion after you’ve already filed the conversion paperwork with the Department, you’ll need to file a statement of abandonment with the state. (Fla. Stat. § 605.1044 (2023).)
Once your conversion has been approved, you’ll need to file articles of conversion and articles of incorporation with the Department of State. Florida provides a single document containing a cover letter, articles of conversion, and articles of incorporation that you can complete and mail to the Florida Division of Corporations.
As of 2023, the total filing fee is $105. This fee includes the $35 articles of conversion fee and the $70 articles of incorporation fee.
The articles of conversion provide basic information about your LLC and proposed new corporation, such as:
(Fla. Stat. § 605.1045 (2023).)
The articles of conversion will need to be signed by either a member of the LLC or an authorized representative. You’ll also need to include your LLC’s articles of organization as an attachment.
State law requires that you include your articles of incorporation along with the articles of conversion. The articles of incorporation can be relatively simple. At a minimum, they should include:
(Fla. Stat. § 607.0202 (2023).)
The articles of incorporation will need to be signed by an incorporator.
While the articles of conversion, which is part of the document package mentioned above, might appear straightforward, converting your particular business could involve unexpected complications. In its instructions for completing the articles, the Florida Department of State recommends that you seek the assistance of an attorney.
When you convert your LLC to a corporation, generally everything associated with your LLC will transfer to the new corporation as if the conversion didn’t occur.
Specifically, the following that once existed under the LLC will now continue under the corporation:
(Fla. Stat. § 605.1046 (2023).)
For example, if a creditor has a claim against your LLC, that same creditor will have the same claim against your new corporation. Or, if your LLC owns a piece of land, your new corporation will now own that property.
Apart from the above steps, you’ll also need to take care of all the tasks normally associated with creating and maintaining a new corporation, such as:
It’s important that you follow all of these required formalities in order to ensure that your business continues to have limited liability and can take advantage of various tax benefits.
One other key step in the conversion process is to make sure that no business contracts—such as loan agreements, commercial lease agreements, and licenses and permits—will be affected by your business’s entity change.
If you don’t want to convert your LLC to a corporation but simply want your business to be taxed as a corporation—instead of as a partnership—you only need to file IRS Form 8832. There’s no need to convert your LLC to a corporation at the state level.
If you’d like to convert your LLC to an S corporation instead of a regular C corporation, then you must elect S corporation tax status. To convert to an S corporation, you’ll need to convert your LLC to a corporation at the state level and then file an IRS Form 2553 at the federal level.
The specific tax consequences for LLC-to-corporation conversions vary from one case to the next. Because the tax consequences can sometimes be significant, you should consult with a tax adviser before undertaking any conversion.
For more information, read how corporations are taxed.
Before converting your LLC to a corporation, make sure you understand the differences between the business structures and the effects of such a conversion. While Florida’s conversion process is relatively simple compared to other states, it’s important that the conversion process is done correctly.
Moreover, Florida has additional and distinct legal requirements for corporations that you’ll need to follow. If you need legal assistance with converting your LLC or complying with the Florida Business Corporation Act, you should talk to a business attorney.
For a more complete discussion of the steps involved in forming a corporation, consult Incorporate Your Business: A Step-by-Step Guide to Forming a Corporation in Any State, by Anthony Mancuso (Nolo).
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Sometimes forming an LLC makes the most sense for your business at the start. But over time, your business grows and changes, and so should your business structure. LLCs are one of the most adaptable entities. They offer limited liability for their owners (called “members”) and flexible tax and management structures.
However, while an LLC is often a great choice for business owners, investors usually prefer to invest in corporations. Investors prefer corporations for several reasons.
Corporations offer more investment opportunities, such as different types of stock, and they give shareholders the most protection. Also, corporations have formalities—many of them required by state law—that provide investors with a transparent picture of how the business is run.
Outside of what investors prefer, you might want to give your employees different compensation packages. Having a corporation allows you to offer employees stock options, which can attract top candidates to your business.
Moreover, converting to an S corporation gives you the limited liability and formalities of a corporation, but similar tax advantages to an LLC. An S corporation is a pass-through tax entity—like an LLC but unlike a regular corporation. So, the corporation itself isn’t taxed. Only the shareholders are taxed on the money they receive from the corporation as dividends (or as a salary if they’re an employee of the corporation). You can only convert to an S corporation after you’ve converted to a regular corporation—also known as a “C corporation.”
For more, read about the differences between LLCs and corporations.
First, there isn’t just one tax status for an LLC, one kind of corporation, or one kind of conversion. On the contrary, there are:
With these variables in mind, it’s important to understand the differences in business and tax structures and in conversion methods. For example, converting an LLC taxed as a partnership to a C corporation through a statutory merger is fundamentally different—both in terms of tax consequences and required paperwork—from converting an LLC taxed as a corporation to an S corporation through a statutory conversion.
Here we’ll try to simplify matters and look mainly at multi-member LLCs taxed as partnerships converting to closely-held C corporations.
There are three types of conversion methods that states recognize. You should check your state’s business laws to see which type of conversions your state allows.
A statutory conversion is a relatively new, streamlined procedure that’s available in many states. This method allows you to convert your LLC to a corporation by filing a few forms with the secretary of state’s office. Each state that allows statutory conversions has its own specific forms and rules.
However, generally speaking, steps for a statutory conversion include:
While there are important technical distinctions between a statutory conversion and other types of conversions, the practical effects are the same:
A key point about statutory conversions is that all these effects occur automatically by operation of law rather than through separate, formal agreements. Though you should still address how LLC interests will be exchanged for stock in either your plan of conversion or in a separate agreement.
Statutory conversion is usually the quickest and most inexpensive way to convert from an LLC to a corporation. In those states where it’s available, this type of conversion will generally be your best option.
A statutory merger is more complicated than a statutory conversion. However, if your state doesn’t allow for statutory conversions, you’ll likely use this method. While specific details will vary from state to state, the basic steps of a statutory merger usually include:
Like with a statutory conversion, a statutory merger automatically transfers your LLC’s assets and liabilities to the new corporation by operation of law. However, unlike statutory conversions, you have to create your new corporation as a separate business entity before that transfer can occur—a process that involves multiple steps and fees. Additionally, you’ll need to formally exchange membership rights for corporate shares through a merger agreement.
You’ll also likely have to file a form that formally dissolves your LLC.
Nonstatutory conversion is generally the most complicated and expensive way to convert from an LLC to a corporation. Very briefly, the main steps are:
Unlike the two preceding conversion methods, under nonstatutory conversion, your LLC’s assets and liabilities aren’t automatically transferred to the new corporation. Instead, in a nonstatutory conversion, you’ll need one or more special agreements to exchange LLC membership interests for corporate shares and to transfer assets and liabilities.
There are multiple methods for handling these transfers and exchanges. If you need to go through a nonstatutory conversion, you’ll need expert legal assistance. However, in most cases, you should be able to avoid using this approach.
In Revenue Ruling 84-111, the IRS briefly describes three more specific methods of converting an LLC to a corporation when using nonstatutory conversion. Each of these three methods has a shorthand name, as follows:
Revenue Ruling 84-111 doesn’t address how the IRS views statutory conversions or statutory mergers. However, a 2004 IRS bulletin clarifies that, for federal tax purposes, the IRS will treat these types of conversions as essentially the same as the first conversion method listed just above (“assets-over”).
Each of the three transfer methods described by the IRS has its own particular tax consequences. If you have questions about the legal and tax implications of converting your business, you should consult with a tax attorney.
If you want to convert your LLC to an S corporation, then you’ll need to take additional steps apart from converting your business to a corporation. An S corporation is a regular corporation (or another entity treated as a corporation) that has elected “S corporation” tax status. Convert your LLC at the state level, and elect to have your business taxed as an S corporation.
You’ll probably need your new corporation’s directors or shareholders to approve of the S corporation election. Check your articles of incorporation or bylaws for the required procedure.
Once you have the appropriate approval, you can file an IRS Form 2553.
For additional guidance on electing S corporation tax status, check out the S corporation tax filing requirements.
Our main concern here is converting the legal form of your business from an LLC to a corporation. However, if you don’t want to convert your LLC to a corporation but simply want your business to be taxed as a corporation—instead of as a partnership—you only need to file IRS Form 8832. There’s no need to convert your LLC to a corporation at the state level.
By default, the IRS taxes a multi-member LLC as a partnership and a single-member LLC as a so-called “disregarded entity.” There’s no separate IRS tax category for LLCs.
While the IRS forms for changing tax status are fairly straightforward, this procedure—known as “Check-the-Box”—involves special eligibility criteria. You can find those criteria in the instructions included with the forms. Generally speaking, your LLC should be eligible to file either Form 8832 or Form 2553, but you should consult with a tax expert for more details.
The specific tax consequences for LLC-to-corporation conversions vary from one case to the next. Because the tax consequences can sometimes be significant, you should consult with a tax adviser before undertaking any conversion.
For more information, read how corporations are taxed.
Here are some examples of states’ conversion and merger laws. Every state has different requirements for converting an LLC to a corporation. Check your state’s business laws for specific rules.
While some states have simple forms to fill out, other states don’t provide any forms. It’s simply up to the filer to create articles of conversion or articles of incorporation. If you need help drafting these documents, talk to a business attorney. They can draft these articles for you or review any documents you draft yourself.
For more information on differences between states, read about where to incorporate your business.
California law allows for statutory conversions. To convert your LLC to a California corporation, your main tasks will be preparing and approving a plan of conversion, and then filing slightly specialized articles of incorporation with the Secretary of State.
For more information, read how to convert your LLC to a corporation in California.
Delaware law allows for statutory conversions. To convert your LLC to a Delaware corporation, you’ll need to file a certificate of conversion and a certificate of incorporation with the Secretary of State.
For more information, see our article on converting your LLC to a corporation in Delaware.
Florida law allows for statutory conversions. To convert your LLC to a Florida corporation, you’ll need to prepare a plan of conversion. You’ll submit the approved plan along with articles of conversion and articles of incorporation to the Florida Department of State.
For more information, read about converting your LLC to a corporation in Florida.
Georgia law allows for statutory conversions. To convert your LLC to a Georgia corporation, you’ll need to file with the Georgia Secretary of State:
Georgia doesn’t provide a form or sample for the certificate of conversion. The Secretary of State does, however, provide instructions and a sample for the articles of incorporation.
The conversion must be approved by a vote required by the LLC governing documents, or, if the governing documents are silent on the issue, by all LLC members. (Ga. Code § 14-2-1109.2 (2023).) For example, if your operating agreement says that two-thirds of LLC members must approve a conversion, then you’ll need to make that quota.
While statutory conversion is available to other entities under Kentucky law, currently only statutory mergers are available for LLCs to convert to corporations. To convert your LLC to a Kentucky corporation, you’ll need to:
Additionally, with a statutory merger, LLC members can’t dissent to the merger. An LLC member can vote against the merger but if the merger passes, they can’t demand a redemption of their LLC interest. (Ky. Rev. Stat. § 275.345 and following (2023).)
Maryland law allows for statutory conversions. Unlike other states, however, Maryland doesn’t require the LLC to have a plan of conversion.
Nevertheless, the conversion will need to be approved by a vote required by the LLC operating agreement or other governing document. If no agreement exists, then the conversion will need to be approved by members that total at least two-thirds of the membership interest.
Once the conversion is approved, you’ll file articles of conversion with the Maryland Department of Assessments and Taxation. The articles must include both a statement that the conversion’s been approved and the way the LLC membership interests will be exchanged for stock in the new corporation. (Md. Code Corps. & Ass'ns § 4A-1101 and following (2023).)
Maryland doesn’t provide a form or template for the articles.
Similar to Kentucky, while statutory conversion is available to other entities, New Hampshire law currently doesn’t allow a statutory conversion for LLCs to convert to a corporation. Instead, an LLC can merge with an existing corporation in a statutory merger.
To convert your LLC to a New Hampshire corporation, you’ll need to:
(N.H. Rev. Stat. § 293-A:11.02 and following (2023).)
In 2023, New Jersey joined the majority of states in allowing statutory conversions. To convert your LLC to a corporation in New Jersey, you need to first adopt a plan of conversion. Your operating agreement or other governing document will determine how the plan can be approved by the LLC.
Once you’ve adopted the plan, you’ll file a certificate of conversion and certificate of incorporation with the Division of Revenue and Enterprise Services. (P.L. 2023, c. 388 (2023).)
This new law will take effect on November 4, 2023.
New York doesn’t allow statutory conversions. Instead, you’ll need to use the statutory merger method. To convert your LLC to a New York corporation, you’ll:
For more information, see our article on converting your LLC to a corporation in New York.
Texas law allows for statutory conversions. To convert your LLC to a Texas corporation, you’ll need to adopt a plan of conversion and file a certificate of conversion with the Texas Secretary of State.
For more information, read how to convert your LLC to a corporation in Texas.
West Virginia law currently only allows for statutory mergers. To convert your LLC to a West Virginia corporation, you’ll need to:
(W. Va. Code § 31B-9-904 (2023).)
Regardless of which method you use to change the legal form of your LLC, you still need to take care of all the tasks normally associated with creating a new corporation. After filing your paperwork to convert your LLC to a corporation and submitting your articles of incorporation, you'll need to:
Also, although various IRS guidance isn’t entirely clear, you might need to obtain a new employer identification number (EIN) as part of the conversion process.
One other key step in the conversion process is to make sure that no business contracts will be affected by your business’s entity change. Make sure you check your business’s:
While converting to a corporation might not affect these agreements, you still might need to notify the other party of your entity change. Check the language of the agreement to see if there’s a provision that requires such notification.
Converting your LLC to a corporation can be fairly straightforward or it can quickly become complicated depending on your circumstances and your state of filing. It’s critical that you choose the right conversion method and that you complete all of the initial and follow-up paperwork to validate the conversion.
You’ll also need to follow all the required formalities for creating and maintaining a corporation to ensure that your business continues to have limited liability. Many business owners will benefit from speaking with a tax adviser or business attorney at some point in the conversion process. An attorney can convert your LLC to a corporation for you, or they can direct you toward your state’s filing requirements and you can complete the process yourself.
For a more complete discussion of the steps involved in forming a corporation, consult Incorporate Your Business: A Step-by-Step Guide to Forming a Corporation in Any State, by Anthony Mancuso (Nolo). This book has guidance on the what, when, how, and why of incorporating your business.
]]>Business owners often mistakenly interchange the two business structures with the misunderstanding that they’re one and the same. Although these legal arrangements share many similarities, there are significant differences that business owners should be aware of when attempting to form an alliance with another enterprise.
By evaluating the pros and cons of each relationship in advance, you can be empowered to make the best strategic decision for your business.
In order to properly distinguish between a JV and a partnership, it helps to start with the definitions and some simple examples.
A partnership is often described as a voluntary association of two or more people who jointly own and manage a business for profit. Partnerships are usually ongoing relationships defined by a partnership agreement.
For example, suppose two friends fresh out of law school want to join together to start an animal rights law firm. They write up a partnership agreement that divides up their responsibilities and duties as partners in the firm. They’ve started a partnership.
Alternatively, consider a hairstylist and independent accountant who want to combine their respective talents to open a salon. They enter into a business partnership where the hairstylist provides services to clients and the accountant takes care of the salon’s finances.
A JV can be described as a business undertaking by two or more people engaged in a single defined project. The creation of a JV is a question of fact that’s determined by the circumstances.
The necessary elements of a JV are:
For example, Sony Ericsson Mobile Communications was a JV started in 2001 by the Japanese consumer electronics company Sony Corporation and the Swedish telecommunications company Ericsson to make mobile phones. Sony contributed its expertise in manufacturing electronic products and Ericsson contributed its mobile and internet communications services.
These definitions overlap in certain ways. Both JVs and partnerships consist of co-owners of a business enterprise sharing the profits and losses. But these business structures also have key distinctions.
JVs differ in how they’re formed, why they’re formed, and for how long they’re formed.
Formation. Partnerships are established when two or more people enter into business together. This business association is usually evidenced by a partnership agreement. Sometimes, partners form limited partnerships or limited liability partnerships, which require an official state filing. While JVs are also usually formed by an agreement—usually called a “joint venture agreement”—they don’t necessarily result in the formation of a single business. A separate business can be created for the purpose of fulfilling the goals of the JV, but it’s not necessary—unlike a partnership.
Scope and duration. A JV is typically set up for one transaction or a series of transactions. Therefore, JVs are generally distinguished from partnerships by their limited scopes and durations. A partnership, on the other hand, ordinarily engages in an ongoing business for an indefinite period of time.
Specific purpose. In a JV, it might not be just profit that binds the parties together. JVs can be formed for specific purposes such as when parties engage in research and development—activities that would otherwise be cost-prohibitive to do individually.
Ownership and control. In a partnership, generally, the partners share equally in the ownership and control of the business. But the partnership agreement can spell out each owner’s ownership share and duties in the partnership. In a JV, each party’s share of ownership, profits, and control is usually outlined in the joint venture agreement. If a new business entity is started to run the venture, then the type of entity—such as a corporation or limited liability company (LLC)—can determine how the parties own and manage the business.
However, these distinctions between the business structures aren’t ironclad, and a court could determine a partnership was formed even for a single business transaction.
One of the main reasons business owners should be concerned about the election between a partnership and a JV is taxes.
Partnerships are considered “pass-through” tax entities where all of the profits and losses of the partnership pass through the business to the partners. The partners each pay taxes on their share of the profits (or deduct their share of the losses) on their individual income tax returns.
As a pass-through business entity owner, partners in a partnership might be able to take advantage of the 20% pass-through deduction established under the Tax Cuts and Jobs Act (TCJA). With this tax deduction, if a partner makes $100,000 in income, they might only be taxed on $80,000 (or 80% of their income). This tax break can result in significant savings, and partners can even qualify for a lower tax bracket with a lower rate.
For additional information, read how partnerships are taxed.
Depending on the circumstances, JVs can be taxed either as a
Entities that are taxed as corporations are subject to tax at both the corporate and shareholder levels, commonly referred to as double taxation. The TCJA established a single flat tax rate of 21% for corporations—a significant change that made the corporate tax rate lower than the top five individual tax rates.
There are advantages and disadvantages to each form of taxation.
One benefit of partnerships is that they offer greater flexibility with regard to the allocation of gains and losses. For example, you might be able to structure your partnership so that one partner receives 50% of the gains generated by the business and 99% of the losses—an arrangement that might benefit the individuals in your group.
However, you or others in your group might not want to report income on your personal returns, and therefore corporate tax treatment might be better.
Your decision might also depend on whether you can take the 20% tax deduction available to partners or if your overall tax rate is better with a flat 21% corporate rate.
Another issue to consider in deciding between a JV and a partnership is liability. Generally, partners in a partnership are jointly and severally liable for the partnership’s obligations. So, every partner is personally liable for:
In general, the members of a JV that’s been set up as a separate corporation or LLC will only be liable to the extent of their investment in the corporation’s stock or their interest in the LLC. But there are situations where JV members will become personally liable for the corporation or LLC’s debts and obligations.
If the JV is established by contract (as opposed to a separate legal entity), then the parties are personally exposed to liabilities related to the venture, similar to a partnership.
A partner in a general partnership owes a fiduciary duty to the partnership and to the other partners. This duty includes duties of loyalty, care, and good faith to the other partners and the partnership.
The fiduciary duties of co-venturers are similar to those owed by a partner in a partnership, although, JVs aren’t always treated the same as partnerships. For instance, the fiduciary duties of a member of a JV are often deemed finite and tailored to the business and activities of the venture, while partnership fiduciary duties are more broadly applied.
Whether you have established a partnership or JV will depend on a number of factors including:
Business owners should be careful to understand which type of arrangement they’re entering into and the consequences of that choice.
If you’re considering entering into a business relationship with another person or business entity, you’re bound to have questions or concerns. If you’ve entered into business contracts before, then you can likely navigate the situation on your own. But business arrangements can often become complicated, and it’s important to define your business relationship at the start before any issues can arise.
If you have legal questions specific to your situation or you and your partner or co-venturer have different opinions about how the business arrangement should look, you should talk to a business lawyer. An attorney can help you negotiate terms with the other party and draft an agreement to govern your business relationship.
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Before deciding on a legal structure for your business, you should determine what you need and value. While LLCs and LLPs share many characteristics, each business type is different and must comply with its own set of state laws.
An LLC is a business entity with one or more owners, who are known as “members.” You can usually create an LLC by filing formation paperwork—usually called “articles of organization”—with your secretary of state.
When properly formed, the business is a separate entity from its owners. So, you can purchase property and open a bank account under your LLC’s name. In most cases, your business will also have its own tax identification number (or “EIN”).
An LLP is essentially a general partnership—where each partner participates in the business’s operations—with the addition of limited liability for one or more partners. A general partnership is formed whenever two or more people do business together, and it doesn’t require any legal filings. However, to create an LLP, you must file formal paperwork with the state—similar to the process for starting a limited partnership.
Like an LLC, an LLP is a separate business entity with its own funds, property, and EIN. But be aware that not every state recognizes LLPs. For the states that do, their laws can vary—sometimes significantly.
LLCs and LLPs share many characteristics. They can both offer owners limited liability, tax benefits, and flexible management roles. But on closer look, these business structures differ in meaningful ways.
Both provide limited liability for owners. Both an LLC and an LLP provide their owners with some protection against personal liability, typically reducing each owner’s liability to the amount they invested in the business. For example, in this case, if an owner invested $8,000 into their company, then they’d only stand to, at most, lose their $8,000 investment.
Generally, an LLC provides the most liability protection. Except for cases of business mismanagement, the members aren’t personally responsible if the LLC is sued or owes any debt. This limited liability serves to protect personal assets like members’ houses, bank accounts, and cars.
An LLP has varying limited liability protections. The partners of an LLP might also have limited liability, but the degree of liability protection depends on the state where the LLP was filed. In some states, LLP partners aren’t responsible for another partner’s negligent acts, but they remain personally responsible for the overall debts and obligations of the business. Other states require at least one partner to have unlimited personal liability, while other partners are protected from business debts and obligations.
Your state’s laws can help determine whether an LLC or LLP works best for your company. If your state doesn’t recognize LLPs, you can either file for an LLC or look to another state that does accept LLPs. If your state does have LLP laws but the protection for owners is minimal, then it might be best to choose an LLC.
An LLC can opt to be taxed as a:
In contrast, an LLP must file as a partnership.
Sole proprietorships and partnerships are considered “pass-through entities” by the IRS. So, the business’s income is passed through to the owners, who report their share of the profits on their individual tax returns.
If the LLC is filed as a corporation, the business first pays tax on its corporate tax return. Then each owner is taxed on their share of the income on their personal tax return. (For more information, read how corporations are taxed.)
Pass-through tax deduction. Owners of both LLCs (that aren’t taxed as corporations) and LLPs can take advantage of the 20% pass-through deduction created by the Tax Cuts and Jobs Act. Under this law, you—as the owner of a pass-through entity—can deduct up to 20% of your business profits from your personal tax return. For example, if you made $100,000, you could only be taxed on $80,000 (or 80% of your income). However, there are some limitations to this complex tax break.
If you want to be taxed as a pass-through entity, you’ll see many of the same tax advantages in an LLC and LLP. But if you want to choose how your business is taxed, an LLC offers you the flexibility that an LLP doesn’t.
Another difference between the two entities is the process for determining the management structure. As mentioned earlier, an LLC can have only one member (known as a “single-member LLC”), while an LLP must have at least two partners.
Both business structures have governing documents that provide rules and procedures for running the company. Both types of agreements provide flexibility and allow owners to choose how each partner contributes and participates in the business.
An LLC is managed according to its operating agreement, which is created by the members. This document outlines:
You can opt to have a member-managed LLC where all of the owners have a say in how the business is run. Alternatively, you can create a manager-managed LLC where you have passive owners or investors who aren’t involved in the decision making for the company. (For more information about the differences in LLC management structures, read our article on member-managed vs. manager-managed LLCs.)
With an LLP, the management structure is determined by the partnership agreement. Like the operating agreement, the partnership agreement details each partner’s:
You have the option to specify one partner as a “silent partner.” Like in a management-managed LLC, the silent partner will receive a share of the partnership’s proceeds but won’t participate in decision making for the business.
Take time to weigh the pros and cons of each business structure. It’s generally challenging—as well as costly and time-consuming—to change the business structure after you’ve made the state filings. Overall, if your main concern is limiting liability or tax flexibility, an LLC is probably your best option. (For more information, read about the advantages of an LLC.)
However, take a look at your state tax laws; some states might impose a higher tax on LLCs than on LLPs.
In some cases, the decision can be made for you based on the state where you want to file and the type of business you want to have. For instance, if you’re running the business on your own without partners, you can’t form an LLP.
Additionally, not every state allows you to form an LLP. Moreover, some states only allow professional businesses, like accounting firms and law offices, to use LLPs. Similarly, some professionals might not be allowed to form an LLC, and they instead must choose an alternate structure—like an LLP—for protection.
(If you’re considering forming an LLC, read our article on the 6 questions to ask before forming an LLC.)
If you have a good understanding of LLCs and LLPs and you’re clear on what your business needs, you can probably make the choice between the two business structures on your own. But if you have questions about your state’s business laws or are unsure about which business type is the right choice for you, you should talk to a small business lawyer. They can help you review and understand your state’s laws and advise you on whether an LLC or LLP will best benefit you.
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An LLC blends certain positive attributes of a:
State laws governing LLCs might vary, but typically LLCs offer five main advantages for new businesses.
An LLC is viewed as a legal entity separate from its individual members or owners. Similar to shareholders of a corporation, an LLC owner is not personally liable for the LLC’s debts or legal liabilities. For example, if your LLC has $5,000 in debt, the creditors probably can’t come after you personally to recover the money.
The LLC owner can usually only lose their capital contribution to the business—like corporate shareholders. For example, suppose Hunter and Cody have an LLC together. Hunter invests $20,000 into the company, and Cody invests $30,000. The LLC struggles to take off and accumulates $70,000 in debt. The LLC can use the $20,000 Hunter invested and the $30,000 Cody contributed to partially pay off the business’s debts. While Hunter and Cody will lose their investments, they won’t need to use any of their own money to pay the remaining $20,000 in business debt.
An LLC’s legal obligations usually don’t put the LLC owner’s personal assets, such as a home or individual bank account, at risk. Creditors can’t come after your—or, if you’re married, your spouse’s—personal assets to pay the business debts.
For instance, if your business owed $10,000 to a creditor, the creditor could only sue the business, and not you personally, to recover the debt.
As with other business organizations, you could still be personally liable for business debts in some instances, such as when:
For more information, read about when you might be personally liable for LLC debt.
State laws usually apply equal management responsibilities and duties to LLC owners. But LLC members (or owners) are generally free to set their own rules for how the LLC is managed and operated.
You can spell out each member’s role and responsibilities in an operating agreement. An operating agreement is the governing document for an LLC, and every LLC should have one—especially if you don’t want to follow the default rules in your state’s LLC laws.
You can specify which member handles or is in charge of the business’s:
Entrepreneurs are self-starters who prefer to chart their own courses. Most states recognize a single-member LLC, which means that you can be the sole owner of your business. As a single-member LLC, you can make your own business decisions without having to consult with and receive approval from:
Like a sole proprietor, you own, manage, and operate your business, but without the same liability issues of a sole proprietor.
Because LLCs are not recognized entities for tax purposes, owners have to elect how they want their LLCs to be taxed. You can choose to have your LLC taxed as a:
There are advantages (and disadvantages) to each tax structure. Corporations typically have lower tax rates but you face double taxation. Both the business and the individual owners are taxed on the business’s income. Alternatively, S corporations and partnerships are known as “pass-through” entities, and only the owners are taxed, not the business. (For more information on how corporations and LLCs are taxed, read our article on corporations and S corporations vs. LLCs.)
Single-Member LLCs are taxed as sole proprietors. If you’re the only owner of your LLC, then you’re considered a sole proprietor for tax purposes. You’ll also be considered a pass-through entity.
Standard corporations typically face the burden of double-income taxation. The corporation’s profits are taxed as income and shareholders must pay income taxes on any dividends. LLCs that don’t elect corporation status receive “pass-through” treatment and avoid double taxation. Instead of taxing the business and its members, each member is only taxed on their share of the profits.
Unless you elect otherwise, the IRS treats LLCs as partnerships for tax purposes. So, you’ll be able to immediately avoid double taxation. Instead, you’ll report the business’s profits and losses on your individual income tax return. If you elect S corporation status, you can also avoid double taxation. (For more information, read how LLC members are taxed.)
As an owner of a pass-through business entity, you might be able to take advantage of the 20% pass-through deduction established under the Tax Cuts and Jobs Act. Under this law, you’ll only be taxed on only 80% of your business income.
For example, if you made $100,000, you’d only be taxed on $80,000. This deduction can save you a significant amount. Not only will your taxes be less, but you might also qualify for a lower tax bracket and lower tax rate.
Establishing and maintaining an LLC is less complex and requires less paperwork than other corporate entities.
An LLC registers its existence by filing articles of organization with and paying a fee to the relevant state office, normally the secretary of state.
You’ll typically only need to provide the following basic information in your articles of organization:
Similarly, corporations must file articles of incorporation with their state’s office. After filing, corporations must then hold an organizational meeting to:
The corporation’s board of directors will meet regularly to discuss and finalize business strategies, finances, and policies and can call special meetings when emergency action is needed. Corporations are also required to hold an annual shareholders meeting. In addition, corporations typically must file annual reports and pay yearly fees to retain their corporate status.
In most states, these meeting and reporting requirements don’t apply to LLCs. Instead, LLCs are usually only responsible for an annual fee and filing obligations.
In most cases, business entities distribute profits based on an owner’s capital contribution (investment) or percentage of ownership interest. In a general partnership, partners normally share profits equally. Corporations can pay dividends based on each stockholder’s proportion of ownership interest.
However, LLC members have the flexibility to determine how profits are distributed—and usually defined these terms in the LLC’s operating agreement. LLC members aren’t limited to their proportion of ownership. They can decide to divide up profits in a different way.
For example, one member might agree to take less than their proportional share in profits if another member agrees to put in extra hours and efforts toward the LLC’s daily operations.
But LLCs have some limitations on how they can distribute profits. They can’t allocate profits when:
Also, the IRS has rules that require allocations not based on ownership interest—called “special allocations”—to reflect a legitimate economic circumstance. The purpose of these rules is to prevent owners from merely trying to gain a tax advantage.
For more information, you can visit the Small Business Administration’s website or contact your local division of corporations or secretary of state’s office. If you have specific legal questions about how your business can capitalize on the benefits of LLCs, you should talk to a business attorney. They can help you take advantage of the tax deductions, explain your liability risk, and draft your operating agreement.
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A single-member limited liability company is a type of business entity owned by one person. You form an LLC by filing a document called articles of organization (or something similar) with your state's business filing office. In most states, this is the Secretary of State’s office. For details, see “How to Form an LLC.”
Like a corporation, an SMLLC is a separate legal entity, meaning that it can:
The owner of an SMLLC runs the business and manages the LLC. But the owner is ordinarily not an employee of the SMLLC. Rather, he or she is a self-employed business owner--the same as a sole proprietor. This means the SMLLC doesn't have to comply with the payroll tax, labor law, and other legal requirements for employees.
All states allow LLCs to be formed, owned, and run by just one person. LLC owners are called members; thus, one-owner LLCs are called single-member limited liability companies, or SMLLCs for short. Any independent contractor can form an SMLLC to own and run a one-owner business.
In the eyes of the law, a worker is either an independent contractor or an employee. However, an independent contractor is not a type of business entity.
Business entity types include partnerships, sole proprietorships, corporations, and LLCs. If you're working as an independent contractor and you do not file formation paperwork with the state, you automatically have a sole proprietorship. Alternatively, you can take steps to form a business, such as a corporation or an LLC.
Forming a single-member LLC can provide an independent contractor with some important advantages over being a sole proprietor, including:
When you’re a sole proprietor, you are personally liable for all your business debts and other liabilities. This means that a person or company to whom you owe money for items you use in your business can go after all your assets, both business and personal. This may include, for example:
Sole proprietors are also personally liable for business-related lawsuits. For example, if someone slips and falls in your office, you can be personally sued for damages.
In contrast, when you form a single-member LLC you obtain limited liability. In fact, an SMLLC provides its owner with the same limited liability as a corporation. “Limited liability” means that the SMLLC owner is not personally responsible for paying debts incurred by the SMLLC business. Instead, only the SMLLC’s money and assets can be taken to pay for such debts. An SMLLC’s creditors can’t touch the owner’s personal funds like his or her personal bank account or personal property like a home.
However, there can be a big exception to the general rule of no personal liability. SMLLC owners are often asked to personally guarantee bank loans and other SMLLC debts. When they do this, they lose the limited liability achieved by forming an SMLLC.
Also, even if you form an SMLLC you remain personally responsible for your own individual wrongdoing. For example, an independent contractor who forms an SMLLC remains personally responsible for damages due to his or her own professional malpractice, negligence, or fraud. For this reason, even if you form an SMLLC, it’s important to have adequate liability insurance.
Single-Member LLCs have another attribute that is often underappreciated: great flexibility in deciding how a business will be taxed. The default form of taxation for an SMLLC is as a “disregarded entity.” This means the IRS ignores the SMLLC and treats it the same as a sole proprietorship for tax purposes.
The SMLLC’s owner files IRS Schedule C to report the business’s income and expenses. Any profits (or losses) are passed through the business to the owner’s personal tax return. The owner pays tax on the profit at his or her individual tax rates.
However, single-member LLC owners have the option of having their business taxed as a regular C corporation or S corporation. This is easily accomplished by filing a document called an election with the IRS. Once this is done, the SMLLC is treated the same as a corporation by the IRS. The SMLLC files the same tax forms as a corporation and is subject to all the corporate tax rules. Independent contractors who are sole proprietors do not have this option.
Independent contractors who are sole proprietors must pay Social Security and Medicare taxes on all the profit they earn from their business. This is a combined 15.3% tax up to an annual ceiling.
In contrast, an SMLLC owner can save on Social Security and Medicare taxes by choosing to have the SMLLC taxed as an S corporation instead of a sole proprietorship. Here’s how it works: by choosing to have the SMLLC taxed as an S corporation, the SMLLC owner works as its employee. The owner’s employee wages are subject to Social Security and Medicare taxes just like any other employees.
Here's the key thing to understand: An SMLLC doesn’t have to distribute to its owner all the profits the business earns in the form of employee wages. It can pay the owner some of the profit in the form of S corporation distributions instead. These are profits passed through the S corporation and paid to the owner as a shareholder, not as an employee for his or her services.
Such distributions are not subject to Social Security and Medicare tax. The SMLLC owner only has to pay income tax on them at his or her individual tax rate. The savings can be substantial. For example, an SMLLC taxed as an S corporation that earns $100,000 in profit would save the owner over $8,000 in Social Security and Medicare tax if $60,000 was paid as a shareholder distribution.
The larger your shareholder distribution, the less Social Security and Medicare tax you’ll pay. If you took no employee wages at all, you would not owe any of these taxes. As you might expect, however, this is not allowed.
The IRS requires S corporation shareholder-employees to pay themselves reasonable employee salaries—at least what other businesses pay employees for similar services. If you fail to do so, the IRS can recharacterize all or part of your distribution as employee wages and require you to pay Social Security and Medicare taxes on them.
It is also possible to save money by electing C corporation taxation for an SMLLC. Unlike an S Corporation, a C corporation is a separate taxpaying entity that pays tax at the corporate tax rate on all its profits. As a result of the Tax Cuts and Jobs Act, C corporations pay a flat tax of 21% on all their profits. This 21% rate is lower than all but the two lowest individual income tax rates.
However, the benefits of this low 21% rate are not as great as you might think because C corporations are subject to double taxation. When a C corporation distributes its profits to its owner the money is taxed twice: first, at the 21% corporate rate, and then at the owner’s capital gains tax rate, anywhere from 0% to 23.8%.
At all but the highest tax brackets, the combined tax is more than you’d pay on your profits if you were taxed as a sole proprietor (or S corporation). Generally, an independent contractor will save on taxes with a C corporation only if his or her business earns substantial profits--at least $200,000 to $400,000.
From 2018 through 2025, business owners other than C corporation shareholders can deduct for income tax purposes up to 20% of the net income they earn from their business entity. This deduction is available for both sole proprietors and SMLLCs. For example, if the net income from an SMLLC business is $100,000, the owner may deduct up to $20,000 from his or her income taxes.
However, if taxable income exceeds an annual threshold, the deduction is limited to 50% of the amount paid to employees of the entity, or 25% of employee payments plus 2.5% of the value of depreciable business property. Additionally, the deduction is phased out for taxpayers involved in various types of service businesses. This deduction may not be taken by SMLLCs that elect to be taxed as C corporations.
When you’re a sole proprietor, you and your business are one and the same. To outsiders, it might look like you are pretty small potatoes. On the other hand, going to the trouble of creating a formal business entity like an LLC shows you’re serious about having a real business. Moreover, when you form an LLC, you get to put the letters LLC (or some variant) after your business name so everyone will know your business is an LLC. As a result, potential clients and others may take you more seriously.
The main disadvantage of SMLLCs is that they cost more than sole proprietorships, which cost next to nothing to form and run. Forming an LLC can cost up to a few hundred dollars. You’ll need to file articles of organization and you should also create an operating agreement. You can minimize the costs involved if you do most of the work yourself.
In addition, some states require LLCs to pay minimum annual taxes. For example, every LLC created in California must pay an $800 annual tax for the “privilege” of doing business in the state. This is the highest minimum LLC tax in the country, but many states have similar, smaller minimum annual taxes. No such taxes are imposed on sole proprietors. Thus, forming an SMLLC will cost more than working as a sole proprietor.
If limited liability is important to you, you should seriously consider forming an SMLLC. It is the lowest cost and easiest way to obtain limited liability for your independent contractor business. SMLLCs also come with the added benefit of potential tax savings if you choose to be taxed as a corporation.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Wyoming Secretary of State (SOS). You can check for available names by doing a business entity search on the SOS website. You can reserve an available name for 120 days by filing an application for reservation of name with the Wyoming SOS. (There are different forms for LLCs and corporations.) There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Wyoming and How to Form a Corporation for more information.
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you have the option to file an Application for Registration of Trade Name with the SOS.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Wyoming, you must register with the Department of Revenue (DOR) to collect sales tax. You can download a Sales/Use Tax License Application from the DOR website.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
The Wyoming Business Council (WBC) publishes an excellent guide, Wyoming Business Permitting and Licensing, that provides an easy-to-read overview of the state’s various regulatory permits and licenses, including the agencies that issue them. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The Wyoming Department of Administration and Information (DAI) has an online list of regulatory boards for some (but not all) licensed professions and occupations. In addition, the Governor’s Boards and Commissions website has a section where you can search for a regulatory board if you know its name. And, finally, the WBC publication Wyoming Business Permitting and Licensing lists the many state agencies that administer professional licenses.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Wyoming is one of just four states that have no corporate tax and no personal income tax. See Wyoming State Business Income Tax for more information on state business taxes in Wyoming.
Wyoming LLCs and corporations must file annual reports with the Wyoming SOS. Also, apart from Wyoming taxes, there are federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the New York Department of State (DOS). You can check for available names by searching the Corporation & Business Entity Database on the DOS website. You can reserve an available name for 60 days by filing an Application for Reservation of Name with the New York DOS (there are separate forms for LLCs and corporations). There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in New York and How to Form a Corporation in New York for more information.
Does your New York sole proprietorship or general partnership use a business name that is different from the name of the business owner (sole proprietorship) or the names of the partners (general partnership)? If so, you must file a fictitious name certificate with the county clerk in the county where you will do business.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in New York, you must register with the New York Department of Taxation and Finance (DTF) as a sales tax vendor. If you will have employees in New York, you must register with the New York Department of Labor (DOL) for employer withholding tax and unemployment insurance. You can register online at the DOL’s Employer Registration webpage.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
The New York State Business Express lists the various licenses issued by the state, including many related to businesses. The site also links to the state’s online Business Wizard, where you can enter details about your specific business and automatically generate a list of the licenses and permits you’ll need. You may also need to get business licenses at the local level.
Professional and occupational licenses. These cover people who work in various fields. The state makes a limited distinction between professions and occupations. You can get information on licensing for most professions from the Office of the Professions (OP), which is a division within the New York State Education Department (NYSED). The New York DOS has a section of its website listing dozens of state-licensed occupations as well as professions.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
New York taxes every kind of business. See New York State Business Income Tax for more information on state business taxes in New York.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns.
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, many partnerships also must file Form IT-204, Partnership Return. Furthermore, some partnerships also must pay an annual state filing fee.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, most LLCs also must pay an annual filing fee and file Form IT-204-LL, Partnership, Limited Liability Company, and Limited Liability Partnership Filing Fee Payment Form. Furthermore, most LLCs also must file biennial statements. See New York LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to New York corporation taxes and a franchise tax. Note: New York’s taxation of corporations is particularly complicated. Finally, most corporations must file a biennial statement with the New York DOS.
If you have employees, you must also deal with state employer taxes.
And, apart from New York taxes, there are always federal income and employer taxes.
Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, consider your own interests, skills, resources, availability, and the reasons you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Washington Secretary of State (SOS). You can check for available names by doing a corporation search on the SOS website (the search site covers LLCs, corporations, and other registered entities). You can reserve an available name for 180 days by filing a Name Reservation form. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Washington and How to Form a Corporation in Washington for more information.
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must register a trade name with the Washington State Business Licensing Service (BLS). You can register online.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Washington, you must register with the Department of Revenue (DOR) to collect sales tax. You can register by filing a Business License Application with the BLS online, by mail, or in person.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Check the List of Licenses section of the BLS’s Business & Professional Licenses webpage for additional guidance on state licenses. You can obtain some state-issued business-related licenses by completing the BLS’s Business License Application.
Many other licenses are issued at the city or county level. Check the BLS webpage that lists Washington cities that work with the BLS to issue local licenses. Also, check the website for any Washington city or county where you will do business.
Professional and occupational licenses. These cover people who work in various fields. Many of these licenses are handled through the BLS. For more information, check both the Professions section and the List of Licenses section of the BLS’s Business & Professional Licenses webpage.
You'll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Washington is one of just four states that have no corporate tax and no personal income tax. However, Washington does have a Business and Occupation Tax (B&O Tax). See Washington State Business Income Tax for more information on state business taxes in Washington.
Washington LLCs and corporations must file annual reports (also known as annual renewals) with the BLS. The reports must be filed online.
And, apart from Vermont taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, consider your own interests, skills, resources, availability, and the reasons you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
You will need to check that your business name is distinguishable from the names of other business entities already on file with the North Dakota Secretary of State (SOS). You can check for available names by doing a business records search on the SOS website. You can reserve an available name for twelve months by filing a Reserve Name Application with the North Dakota SOS. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in North Dakota and How to Form a Corporation in North Dakota for more information.
Sole proprietorships and partnerships in North Dakota must file a Trade Name Registration with the North Dakota SOS if they use a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership).
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in North Dakota, you must register for a sales and use tax permit with the North Dakota Office of the State Tax Commissioner (STC). If you will have employees in North Dakota, you must register with the STC for employer withholding tax. For both types of tax, you can register through the North Dakota Taxpayer Access Point.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check the Licensing Information section of the state website. You’ll find that some of the agencies that issue business-related licenses and permits are:
You'll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
North Dakota taxes every type of business. See North Dakota State Income Tax for more information on state business taxes in North Dakota.
Sole proprietorships. Sole proprietors pay state taxes on business income as part of their personal state income tax returns.
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, many partnerships must file an annual North Dakota Partnership Return, Form 58.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, North Dakota LLCs must file annual reports with the SOS. These reports must be filed online. If the LLC is taxed like a partnership for federal income tax purposes, it must also file an annual North Dakota Partnership Return, Form 58. For more information, see North Dakota LLC Annual Filing Requirements.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. Moreover, the corporation itself is subject to North Dakota corporate taxes and must file a corporation income tax return. Finally, North Dakota LLCs must file annual reports with the SOS. These reports must be filed online.
If you have employees, you must also deal with state employer taxes.
Apart from New Hampshire taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take time to explore and research ideas for your business. At this stage, consider your own interests, skills, resources, availability, and the reasons you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the North Carolina Secretary of State (SOS). You can check for available names by doing a corporate name search on the SOS website. You can reserve an available name for 120 days by filing an Application to Reserve a Business Entity Name with the North Carolina SOS. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations).
Sole proprietorships and partnerships in North Carolina must file a Certificate of Assumed Name if they use a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership). The certificate is filed with the County Register of Deeds.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in North Carolina, you must register to collect sales tax with the North Carolina Department of Revenue (DOR). If you will have employees in North Carolina, you must register with the DOR for employer withholding tax. For both types of tax, you can register using Form NC-BR either online or using a web fillable PDF form.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check with the North Carolina Department of Commerce and Business Link North Carolina (BLNC). For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. You can get information about the state agencies that license and regulate many professions and occupations from the North Carolina Department of Commerce.
You'll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
North Carolina taxes every kind of business. See North Carolina State Business Income Tax for more information on state business taxes in North Carolina.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form D-400).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, every partnership doing business in North Carolina also must file Form D-403, Partnership Income Tax Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, depending on how the LLC is classified for federal tax purposes, the LLC itself may have to file an additional state tax form. The LLC also must file an annual report with the North Carolina SOS. See North Carolina LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to North Carolina corporation taxes and a corporate franchise tax. Finally, corporations must file an annual report with the North Carolina SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from North Carolina taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take time to explore and research ideas for your business. At this stage, consider your own interests, skills, resources, availability, and the reasons you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the New Mexico Secretary of State (SOS). You can check for available names by doing a business search on the SOS website. You can reserve an available name for 120 days by filing an Application for Reservation of Name with the New Mexico SOS (there are separate forms for LLCs and corporations). There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations).
Unlike most other states, New Mexico does not have a method for registering the business name of a sole proprietorship or general partnerships when that business name is different from the name of the owner or owners. Nevertheless, you should do a business name search to make sure the name is distinguishable from the names of other businesses on record with the Secretary of State. In addition, if the business name is associated with a service or product, you may want to look into state trademark registration.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in New Mexico, you must register with the New Mexico Taxation and Revenue Department (TRD) to collect the state gross receipts tax (also known as sales tax). If you will have employees in New Mexico, you must register with the TRD for employer withholding tax. For both types of tax (and others) you can register online using the TRD’s Taxpayer Access Point (TAP) or on paper using Form ACD-31015, Application for Business Tax Identification Number.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Virtually every New Mexico business must register with the New Mexico TRD. You can find more information about the business registration requirement in the Register Your Business section of the TRD website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The state’s Regulation & Licensing Department (RLD) oversees many (but not all) of the regulatory boards and commissions for licensed professions and occupations. The Boards and Commissions section of the RLD website lists the professions and occupations the RLD handles.
You'll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
New Mexico taxes every kind of business. See New Mexico State Business Income Tax for more information on state business taxes in New Mexico.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form PIT-1).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, most partnerships also must file Form PTE, New Mexico Information Return for Pass-Through Entities.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, most LLCs also must file Form PTE, New Mexico Information Return for Pass-Through Entities. Unlike most other states, New Mexico does not require LLCs to file annual reports. See New Mexico LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to New Mexico corporation taxes and a franchise tax. Finally, corporations must file an annual/biennial report with the New Mexico SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from New Mexico taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, consider your own interests, skills, resources, availability, and the reasons you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Alaska Division of Corporations, Business and Professional Licensing (CBPL). You can check for available names doing a business entity search on the CBPL website. You can reserve an available name for up to 120 days by filing a Business Name Reservation with the CBPL. There are also certain name requirements for LLCs and corporations (like including a word such as “L.L.C.” for LLCs or “Company” for corporations). See How to Form an LLC in Alaska and How to Form a Corporation for more information.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. Alaska does not have a state sales tax or a personal income tax on wages so there is no issue of registering for those types of taxes. Be aware, however, that individual Alaska municipalities may charge sales tax.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Most Alaska businesses are required to have a state business license. The license is issued by the CBPL. You have the option to pay for either a one-year or two-year business license. For more information, check the New BL Online section of the CBPL website. Other state agencies issue permits for matters relating to, for example, the environment or health and safety. If you think one of these kinds of permits might apply to your business, check the websites of the Division of Environmental Health, Department of Environmental Conservation, and other state agencies. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The Professional Licensing section of the CBPL website lists most of the professions requiring state licensing.
You'll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Alaska is like most states in that it has a corporate income tax, but unlike many states, it does not have any franchise or privilege tax generally applicable to businesses. Moreover, Alaska does not have a personal income tax. See Alaska State Business Income Tax for more information on state business taxes in Alaska.
Sole proprietorships. Sole proprietorships only pay federal taxes on business income.
Partnerships. Typical partnerships only pay federal taxes on business income.
LLCs. For typical LLCs, LLC members only pay federal taxes on business income. In addition, the LLC itself must file a biennial report with the CBPL. See Alaska LLC Annual Report and Tax Requirements for more information.
Corporations. Alaska corporations must pay the state’s corporation income tax. Individual shareholders must pay federal taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay federal income tax on his or her individual federal tax return. In addition, corporations must file a biennial report with the CBPL.
Apart from Alaska taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, consider your own interests, skills, resources, availability, and the reasons you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the New Jersey Department of Revenue and Enterprise Services (DORE). You can check for available names by doing a business entity name search on the DORE website. You can reserve an available name for 120 days by filing an Application for Reservation of Name with the New Jersey DORE. There are certain name requirements for LLCs and corporations (like including a word such as “L.L.C.” for LLCs or “Company” for corporations). See How to Form an LLC in New Jersey and How to Form a Corporation in New Jersey for more information.
A New Jersey sole proprietorship or general partnership should file a registration for a trade name (also known as an assumed name) at the county level if it uses a business name that is different from the name of the business owner (sole proprietorship) or partners (general partnership).
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in New Jersey, you must register to collect sales tax with the New Jersey DORE. If you will have employees in New Jersey, you must register with the DORE for employer withholding tax. You can register online using the DORE’s NJ Business Gateway Services or on paper using Form NJ-REG for both types of tax.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check the License & Certification Guide on the New Jersey Business Portal, which has links to information about all the latter kinds of licenses and permits, and many others besides. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. You can get information about the state agencies that license and regulate many professions and occupations, as well as at least the basic licensing requirements, from either of the following sources:
In addition, the Division of Consumer Affairs website has a Licensing Boards and Committees section that provides similar information.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
New Jersey taxes every kind of business. See New Jersey State Business Income Tax for more information on state business taxes in New Jersey.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form NJ-1040).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, most partnerships also must file Form NJ-1065, Partnership Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, most LLCs also must file Form NJ-1065, Partnership Return. Furthermore, the LLC must file an annual report with the New Jersey DORE. See New Jersey LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to New Jersey corporation taxes. Finally, corporations must file an annual report with the New Jersey DORE.
If you have employees, you must also deal with state employer taxes.
And, apart from New Jersey taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, consider your own interests, skills, resources, availability, and the reasons you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Montana Secretary of State (SOS). You can check for available names by doing a business entity search on the SOS website. You can reserve an available name for up to 120 days by filing a Reservation of Name Application with the Montana SOS. Name reservations cannot be renewed to extend the reservation.
There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Montana and How to Form a Corporation in Montana for more information.
Sole proprietorships and partnerships in Montana should file a Registration of Assumed Business Name with the Montana SOS if they use a business name that is different from the names of the business owner (for a sole proprietorship) or individual partners (for a partnership).
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will have employees in Montana, you must register with the Montana Department of Revenue (DOR) for an employer withholding tax number. You can register online using the DOR’s Taxpayer Access Point (TAP) or on paper using Form GenReg, Registration/Application for Permit.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check the Small Business Licensing Information of the state website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The Occupational and Professional Licensing section of the state website has links to the licensing requirements for most professions.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Montana taxes every kind of business. See Montana State Business Income Tax for more information on state business taxes in Montana.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 2).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, most partnerships also must file Form PR-1, Montana Partnership Information and Composite Tax Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, the LLC itself must file an annual report with the Montana SOS. Montana LLCs taxed as corporations for federal tax purposes must also file a state corporation tax return. See Montana LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Montana’s corporation license tax. Finally, corporations must file an annual report with the Montana SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Montana taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, consider your own interests, skills, resources, availability, and the reasons you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Rhode Island Secretary of State (SOS). You can check for available names by doing an entity name search on the SOS website. You can reserve an available name for 120 days by filing an Application for Reservation of Entity Name form with the Rhode Island SOS. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Rhode Island and How to Form a Corporation for more information.
Is your business a sole proprietorship or partnership that uses a business name that is different from the name of the business owner (for a sole proprietorship) or individual partners (for a partnership)? If so, you must file a certificate of assumed business name with the city or town clerk where your business is located.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Rhode Island, you must apply for a retail sales permit for sales tax. If you will have employees in Rhode Island, you must register for employer withholding tax. You can accomplish both types of registrations, and many others, by completing Form BAR, Business Application and Registration, which you can do either online or on paper.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
You can find information about commercial licenses from the Commercial Licensing & Racing & Athletics section of Rhode Island’s Department of Business Regulation (DBR) website. For certain sales-related licenses, check Form BAR, Business Application and Registration. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. A good first place to check for information is the Professional License Renewal section of the ri.gov website. The section provides licensing information for some professions and occupations. Another option is the Rhode Island Department of Business Regulation, which has links for licensing for a few professions, such as insurance professionals.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Rhode Island taxes every kind of business. See Rhode Island State Business Income Tax for more information on state business taxes in Rhode Island.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (RI-1040).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Rhode Island partnerships also must file Form RI-1065, Partnership Income Tax Return. Limited Liability Partnerships (LLPs) also must pay an annual fee equal to the minimum annual corporate tax.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. LLCs also must pay an annual fee equal to the minimum annual corporate tax. Furthermore, Rhode Island LLCs must file an annual report with the Rhode Island SOS. See Rhode Island LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Rhode Island corporation taxes. Finally, corporations must file an annual report with the Rhode Island SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Rhode Island taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, consider your own interests, skills, resources, availability, and the reasons you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Iowa Secretary of State (SOS). You can check for available names by doing a business entities search on the SOS website. You can reserve an available name for 120 days by filing an Application for Reservation of Name. You can also renew a name reservation before it expires. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Iowa and How to Form a Corporation in Iowa for more information.
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must file a trade name form with the county recorder in the county where your business is located. Check the website for the relevant county for forms and additional information.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Iowa, you must register with the Department of Revenue (DOR) to collect sales tax. If your business will have employees, you must register with the DOR for employer withholding taxes. You can register for both types of tax and other business taxes, either online or on paper using Form 78-005, Iowa Business Tax Permit Registration.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Ultimately, however, there is a vast number of regulatory licenses and permits. For help figuring out which regulatory licenses and permits may apply to your particular business, check IASourceLink's Business License Information Center (IASourceLink is part of the Iowa Economic Development Authority). For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The Iowa Professional Licensing Bureau oversees the regulatory boards and licensing for about a half dozen professions. Other professional and occupational licenses are handled by other state agencies. For example, the Iowa Department of Public Health’s Bureau of Professional Licensure handles licensing for roughly 20 health-related professions, such as Chiropractic, Dietetics, Optometry, and Podiatry.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Iowa taxes every kind of business. See Iowa State Business Income Tax for more information on state business taxes in Iowa.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form IA 1040).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Iowa partnerships must file Form IA 1065, Partnership Return of Income.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Iowa LLCs also are required to file a biennial report with the Iowa SOS. See Iowa LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Iowa corporation taxes. And, finally, corporations must file a biennial report with the Iowa SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Iowa taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, consider your own interests, skills, resources, availability, and the reasons you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Kentucky Secretary of State (SOS). You can check for available names by doing a name availability search on the SOS website. You can reserve an available name for 120 days by filing a Reservation or Renewal of Reserved Name. You can also renew a name reservation. There are certain name requirements for LLCs and corporations (like including a word such as “L.L.C.” for LLCs or “Company” for corporations). See How to Form an LLC in Kentucky and How to Form a Corporation in Kentucky for more information.
If your business is a partnership that uses a business name that’s different from the surnames of the individual partners, you must file a Certificate of Assumed Name with the SOS. If your business is a sole proprietorship that uses a business name that’s different from your legal name, you must file the Certificate of Assumed Name with the county clerk in the county where you are a resident.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Kentucky, you must register with the Department of Revenue (DOR) to collect sales tax. If your businesses will have employees, you must register with the DOR for employer withholding taxes. You can register for both types of tax, as well as other business taxes, online at Kentucky’s One Stop Business Portal.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. Kentucky does not have a general business license issued by the state. However, many types of businesses either can or must get one or more licenses or permits. Kentucky sometimes refers collectively to all of these licenses and permits as “occupational.” Regulatory licenses and permits may cover particular types of business services, the sale of particular products, health and safety, and the environment, among other things. For help figuring out which state regulatory licenses and permits may apply to your particular business, check the Occupational Licenses/Permits section of the Kentucky One Stop Business Portal. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The Occupational Licenses/Permits section of the Kentucky One Stop Business Portal lists many—though not all—of these professions and occupations.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Kentucky taxes every kind of business. This includes a relatively unusual Limited Liability Entity Tax (LLET). See Kentucky State Business Income Tax for more information on state business taxes in Kentucky.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 740).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Kentucky partnerships also must file some version of Form 765. Limited Partnerships and Limited Liability Partnerships are liable for the LLET.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. LLCs are liable for the LLET. Kentucky LLCs also are required to file an annual report with the Kentucky SOS. See Kentucky LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Kentucky corporation taxes and the LLET. And, finally, corporations must file an annual report with the Kentucky SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Kentucky taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Colorado Secretary of State (SOS). You can check for available names by doing a business entity search on the SOS website. You can reserve an available name for 120 days by filing a Statement of Reservation of Name. You can also renew a previously filed reservation by filing a Statement of Renewal of Reservation of Name. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Colorado and How to Form a Corporation in Colorado for more information.
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must file a document with the SOS. For sole proprietorships, file a Statement of Trade Name of an Individual, and for partnerships file a Statement of Trade Name. Forms for both of the filings are available from the SOS.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Colorado, you must register with the Department of Revenue (DOR) to collect sales tax. If your business will have employees, you must register with the DOR for employer withholding taxes. You can register for both types of tax online via MyBizColorado or on paper using Form CR0100AP.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For many licenses, you can find information on the Colorado Department of Regulatory Agencies (DORA) website. In addition, check the Colorado Small Business Development Center (SBDC) Network for its Resource Book on starting a Colorado Business. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The DORA website includes information for these kinds of licenses.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Colorado taxes every kind of business. See Colorado State Business Income Tax for more information on state business taxes in Colorado.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 104).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Colorado partnerships also must file Form 106.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Colorado LLCs also are required to file a periodic report (known in other states as an annual report) with the Colorado SOS. See Colorado LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Colorado corporation taxes. And, finally, corporations must file a periodic report (known in other states as an annual report) with the Colorado SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Colorado taxes, there are always federal income and employer taxes. For more information, check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Arizona Corporation Commission (AZCC). You can check for available names by doing a business entity search on the AZCC website. You can reserve an available name for 120 days by filing an application to reserve an entity name. You can file online at the AZCC website. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Arizona and How to Form a Corporation in Arizona for more information.
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you have the option to register a trade name for your business with the Arizona Secretary of State (SOS). To register, use the Trade Names Registration Application available on the SOS website.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Arizona, you must register with the Arizona Department of Revenue (DOR) to collect the transaction privilege tax (in most other states, this is known as sales tax). If your business will have employees, you must register with the DOR for employer withholding taxes. You can register for both types of tax, as well as other business taxes and licenses, online via the DOR’s AZTaxes website.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
The Licensing Guide section of the DOR website includes basic information about several important Arizona business licenses and a link to a guide to Arizona business taxes. Other important regulatory licenses and permits are issued by other state agencies, such as the Arizona Department of Environmental Quality and the Arizona Department of Health Services. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can foreseeably afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Arizona taxes every kind of business. See Arizona State Business Income Tax for more information on state business taxes in Arizona.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 140).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Arizona partnerships also must file Form 165, Arizona Partnership Income Tax Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. See Arizona LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Arizona corporation taxes. And, finally, corporations must file an annual report with the Arizona SCC.
If you have employees, you must also deal with state employer taxes.
And, apart from Arizona taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the West Virginia Secretary of State (SOS). You can check for available names by doing a business organization search on the SOS website. You can reserve an available name for 120 days by filing an Application for Name Reservation. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in West Virginia and How to Form a Corporation for more information.
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must file an Application for Trade Name (DBA) with the SOS.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in West Virginia, you must register with the State Tax Department (STD) to collect sales tax. If your business will have employees, you must register with the STD for employer withholding taxes. You can register for both types of tax, as well as many other business taxes, using Form BUS-APP, which combines all the primary state business tax registration forms.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Different state licenses and permits are issued by different agencies. One place to go for more information is the Licenses and Permits section of the state business portal. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. You can get information about the state agencies that license and regulate many professions and occupations by going to the Licenses and Permits section of the state business portal for more details.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
West Virginia taxes every kind of business. See West Virginia State Business Income Tax for more information on state business taxes in West Virginia.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form IT-140).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, West Virginia partnerships also must file Form SPF-100, West Virginia Income Tax Return S Corporation & Partnership (Pass-Through Entity). West Virginia partnerships are subject to the state’s business franchise tax.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. West Virginia LLCs are subject to the state’s business franchise tax. West Virginia LLCs also are required to file an annual report. See West Virginia LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to West Virginia business franchise tax and state corporation taxes. And, finally, corporations must file an annual report with the West Virginia SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from West Virginia taxes, there are always federal income and employer taxes.
Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the South Dakota Secretary of State (SOS). You can check for available names by doing a business name search on the SOS website. You can reserve an available name for 120 days by filing an Application for Reservation of Name form with the South Dakota SOS. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in South Dakota and How to Form a Corporation in South Dakota for more information.
Is your business is a sole proprietorship or partnership that uses a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership)? If so, you must register a DBA (Doing Business As) with the South Dakota Secretary of State.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in South Dakota, you must register with the Department of Revenue (DOR) to collect sales tax. You can register online at the DOR’s South Dakota Tax Application website.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
The Governor’s Office of Economic Development (GOED) has a downloadable document that lists licenses issued by many state agencies, such as the Departments of Agriculture, Environment and Natural Resources, Health, and Labor & Regulation. You can apply for some important state business licenses relating to taxes by completing a South Dakota Tax Application. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The Occupational Licensing Agencies section of the South Dakota Department of Labor and Regulation website lists many state agencies and boards that regulate various professions and occupations. Similarly, the South Dakota Boards and Commissions Portal provides a searchable list of licensing agencies and boards.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
South Dakota is one of just four states that have no corporate tax and no personal income tax. See South Dakota State Business Income Tax for more information on state business taxes in South Dakota.
South Dakota LLCs and corporations must file annual reports with the South Dakota SOS. Also, apart from South Dakota taxes, there are federal income and employer taxes.
Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>An LLC is a business entity, which means it is separate from its members—the term used for people who own the LLC. The LLC, not the members, owns and manages the business and real estate. One advantage of an LLC is that you have a great deal of flexibility in deciding how to manage the company and how to split profits among co-owners.
Another option is a corporation, which—like an LLC—provides liability protection for its owners. However, a corporation is generally more complicated to form, operate, and maintain than an LLC. Additionally, depending on your situation, corporations may not provide as many tax benefits for your business as an LLC.
If you decide you don’t want to create a separate legal structure, you can operate your business as a sole proprietor, or as a partnership if you are in business with others. While both a sole proprietorship and partnership are the easiest businesses to own and operate, they don’t provide owners with personal protection from the debts and liabilities of the business. Business insurance provides some protection, but many real estate company owners want more because of the level of risk involved with owning and operating a real estate company.
One of the main reasons to form an LLC or a corporation is to limit your personal liability. In the absence of a business structure, your personal assets could be on the line if the business is sued, or if money is needed to satisfy the debts of the business. With an LLC and a corporation, personal assets—like your home or individual bank account—are not at risk and business creditors can only go after the business entity and its holdings and assets.
The only exception would be if there was some type of wrongdoing or a real lack of separation between the business and its owners. In those situations, a court can “pierce the corporate veil” and hold the LLC or corporation owners personally responsible for the debts of the business.
One benefit of LLCs for many businesses is pass-through taxation. With LLCs, profits “pass through” the business to the members who report their individual share of earnings on their personal income tax returns. The LLC itself does not pay any tax on those earnings. Moreover, owners of LLCs may benefit from the new qualified business income (QBI) deduction, which allows taxpayers to deduct 20% of LLC income from their personal taxes.
Corporations, on the other hand, face two layers of taxation. The business pays a tax on earnings at the corporate level, and then the same earnings are taxed again when distributed as income or dividends to the owners or shareholders. Income from regular corporations does not qualify for the QBI deduction.
Another potential benefit of an LLC is that there are no tax consequences when you transfer property into the LLC. This is unlike a corporation where you have to pay a corporate tax when you transfer property into the corporation. The amount taxed is the difference between the value of the property when you originally purchased it and the value at the time of the transfer to the corporation.
To gain all the protections and tax benefits of an LLC for your real estate investment business, it is best to legally form the company before acquiring your first piece of property. The benefits of limited liability begin once the business is legally formed. If you already have property, it is possible to form the LLC and then transfer the property to the business. However, this is more complicated and you should consult with an attorney if you are in this situation.
You will also have to decide where to form your LLC, particularly if you plan to invest in real estate located in different states. It is common to form the LLC in the state where you live or where your business is located, but there can be benefits to forming your LLC in a different state. Delaware, Nevada, and Wyoming, for example, are known for lower taxes, reduced business formalities, and simpler filing processes. Registering your LLC in a different state from where you live complicates the process though so it is best to consult with an attorney in the state where you want to file.
]]>First, explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Massachusetts Secretary of State (SOS). Names can be checked for availability by searching the Massachusetts SOS business entity database. You can reserve an available name for 60 days by filing an Application of Reservation of Name with the Massachusetts SOS. You can also renew the reservation for an additional 60 days. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Massachusetts and How to Form a Corporation in Massachusetts for more information.
Will your Massachusetts sole proprietorship or partnership use a business name that is different from the surname of the business owner (for a sole proprietorship) or individual partners (for a partnership)? If so, you must file a notarized assumed name certificate with the city or town where you will do business. The certificate must be renewed every four years.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Massachusetts, you must register for a sales and use tax registration certificate with the Massachusetts Department of Revenue (DOR). If you will have employees in Massachusetts, you must register with the DOR for employer withholding. For both kinds of registration, you can use the online MassTax Connect.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check the Licensing and Permits of the state website. The section provides some information about local licenses and permits, but you should also check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. You can find a list of state-issued professional and occupational licenses on the Professional Licenses & Permits of the state website.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Massachusetts taxes every kind of business. See Massachusetts State Business Income Tax for more information on state business taxes in Massachusetts.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 1).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, if a partnership has a usual place of business in Massachusetts or federal gross income of more than $100 for its tax year, it must also file Massachusetts Form 3, Partnership Return of Income.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, the LLC itself must file an annual report with the SOS. See Massachusetts LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Massachusetts corporation taxes. And, finally, corporations must file an annual report with the SOS.
If you have employees, you must also deal with employer taxes.
And, apart from Idaho taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>First, explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Business Registration Division (BREG) of the Hawaii Department of Commerce and Consumer Affairs (DCCA). You can check for available names by doing a business entity search on the BREG website. You can reserve an available name for 120 days by filing an Application for Reservation of Name with BREG. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Corporation” for corporations). See How to Form an LLC in Hawaii and How to Form a Corporation in Hawaii for more information.
If you are forming a Hawaii general partnership you must file Form GP-1, Registration Statement of Partnership, with BREG. If your business is a sole proprietorship that uses a business name that is different from the legal name of the business owner, you have the option to register a trade name with BREG.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Hawaii, you must register with the Department of Taxation (DOT) to collect the general excise tax (GET; known elsewhere as sales tax). There is a one-time fee to register for the GET. If your business will have employees, you must register with the DOT for employer withholding taxes. You can register for both the GET and withholding taxes, as well as other business taxes, either online via Hawaii Business Express (HBE) or on paper using Form BB-1, Basic Business Application.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. Unlike some other states, Hawaii doesn’t have a required general business license for all businesses. However, some businesses may be required to obtain permits from state agencies. For example, a business may need a permit related to the environment or health and safety issued by the Department of Health. In addition, some required licenses are issued locally — for more information, check the websites for any cities or counties where you will have a business location.
Professional and occupational licenses. These cover people who work in various fields. The DCCA’s Professional and Vocational Licensing Division (PVL) is responsible for licensing for 49 different professions and vocations. The PVL website lists information for each of these professions and vocations.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Hawaii taxes every kind of business. See Hawaii State Business Income Tax for more information on state business taxes in Hawaii.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form N-11).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Hawaii partnerships also must file Form N-20, Partnership Return of Income.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Hawaii LLCs also are required to file an annual report with BREG. See Hawaii LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Hawaii corporation taxes. And, finally, corporations must file an annual report with BREG.
If you have employees, you must also deal with state employer taxes.
And, apart from Hawaii taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the DC Department of Consumer and Regulatory Affairs (DCRA). You can check for available names by doing a Business License Verification on the DCRA website. You can reserve an available name for 120 days. File name reservations online at the DCRA website or on paper by filing Form NR-1, Application for Name Reservation. There are certain name requirements for LLCs and corporations (like including a word such as “L.L.C.” for LLCs or “Company” for corporations). See How to Form an LLC in the District of Columbia and How to Form a Corporation for more information.
Is your business is a sole proprietorship or partnership that uses a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership)? If so, you have the option to register a trade name with the DCRA.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Note: All business entities in the District of Columbia need some kind of business license (see next section).
Tax Registration. If you will be selling goods in Washington, DC, you must register with the Office of Tax and Revenue (OTR) to collect sales tax. If your business will have employees, you must register with the OTR for employer withholding taxes. You can register for both types of tax, among others, either online via the DC Taxpayer Service Center (TSC) or on paper using Form FR-500, Combined Registration Application for Business DC Taxes/Fees/Assessments.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Basic Business License (BBL). All businesses operating in the District of Columbia must be licensed in some way by the D.C. government. In many cases, this means getting a Basic Business License (BBL). However, some businesses where the principals are required to be licensed by a certification board or body—which often means licensed professionals (see below)—are not required to have a BBL. BBLs are issued by the Department of Consumer and Regulatory Affairs (DCRA).
Regulatory licenses and permits. These cover areas such as:
Your particular business may need a regulatory license or permit. For example, you may need an environmental permit issued by the Department of Energy & Environment.
Professional and occupational licenses. These cover people who work in various fields. The DCRA's Occupational & Professional Licensing Administration (OPLA) licenses, for example, certified public accountants, architects, real estate agents, master electricians, plumbers, and asbestos workers. However, other professions and occupations are licensed through agencies such as:
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
The District of Columbia taxes every kind of business. All forms of unincorporated business, such as sole proprietorships, general partnerships, and LLCs, that have at least a certain minimum amount of gross receipts and are not otherwise exempt, are subject to D.C.’s Unincorporated Business Franchise Tax (UBFT). To pay the Unincorporated Business Franchise Tax, use Form D-30.
Corporations are subject to D.C.’s Corporate Franchise Tax. To pay the Corporate Franchise tax, use Form D-20.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form D-40). They are also subject to the UBFT.
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, some District of Columbia partnerships also must file Form D-65, Partnership Return of Income. They are also subject to the UBFT.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves are subject to either the UBFT or the Corporate Franchise Tax. D.C. LLCs classified as corporations for federal tax purposes also have to file a D.C. corporate tax form. Furthermore, District of Columbia LLCs are required to file a biennial report with the DCRA. See District of Columbia LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay income tax on his or her personal state tax return. Moreover, the corporation itself is subject to the District of Columbia’s Corporate Franchise Tax. And, finally, corporations must file a biennial report with the DCRA.
If you have employees, you must also deal with state employer taxes.
And, apart from District of Columbia taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Pennsylvania Department of State (DOS). You can check for available names by doing a business entity search on the DOS website. You can reserve an available name for 120 days by filing a Name Reservation/Transfer of Reservation form with the Pennsylvania DOS. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Pennsylvania and How to Form a Corporation in Pennsylvania for more information.
Sole proprietorships and partnerships in Pennsylvania must file a fictitious name registration with the Pennsylvania DOS if they use a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership).
If you plan on doing business online, you may want to register your business name as a domain name. See Domain Names and Trademarks FAQ for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Pennsylvania, you must apply for a sales tax license. If you will have employees in Pennsylvania, you must register for employer withholding tax. You can accomplish both types of registrations, and many others, by completing Form PA-100, Pennsylvania Enterprise Registration.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
You can apply for some of the most important of these licenses and permits by filing Form PA-100, Pennsylvania Enterprise Registration. The form contains a section for business license applications. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The DOS website has a Professional Licensing section that contains webpages listing state regulatory board contact information and other general information about many of the state’s professional regulatory boards.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Pennsylvania taxes every kind of business. See Pennsylvania State Business Income Tax for more information on state business taxes in Pennsylvania.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (PA-40).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Pennsylvania partnerships also must file Form PA-20S/PA-65, PA S Corporation/Partnership Information Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. Pennsylvania LLCs providing certain professional services also must file a certificate of annual registration with the Pennsylvania DOS. See Pennsylvania LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Pennsylvania corporation taxes.
If you have employees, you must also deal with state employer taxes. And, apart from Pennsylvania taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Delaware Division of Corporations (DOC). You can check for available names by doing a business name search on the DOC website. You can reserve an available name for 120 days by filing a Name Reservation Application either online or on paper. You can also renew (re-reserve) a name reservation after first applying for one. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Delaware and How to Form a Corporation in Delaware for more information.
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must file a trade name certificate with the county where your business is located. File with the Prothonotary’s office located in the county’s Superior Court.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Delaware, you must register with the Division of Revenue (DOR) and, if liable, pay the state’s gross receipts tax. If your businesses will have employees, you must register with the Division of Revenue (DOR) for employer withholding taxes. You can register for both kinds of taxes online using Delaware’s One Stop Business Registration and Licensing System. You can also register on paper using Form CRA, Combined Registration Application.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
State business license. Every Delaware business is required to get an annual state business license. The license is issued by the Division of Revenue. You can register for the license online at the One Stop Business Licensing and Registration Service. Depending on your specific type of business you may also need other licenses or permits issued by specific state agencies, such as the Division of Public Health within Delaware Health and Social Services. In addition, some required licenses are issued locally, so be sure to check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The Division of Professional Regulation (DPR) oversees the state’s many professional regulatory boards. The homepage of the DPR website lists virtually all of the regulated professions.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Delaware taxes every kind of business. This includes a special state tax that applies to LLCs and most partnerships. See Delaware State Business Income Tax for more information on state business taxes in Delaware.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 200-01).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Delaware partnerships also must file Form 300, Partnership Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Unlike most states, Delaware does not require LLCs to file annual reports. However, the state does require LLCs to pay an annual tax. See Delaware LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Delaware corporation taxes. And, finally, corporations must file an annual report with the Delaware DOC (which is associated with the payment of the state’s franchise tax).
If you have employees, you must also deal with state employer taxes.
And, apart from Delaware taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Connecticut Secretary of State (SOS). You can check for available names by doing a business entity search on the SOS CONCORD system. You can reserve an available name for 120 days by filing an Application for Reservation of Name. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Connecticut and How to Form a Corporation in Connecticut for more information.
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must register a trade name with the clerk of the city or town where you do business. For more information, check the website for the relevant city or town.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Connecticut, you must register with the Department of Revenue Services (DRS) to collect sales tax. If your business will have employees, you must register with the DRS for employer withholding taxes. You can register for both types of tax, as well as other business taxes, either online via the Connecticut Taxpayer Service Center (TSC) or on paper using Form REG-1, Business Taxes Registration Application.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Trade licenses and permits. These cover areas such as:
Check with the Department of Consumer Protection for more information. For information about local licenses and permits, check the websites for any cities or counties where you will do business
Professional and occupational licenses. These cover people who work in various fields. For more information, check with the Occupational & Professional Licensing Division of the Department of Consumer Protection.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Connecticut taxes every kind of business. See Connecticut State Business Income Tax for more information on state business taxes in Connecticut.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form CT-1040).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Connecticut partnerships also must file Form CT-1065/CT-1120SI, Connecticut Composite Income Tax Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Connecticut LLCs classified as partnerships are also subject to the state’s biennial Business Entity Tax. In addition, Connecticut LLCs also are required to file an annual report with the Connecticut SOS. See Connecticut LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Connecticut corporation taxes. And, finally, corporations must file an annual report with the Connecticut SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Connecticut taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the South Carolina Secretary of State (SOS). You can check for available names by doing a business name search on the SOS website. You can reserve an available name for 120 days by filing an Application to Reserve Name form with the South Carolina SOS. There are different forms for LLCs and corporations. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in South Carolina and How to Form a Corporation in South Carolina for more information.
Sole proprietorships and partnerships in South Carolina have the option to register an assumed name with the South Carolina SOS if they use a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership).
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be engaged in retail sales in South Carolina, you must apply for a retail license. If you will have employees in South Carolina, you must register for employer withholding tax. Both registrations are handled by the South Carolina Department of Revenue (DOR). You can accomplish both types of registrations (among others) by using the state’s MyDORWAY website.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
You can find information about which licenses you may need and which agencies issue them by going to the Licenses, Permits, & Registration section of the state website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. Professional licensing is handled through the South Carolina Department of Labor, Licensing and Regulation (LLR). More specifically, the licensing is handled by the LLR’s Division of Professional and Occupational Licensing (POL).
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
South Carolina taxes every kind of business. See South Carolina State Business Income Tax for more information on state business taxes in South Carolina.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (SC1040).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, South Carolina partnerships also must file Form SC1065, Partnership Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. Unlike most other states, South Carolina LLCs are not required to file an annual report. See South Carolina LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to South Carolina corporation taxes including a license fee. An annual report must be included as part of the corporation’s tax return.
If you have employees, you must also deal with state employer taxes.
And, apart from South Carolina taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Ohio Secretary of State (SOS). You can check for available names by doing a Business Search by Name on the SOS website. You can reserve an available name for 180 days by filing a Name Reservation with the Ohio SOS. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Ohio and How to Form a Corporation in Ohio for more information.
Sole proprietorships and partnerships in Ohio must file a Fictitious Name Registration with the Ohio SOS if they use a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership).
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Ohio, you must register for a vendor’s license with the Ohio Department of Taxation (DOT). The license is required in order to collect state sales tax. If you will have employees in Ohio, you must register with the DOT for employer withholding tax. You can register for both sales tax collection and withholding tax, as well as other business taxes, via the Ohio Business Gateway.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check the Business section of the state's website.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Ohio has a Commercial Activity Tax (CAT) that applies to most Ohio businesses. See Ohio State Business Income Tax for more information on state business taxes in Ohio.
Sole proprietorships. Apart from CAT, sole proprietorships pay only federal taxes on business income.
Partnerships. Apart from CAT, partnerships pay only federal taxes on business income.
LLCs. Apart from the CAT, LLC members pay only federal taxes on business income. Unlike most states, Ohio does not require LLCs to file annual reports. See Ohio LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. In addition, the corporation itself is subject to CAT. Unlike most states, Ohio does not require corporations to file annual reports.
Apart from Ohio taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, which might include general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>You'll need to decide what type of ownership structure makes sense for your new business. Most states have information on their secretary of state (SOS) website about the different types of business entities you can choose from—solo proprietorship, LLC, corporation, and partnership. There are also many online and other resources available to help you understand your choices.
Figuring out what type of ownership structure best suits your needs will depend on the type of business you have, the number of owners, and your financing. Although many entrepreneurs make this decision on their own, you may have questions about liability, tax, ownership, and more that you should discuss with a lawyer or an accountant before you decide. For more information, see Choosing the Best Ownership Structure for Your Business.
Choosing a name for your business is another initial step you will need to take. While there are some legal requirements related to naming your business, this can usually be done quite easily without the help of a lawyer.
The first thing you'll need to do is check whether the name you want is available in the state where you plan to form and operate your business. Most states have a business name database on their Secretary of State (SOS) website with the names of all the businesses that are already registered in their state. You should find instructions there about checking for name availability and how to reserve your business name if you decide to do that.
Once you’ve determined that the name you want to use is available in your state, you'll want to make sure it's not a registered trademark. You can do this by checking online with the U.S. Patent and Trademark Office’s Trademark Electronic Search System (TESS). Are you planning on having a business website? If so, you should also check for domain name conflicts. See Make Sure Your Proposed Business Name Is Available for more information on naming your business.
Once you've decided on the business structure and a name for your new business, you're ready to form your business entity. If you’ve decided on a sole proprietorship or partnership, you likely won’t need to file any forms or pay any fees to become official (although partners should enter into a partnership agreement).
If you've decided you want to form an LLC or corporation, you’ll need to file organizational documents with the state and pay a filing fee. Most SOS offices have helpful information and forms that you can use to create your LLC or corporation. These forms generally require only very basic information, like the name and the address of the new business, the name and address of your registered agent, and a few other items. There are usually detailed instructions on the SOS website about how to complete the form, pay the filing fee, and file the document with the state. There are also online resources and companies that can form your business entity for you.
In addition to registering your business entity with the SOS’s office, you'll need to create bylaws if you're forming a corporation, or an operating agreement if you're forming an LLC. These are internal documents that lay out the rules and procedures for your organization, like how to hold meetings, take action, or dissolve and wind up your business. See Nolo.com for more information and resources to create these documents on your own, including books, articles, and online products.
As part of getting your business started, you'll want to open a business bank account and keep all money for your new business separate from your personal or other business finances. To do this, you'll need an employer identification number (EIN) from the IRS, which you can apply for online. Once you have your EIN and the stamped copy of your formation documents from the SOS, you can go to a local bank and open a business account.
If you're a sole proprietorship or single-member LLC and don’t plan on having employees, you aren’t required to have an EIN, although it’s considered good business practice. For more information, see Which Type of Business Entity Needs an Employer Identification Number (EIN)?
Once the formation tasks are done, you can focus your energy on getting your business up and running, figuring out the best way to sell your services or products, and creating the online presence you want. Depending on what your business does, you may need to create contracts or different types of agreements for the services or products your business offers.
You’ll also need to get any required permits and licenses as well as proper insurance for your business. There are a lot of self-help resources available which can help you get through these tasks without having to hire a lawyer.
At some point, you may run into more complex situations or legal issues with potentially serious consequences. This might occur in the context of a possible employee lawsuit or bringing on investors or buying another business. The cost of hiring an experienced lawyer to help out with more complicated situations will be more than offset by the costs you may incur if you make a mistake. Most small businesses encounter some situation where they'll need the help of an experienced small business lawyer.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Minnesota Secretary of State (SOS). You can check for available names by doing a search on the SOS website. You can reserve an available name for 12 months by filing a Request for Reservation of Name with the Minnesota SOS. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Minnesota and How to Form a Corporation in Minnesota for more information.
Sole proprietorships and partnerships in Minnesota must file a Certificate of Assumed Name with the Minnesota SOS if they use a business name that is different from the names of the business owner (for a sole proprietorship) or individual partners (for a partnership). Assumed names expire at the end of each calendar year and must be renewed annually.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Sole proprietorship. To establish a sole proprietorship in Minnesota, you don’t need to file any organizational documents with the state. For more information, see How to Establish a Sole Proprietorship in Minnesota.
Partnership. To create a general partnership in Minnesota, you don’t need to file any organizational documents with the state. Although not legally required, all partnerships should have a written partnership agreement. The partnership agreement can be very helpful if there is ever a dispute among the partners. For more information, see How to Form a Partnership. To form a limited liability partnership (often used by professionals), you must file a Statement of Qualification with the Minnesota SOS. For more information, see Why Choose a Limited Liability Partnership.
LLCs. To create an LLC in Minnesota, you must file articles of organization with the Minnesota SOS. You will also need to appoint a registered agent in Minnesota for service of process. In addition, while not required by law, you also should prepare an operating agreement to establish the basic rules about how your LLC will operate. The operating agreement is not filed with the state. For more information, see How to Form an LLC in Minnesota and How to Form a Professional LLC in Minnesota (for professionals).
Corporations. To create a corporation in Minnesota, you must file articles of incorporation with the Minnesota SOS. You will also need to appoint a registered agent in Minnesota for service of process. Although not legally required, you also should prepare bylaws to establish your corporation’s internal operating rules. Bylaws are not filed with the state. S Corporations must also file IRS Form 2553, Election by a Small Business Corporation, with the IRS. For more information, see How to Form a Corporation in Minnesota.
Tax Registration. If you will be selling goods in Minnesota, you must register to collect sales tax with the Minnesota Department of Revenue (DOR). If you will have employees in Minnesota, you must register with the DOT for employer withholding tax. For both types of tax, you can register online.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, Minnesota’s Bureau of Business Licenses (BBL), also known as License Minnesota, has information about the state’s many business licenses. In addition, the BBL publishes a comprehensive State of Minnesota Directory of Licenses and Permits. You can also find more extensive information online by going to the BBL’s License Minnesota (elicense) website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. You can get information about the state agencies that license and regulate many professions and occupations from the State Agencies section of the License Minnesota website.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Minnesota taxes every kind of business. See Minnesota State Business Income Tax for more information on state business taxes in Minnesota.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form M1).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, most partnerships also must file Form M3, Partnership Return, and also may be liable for a minimum fee.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, the LLC itself must file an annual report (also known in Minnesota as an annual renewal) with the Minnesota SOS. See Minnesota LLC Annual Report and Tax Requirements for more information. LLCs with property, payroll, sales, or receipts above a certain level also must pay a separate minimum fee.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Minnesota corporation taxes. And corporations with property, payroll, sales, or receipts above a certain level also must pay a so-called minimum fee. Finally, corporations must file an annual report (also known in Minnesota as an annual renewal) with the Minnesota SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Minnesota taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Here’s an overview of the key steps you’ll need to take to start your own business in Maine.
Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Maine Secretary of State (SOS). Names can be checked for availability by searching the Maine SOS corporate name search. You can reserve an available name for 120 days by filing an Application for Reservation of Name with the Maine SOS. There are also certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Maine and How to Form a Corporation in Maine for more information.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Maine, you must register your business with Maine Revenue Services (MRS). If you will have employees in Maine, you must register with MRS and the Maine Department of Labor (DOL). For both kinds of registration, you can use the MRS/DOL application for tax registration.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
General licenses needed to operate a business are handled at the town or city level. You should contact the town or city office where your business is located for more information. You can find contact information for a particular town office through the Maine Local Government Portal.
Professional and occupational licenses. These cover people who work in various fields. You can find a list of state-issued professional and occupational licenses at the Resources by Profession section of the state website.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Maine taxes every kind of business. See Maine State Business Income Tax for more information on state business taxes in Maine.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 1040ME).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. If your partnership has non-Maine partners, you must also file Form 941P-ME for the partnership.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, the LLC itself must file an annual report and pay an $85 filing fee. See Maine LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Maine corporation taxes. And, finally, corporations must file an annual report and pay an annual filing fee.
If you have employees, you must also deal with employer taxes.
And, apart from Maine taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Florida Department of State (DOS). You can check for available names by doing a business entity search on the DOS website. You cannot reserve a name before formally creating your business with the state. See How to Form an LLC in Florida and How to Form a Corporation in Florida for more information.
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must register a fictitious name with the DOS. You can register online or on paper.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Florida, you must register with the Department of Revenue (DOR) to collect sales tax. You can register online on the DOR website or on paper using Form DR-1, Florida Business Tax Application.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
General business licenses. Most Florida businesses are required to obtain a general business license, otherwise known as a business tax receipt, which is associated with a local business tax. You apply for and renew a business tax receipt through the county or, in some cases, the city where your business is located. Check the website for your county and city for more details on how to file.
Professional and occupational licenses. These cover people who work in various fields as well as certain types of businesses. Check the Get a Business License section of the state's website for more detailed information.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Because Florida does not have a personal income tax, owners of some forms of business will not owe state tax on their business income. See Florida State Business Income Tax for more information on state business taxes in Florida.
Sole proprietorships. Pay federal taxes on business income as part of their personal federal income tax returns.
Partnerships. Partners pay federal taxes on partnership income.
LLCs. Members pay federal taxes on their share of LLC income. In addition, if an LLC is classified as a corporation for federal tax purposes, the LLC itself also must file a state corporation tax return. Florida LLCs also are required to file an annual report with the Florida DOS. See Florida LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay federal taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay federal income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Florida corporation taxes. And, finally, corporations must file an annual report with the Florida DOS.
Apart from Florida taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Nebraska Secretary of State (SOS). You can check for available names by doing a search on the SOS website. You can reserve an available name for twelve months by filing an Application for Reservation of Name with the Nebraska SOS (there are separate forms for LLCs and corporations). You can reserve a name for up to 120 days. There are also certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Nebraska and How to Form a Corporation in Nebraska for more information.
Sole proprietorships and partnerships in Nebraska have the option to file a Trade Name Application with the Nebraska SOS if they use a business name that is different from the name of the business owner (for a sole proprietorship) or individual partners (for a partnership). Trade names expire after ten years.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Nebraska, you must register with the Nebraska Department of Revenue (DOR) for a sales tax permit. If you will have employees in Nebraska, you must register with the DOR for employer withholding tax. For both types of registration, you can use Form 20, Nebraska Tax Application.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check the state's Business Licensing Resources section. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. In many cases, you can get the basic licensing information by going to the Professions & Occupations section of the Nebraska Department of Health and Human Services (DHHS) website. For professions not listed on the DHHS website, such as doctors, lawyers, accountants, architects, and engineers, you’ll need to check the website for the state regulatory board for your profession (for example, the Nebraska Board of Engineers and Architects).
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Nebraska taxes every kind of business. See Nebraska State Business Income Tax for more information on state business taxes in Nebraska.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 1040N).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, some partnerships also must file Form 1065N, Nebraska Return of Partnership Income.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, the LLC must file a biennial report with the Nebraska SOS in odd-numbered years. Nebraska LLC’s taxed as corporations must also file a state corporation tax return. See Nebraska LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation is subject to Nebraska corporation taxes. Finally, corporations must file a biennial report with the Nebraska SOS in even-numbered years. The reporting requirement includes paying a corporate occupation tax.
If you have employees, you must also deal with state employer taxes.
And, apart from Nebraska taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Oregon Secretary of State (SOS). You can check for available names by doing a business name search on the SOS website. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations).
Sole proprietorships and partnerships in Oregon must file an assumed name with the Oregon SOS if they use a business name that is different from the name of the business owner (for a sole proprietorship) or individual partners (for a partnership). To file, you can use the SOS’s Oregon Business Registry.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will have employees in Oregon, you must register with the Department of Revenue (DOR) for a state payroll account in relation to paying employer withholding tax. You can register online through the Oregon Business Registry.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check the SOS’s searchable online license directory which covers well over a thousand licenses. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. Apart from the sites mentioned just above for regulatory licenses, you can also check the licenses section of the state website for certain information regarding professional licensing.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Oregon taxes every kind of business. See Oregon State Business Income Tax for more information on state business taxes in Oregon.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 40).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Oregon partnerships also must file Form 65, Oregon Return of Income, and usually will owe a minimum $150 excise tax.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, most LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. The LLC also must file an annual report with the Oregon SOS. See Oregon LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Oregon corporation taxes. Finally, corporations must file an annual report with the Oregon SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Oregon taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also evaluate the likelihood of success based on the interests of your community, and whether your business idea will meet an unmet need. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to determine your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Investors and lenders will want to review your business plan before providing financial assistance, and you can be prepared by drafting a plan in advance of submitting funding requests.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Mississippi Secretary of State (SOS). You can check for available names by doing a business name search on the SOS website. You can reserve an available name for 180 days by filing an Application for Name Reservation with the Mississippi SOS. You will need to register with the Mississippi SOS’s online filing system to get the name reservation application form. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Mississippi and How to Form a Corporation in Mississippi for more information.
Sole proprietorships and partnerships in Mississippi have the option to file a Fictitious Business Name Registration with the Mississippi SOS if they use a business name that is different from the names of the business owner (for a sole proprietorship) or individual partners (for a partnership). Fictitious names expire after five years and may be renewed indefinitely.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Mississippi, you must register to collect sales tax with the Mississippi Department of Revenue (DOR). If you will have employees in Mississippi, you must register with the DOR for employer withholding tax. For both types of tax, you can register online using the Mississippi Taxpayer Access Point (TAP).
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check the section covering “Do I need a business license?” on the Mississippi Small Business Development Center FAQ page. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. You can get information about the state agencies that license and regulate many professions and occupations from the Mississippi Department of Health.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Mississippi taxes every kind of business. See Mississippi State Business Income Tax for more information on state business taxes in Mississippi.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 80-105).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, most partnerships also must file Form 84-105, Pass-Through Entity Tax Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, the LLC itself must file Form 84-105, Pass-Through Entity Tax Return. Furthermore, the LLC also must file an annual report with the Mississippi SOS. See Mississippi LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Mississippi corporation taxes and a corporate franchise tax. Finally, corporations must file an annual report with the Mississippi SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Mississippi taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options for your business, which may include general liability insurance to protect you against claims relating to bodily injury or property damage, or malpractice insurance for professionals such as doctors and lawyers. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Kansas Secretary of State (SOS). You can check for available names by doing searches of existing business entities and available names on the SOS website. You can reserve an available name for 120 days by filing a Temporary Reservation of Business Entity Name. There are certain name requirements for LLCs and corporations (like including a word such as “L.L.C.” for LLCs or “Company” for corporations). See How to Form an LLC in Kansas and How to Form a Corporation in Kansas for more information.
If your business is a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership), there is no method to register an assumed name or trade name with the state. However, you should check for existing business entities and available names to make sure your business name doesn’t duplicate the name of another, preexisting Kansas business.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Kansas, you must register with the Department of Revenue (DOR) to collect sales tax. If your businesses will have employees, you must register with the DOR for employer withholding taxes. You can register for both types of tax, as well as other business taxes, either online via the DOR’s Customer Service Center or on paper using Form CR-16, Kansas Business Tax Application.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Ultimately, however, there are a vast number of regulatory licenses and permits. Moreover, different licenses and permits are issued by different state agencies. For help figuring out which regulatory licenses and permits may apply to your particular business, check the Common Business Licenses / Permits section of the Kansas.gov website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. Some licensed professions and occupations are included on the list in the Common Business Licenses / Permits section of the Kansas.gov website.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Kansas taxes every kind of business. See Kansas State Business Income Tax for more information on state business taxes in Kansas.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form K-40).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Kansas partnerships also must file Form K-120S, Kansas Partnership of S Corporation Income.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Kansas LLCs also are required to file an annual report with the Kansas SOS. See Kansas LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Kansas corporation taxes. And, finally, corporations must file an annual report with the Kansas SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Kansas taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore your options for coverage, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests of your community, and whether your business idea will meet an unmet need. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to determine your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Investors and lenders might ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans, and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Wisconsin Department of Financial Institutions (DFI). You can check for available names by doing a business entity search on the DFI website. You can reserve an available name for 120 days by filing a Name Reservation Application (Form 1) with the DFI. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Wisconsin and How to Form a Corporation in Wisconsin for more information.
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you have the option to file a Registration of Firm Names with the Register of Deeds in the county where your business is located.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Wisconsin, you must register with the Department of Revenue (DOR) to collect sales tax. If your businesses will have employees, you must register with the DOR for employer withholding taxes. You can register for both types of tax, as well as other business taxes, online via the state’s One Stop Business Portal or the DOR’s Online Registration site (depending on your business type). You can also register on paper using Form BTR-101, Application for Wisconsin Business Tax Registration.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Different licenses and permits are issued by different agencies. You can find out about — and apply for — tax-related licenses through the Department of Revenue. Some of the state’s other important regulatory licenses and permits are handled through the Department of Natural Resources and divisions of the Department of Health Services. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The Wisconsin Department of Safety and Professional Services (DSPS) has information about the full range of the state’s licensed professions and occupations.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Wisconsin taxes every kind of business. That includes a so-called economic development surcharge that applies to businesses with $4 million or more in gross receipts. See Wisconsin State Business Income Tax for more information on state business taxes in Wisconsin.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 1).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, most Wisconsin partnerships also must file Form 3, Wisconsin Partnership Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. Wisconsin LLCs also are required to file an annual report with the Wisconsin DFI. See Wisconsin LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Wisconsin corporation franchise tax. Finally, corporations must file an annual report with the Wisconsin DFI.
If you have employees, you must also deal with state employer taxes.
And, apart from Wisconsin taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options for your business, which may include general liability insurance to protect you against claims relating to bodily injury or property damage, or malpractice insurance for professionals such as doctors and lawyers. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Typically, investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the New Hampshire Secretary of State (SOS). You can check for available names doing a business entity search on the SOS website. You can reserve an available name for up to 120 days by filing an Application for Reservation of Name with the New Hampshire SOS. There are also certain name requirements for LLCs and corporations (like including a word such as “L.L.C.” for LLCs or “Corporation” for corporations). See How to Form an LLC in New Hampshire and How to Form a Corporation in New Hampshire for more information.
Sole proprietorships and partnerships in New Hampshire must file a Trade Name Registration with the New Hampshire SOS if they use a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership).
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. New Hampshire does not have a state sales tax or a personal income tax on wages so you do not need to register for those types of taxes.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check the Doing Business section of New Hampshire’s official government website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. You can get information about the state agencies that license and regulate many professions and occupations by going to the Licensed, Certified and Registered Occupations Index on the New Hampshire Employment Security (NHES) website.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
New Hampshire has a Business Enterprise Tax (BET) and Business Profits Tax (BPT). Each of these taxes can apply to any New Hampshire business that has a certain minimum amount of gross receipts, or, in the case of the BET, a certain minimum enterprise value tax base. See New Hampshire State Business Income Tax for more information on state business taxes in New Hampshire.
Sole proprietorships. Apart from the BET and BPT, sole proprietorships pay only federal taxes on business income.
Partnerships. Apart from the BET and BPT, partnerships pay only federal taxes on business income.
LLCs. Apart from the BET and BPT, LLC members pay only federal taxes on business income. In addition, the LLC itself must file an annual report with the New Hampshire SOS. See New Hampshire LLC Annual Report and Tax Requirements for more information.
Corporations. Taxation of corporations and their shareholders in New Hampshire can be complicated. Corporation dividends may figure into certain kinds of state taxation. In addition, corporations must file an annual report with the New Hampshire SOS.
Apart from New Hampshire taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take some time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to evaluate your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Investors and lenders will ask to review your business plan before providing financial assistance. To learn more about the benefits of business plans, and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Arkansas Secretary of State (SOS). You can check for available names by doing a business entity search on the SOS website. You can reserve an available name for 120 days by filing an Application for Reservation of Entity Name either online or on paper. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations).
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must file an assumed name certificate (also known as a Doing Business As or DBA certificate) in the counties where you do business. Check county websites for more information.
If you plan on doing business online, you may want to register your business name as a domain name. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use.
Tax Registration. If you will be selling goods in Arkansas, you must register with the Department of Finance and Administration (DFA) to collect sales tax. If your businesses will have employees, you must register with the DFA for employer withholding taxes. You can register for both types of tax, as well as other business taxes, either online via the Arkansas Taxpayer Access Point (ATAP) or on paper using Form AR-1R, Combined Business Tax Registration Form.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Different licenses and permits are issued by different agencies. Examples include the Department of Health and the Arkansas Contractors Licensing Board. For more details, check the Arkansas Small Business and Technology Development Center (ASBTDC) for access to the guide License, Permit, & Tax for Arkansas Small Businesses. For information about local licenses and permits, check the websites for any cities or counties where you will do business
Professional and occupational licenses. These cover people who work in various fields. The Arkansas Division of Workforce Service has a list of licensed occupations and professions.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months.
It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Arkansas taxes every kind of business. See Arkansas State Business Income Tax for more information on state business taxes in Arkansas.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form AR1000).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Arkansas partnerships also must file Form AR1050, Partnership Tax Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form — either a partnership return or a corporation return. The specific form used will depend on how the LLC is classified for federal tax purposes. Arkansas LLCs also are required to file an annual report with the Arkansas SOS which includes payment of the state’s franchise tax.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Arkansas corporation taxes. And, finally, corporations must file an annual report with the Arkansas SOS which includes payment of the state’s franchise tax.
If you have employees, you must also deal with state employer taxes.
And, apart from Arkansas taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options, such as general liability insurance to protect your business against claims relating to bodily injury or property damage. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also evaluate the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to determine your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Investors and lenders will want to review your business plan before providing financial assistance, and you can be prepared by drafting a plan before you start soliciting funding.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Utah Division of Corporations and Commercial Code (DCCC). You can check for available names by doing a business name search on the DCCC website. You can reserve an available name for 120 days by filing an Application for Reservation of Business Name form with the Utah DCCC. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Utah and How to Form a Corporation in Utah for more information.
Is your business is a sole proprietorship or partnership that uses a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership)? If so, you must register that name with the DCCC. You can register online or on paper.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Almost anyone doing business in Utah must register with the state. You should use Utah’s OneStop Business Registration for this purpose.
Tax Registration. If you will be selling goods in Utah, you must apply for a sales and use tax license. If you will have employees in Utah, you must register for employer withholding tax. You can register for both types of tax at the state’s OneStop business registration website.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Utah’s OneStop online system allows you to register simultaneously with all of the following state agencies:
For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. Utah’s Division of Occupational and Professional Licensing (DOPL) is the umbrella agency for nearly all of the state’s regulatory boards and commissions for licensed professions and occupations. The Select Profession/Occupation section of the DOPL website lists the professions and occupations DOPL handles.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months. You should also be sure to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Utah taxes every kind of business. See Utah State Business Income Tax for more information on state business taxes in Utah.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (TC-40).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, most Utah partnerships also must file Form TC-65, Utah Partnership/Limited Liability Partnership/Limited Liability Company Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, most LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. LLCs classified as corporations for federal tax purposes must pay Utah’s franchise tax. In addition, Utah LLCs must file an annual renewal with the Utah DCCC. See Utah LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Utah’s franchise tax. Finally, corporations must file an annual renewal with the DCCC.
If you have employees, you must also deal with state employer taxes.
And, apart from Utah taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your business and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits and natural catastrophes. An insurance agent can help you explore the different coverage options for your business, which might include general liability insurance to protect you against claims relating to bodily injury or property damage, or cyber liability insurance to cover litigation and settlement fees following a data security breach. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. If you own a business with limited liability, such as an LLC or a corporation, you must open a separate bank account to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests and needs of your community. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to determine your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Investors and lenders will want to review your business plan before providing financial assistance, and you can be prepared by drafting a plan before you start soliciting funding. To learn more about the benefits of business plans, and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Oklahoma Secretary of State (SOS). You can check for available names by doing a business entities search on the SOS website. You can reserve an available name for 60 days by filing an Application for Reservation of Name with the Oklahoma SOS. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Oklahoma and How to Form a Corporation in Oklahoma for more information.
Sole proprietorships and partnerships in Oklahoma must file a Trade Name Report with the Oklahoma SOS if they use a business name that is different from the name of the business owner (for a sole proprietorship) or names of the individual partners (for a partnership).
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Oklahoma, you must register to collect sales tax. If you will have employees in Oklahoma, you must register for employer withholding tax. For both of these business-related taxes (and others), you can register through Oklahoma’s Online Business Registration System.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check the Business Licensing & Operating Requirements section of the Oklahoma Department of Commerce website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. The Professional License Online Services section of the state’s website covers many of the professions requiring state licensure.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months. It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Oklahoma taxes every kind of business. See Oklahoma State Business Income Tax for more information on state business taxes in Oklahoma.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 511).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Oklahoma partnerships also must file Form 514, Oklahoma Partnership Income Tax Return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, most LLCs themselves have to file an additional state tax form. The LLC also must file an annual certificate with the Oklahoma SOS. See Oklahoma LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Oklahoma corporation taxes. Finally, corporations must file an annual certificate with the Oklahoma SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Oklahoma taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options for your business, which may include general liability insurance to protect you against claims relating to bodily injury or property damage, or malpractice insurance for professionals. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests of your community, and whether your business idea will meet an unmet need. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to determine your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Investors and lenders might ask to review your business plan before providing financial assistance, and you can be prepared by drafting a plan before you start soliciting funding. To learn more about the benefits of business plans, and how to create one for your enterprise see Why You Need to Write a Business Plan.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Virginia State Corporation Commission (SCC). You can check for available names by doing a business entity search on the SCC website. You can reserve an available name for 120 days by filing Form SCC631, Application for Reservation or for Renewal of Reservation of a Business Entity Name. You can also repeatedly renew the reservation before it expires. There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Virginia and How to Form a Corporation in Virginia for more information.
Is your business a sole proprietorship or partnership that uses a business name that is different from the legal name of the business owner (for a sole proprietorship) or surnames of the individual partners (for a partnership)? If so, you must register a Certificate of Assumed or Fictitious Name in the county where you do business.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Virginia, you must register with the Department of Taxes (DOT) to collect sales tax. If your businesses will have employees, you must register with the DOT for employer withholding taxes. You can register for both types of tax, as well as other business taxes, either online via VATAX Online Services or on paper using Form R-1, Virginia Department of Taxation Business Registration Form.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
Different licenses and permits are issued by different agencies. You can check the websites for individual state agencies for more information. For example, certain permits related to environmental regulations are issued by the Department of Environmental Quality. Many other licenses are issued locally. Contact your town or city licensing department to determine if you need a local business license.
Professional and occupational licenses. These cover people who work in various fields. Most of this licensing is handled through the Virginia Department of Professional and Occupational Regulation (DPOR). The DPOR website has sections listing various professional regulatory boards and regulated professions and occupations.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. You can refer back to your business plan to evaluate whether you can afford your desired location during your company's early months. It is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. In addition, review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Virginia taxes every kind of business. See Virginia State Business Income Tax for more information on state business taxes in Virginia.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 760).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, Virginia partnerships also must file Form 502, Pass-Through Entity Return of Income and Return of Nonresident Withholding Tax.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, LLCs themselves have to file an additional state tax form. The specific form used will depend on how the LLC is classified for federal tax purposes. Virginia LLCs also are required to file an annual report (also known as an annual registration fee). See Virginia LLC Annual Filing Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Virginia corporation taxes. And, finally, corporations must file an annual report with the Virginia SCC.
If you have employees, you must also deal with state employer taxes.
And, apart from Virginia taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your company and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits or natural catastrophes. An insurance agent can help you explore the different coverage options for your business, which may include general liability insurance to protect you against claims relating to bodily injury or property damage, or cyber liability insurance to cover litigation and settlement fees following a data security breach. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. For some business types, like LLCs and corporations, a separate bank account is necessary to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also evaluate the likelihood of success based on the interests of your community, and whether your business idea will meet an unmet need. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to determine your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Investors and lenders will want to review your business plan before providing financial assistance, and you can be prepared by drafting a plan before you start soliciting funding.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with Maryland. Names can be checked for availability by searching the Maryland Business Express business entity database. There also are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Maryland and How to Form a Corporation in Maryland for more information.
Sole proprietorships and partnerships in Maryland must file an Application for Trade Name with the Maryland Department of Assessments and Taxation (DAT) if they use a business name that is different from the surnames of the business owner (for a sole proprietorship) or individual partners (for a partnership). Trade names expire after five years and should be renewed within six months of expiration.
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Maryland, you must register for a sales and use tax license with the Comptroller of Maryland. If you will have employees in Maryland, you must register with the Comptroller of Maryland for employer withholding. For both kinds of registration, you can use the online combined registration.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, register through Maryland Business Express. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. You can find a list of state-issued professional and occupational licenses at the Division of Occupational and Professional Licensing.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. Refer back to your business plan to evaluate whether you can afford your desired location during your company's early months. In addition, verify that the spot is zoned for your type of business. You can find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. You should also review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Maryland taxes every kind of business. See Maryland State Business Income Tax for more information on state business taxes in Maryland.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form 502).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, like every other Maryland pass-through entity, your partnership must also file Form 510, the pass-through entity tax return.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, the LLC itself must file Form 510, the Maryland pass-through entity tax return, and an annual report (also known in Maryland as a personal property return). See Maryland LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Maryland corporation taxes. And, finally, corporations must file an annual report (also known in Maryland as a personal property return).
If you have employees, you must also deal with employer taxes.
And, apart from Maryland taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your business and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits and natural catastrophes. An insurance agent can help you explore the different coverage options for your business, which might include general liability insurance to protect you against claims relating to bodily injury or property damage, or cyber liability insurance to cover litigation and settlement fees following a data security breach. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. If you own a business with limited liability, such as an LLC or a corporation, you must open a separate bank account to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>Take time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also evaluate the likelihood of success based on the interests of your community, and whether your business idea will meet an unmet need. Read our article for more tips on how to evaluate business ideas.
After you select an idea, consider drafting a business plan to determine your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Investors and lenders will want to review your business plan before providing financial assistance, and you can be prepared by drafting a plan before you start soliciting funding.
The most common legal structures for a small business are:
There also are special versions of some of these structures, such as limited partnerships and S corporations. You’ll want to consider which business entity structure offers the type of liability protection you want and the best tax, financing, and financial benefits for you and your business. Read our article for information on how to choose the best ownership structure for your business.
For LLCs and corporations, you will need to check that your name is distinguishable from the names of other business entities already on file with the Missouri Secretary of State (SOS). You can check for available names by doing a business name search on the SOS website. You can reserve an available name for 60 days by filing an Application for Reservation of Name with the Missouri SOS. You also can renew the reservation for up to a total of 180 days.
There are certain name requirements for LLCs and corporations (like including a word such as “LLC” for LLCs or “Company” for corporations). See How to Form an LLC in Missouri and How to Form a Corporation in Missouri for more information.
Sole proprietorships and partnerships in Missouri should file a Fictitious Name Registration online with the Missouri SOS if they use a business name that is different from the names of the business owner (for a sole proprietorship) or individual partners (for a partnership).
If you plan on doing business online, you may want to register your business name as a domain name. See Choose and Register a Domain Name for more information. In addition, to avoid trademark infringement issues, you should do a federal and state trademark check to make sure the name you want to use is not the same as or too similar to a name already in use. See How to Do a Trademark Search for more information.
Tax Registration. If you will be selling goods in Missouri, you must register with the Missouri Department of Revenue (DOR) to obtain a retail sales tax license. If you will have employees in Missouri, you must register with the DOR for an employer withholding tax number. For both types of tax, you can register online at the DOR’s Online Business Registration site or on paper using Form 2463.
EIN. If your business has employees or is taxed separately from you, you must obtain a federal Employer Identification Number (EIN) from the IRS. Even if you are not required to obtain an EIN, there are often business reasons for doing so. Banks often require an EIN to open an account in the business’s name and other companies you do business with may require an EIN to process payments. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
Regulatory licenses and permits. These cover areas such as:
For regulatory licenses and permits issued by the state, check the Registering My Business section of the Missouri Business website. For information about local licenses and permits, check the websites for any cities or counties where you will do business.
Professional and occupational licenses. These cover people who work in various fields. There are at least two places you can check online for initial information about this kind of licensing:
The DPR website has links to detailed licensing information about each profession. The MBP has a similar set of links.
You’ll need to pick a location for your business and check local zoning regulations. Before you commit to a location, take time to calculate the costs of running your business in the desired spot, including rent and utilities. Refer back to your business plan to evaluate whether you can afford your desired location during your company's early months. In addition, it is important to verify that the spot is zoned for your type of business. You might find zoning regulations for your town or city by reviewing your local ordinances and contacting your town's zoning or planning department. Read our article for more tips on picking a location.
One alternative to opening your business at a new location is running your company out of your home. If you decide to run a home-based business, again check your local zoning laws. You should also review your lease (if you rent your home) and homeowners association rules (if applicable), either of which might ban some or all home businesses.
Missouri taxes every kind of business. See Missouri State Business Income Tax for more information on state business taxes in Missouri.
Sole proprietorships. Pay state taxes on business income as part of their personal state income tax returns (Form MO-1040).
Partnerships. Partners pay state taxes on partnership income on personal tax returns. In addition, most partnerships also must file Form MO-1065, Partnership Return of Income.
LLCs. Members pay state taxes on their share of LLC income on personal tax returns. In addition, Missouri LLCs taxed as corporations for federal tax purposes must also file a state corporation tax return. See Missouri LLC Annual Report and Tax Requirements for more information.
Corporations. Shareholders must pay state taxes on their dividends from the corporation. A shareholder-employee with a salary also must pay state income tax on his or her personal state tax return. Moreover, the corporation itself is subject to Missouri corporation taxes and a corporation franchise tax. Finally, corporations must file an annual report with the Missouri SOS.
If you have employees, you must also deal with state employer taxes.
And, apart from Missouri taxes, there are always federal income and employer taxes. Check IRS Publications 334, Tax Guide for Small Business, and 583, Taxpayers Starting a Business.
Business insurance can protect your business and your personal assets from the fallout of unexpected disasters, such as personal injury lawsuits and natural catastrophes. An insurance agent can help you explore the different coverage options for your business, which might include general liability insurance to protect you against claims relating to bodily injury or property damage, or cyber liability insurance to cover litigation and settlement fees following a data security breach. To learn more, see Nolo's article, What Types of Insurances Does Your Small Business Need?
No matter the type of business you form, you should consider opening a separate business account to make it easier to track your income and expenses. If you own a business with limited liability, such as an LLC or a corporation, you must open a separate bank account to maintain your liability protection. To learn more, see Opening a Business Bank Account.
]]>The only businesses that can include “ltd.” in their names are those that enjoy limited liability, such as corporations and limited liability companies (LLCs). Whether you can or must include “ltd” or another suffix in your company’s name depends on the type of business entity you form and the laws of your state.
When you form and properly maintain a business with limited liability, your financial responsibility will not exceed the amount of money you invested in the business. If someone successfully sues your company, they cannot collect more than what the business owns. If your business does not have enough money or assets to liquidate to pay the judgment, you are not responsible for paying the difference, and the remaining business debt will go unpaid.
If you did not file paperwork to form the business with the state, your business is a sole proprietorship or a partnership (depending on the number of owners). If the sole proprietorship or the partnership does not have enough money to pay damages from a lawsuit, the owner(s) are on the hook to pay the remaining debt.
When you start doing business by yourself or with a partner and do not file anything with the state (meaning you own a sole proprietorship or a partnership), you will not have liability protection. To protect your liability, you must form one of the following companies:
Corporation: A corporation is a business structure that is owned by shareholders and run by a board of directors. All of the shareholders and directors have liability protection.
Professional corporation (PC): In some states, if you are a licensed professional such as a doctor or an accountant, your only option for limited liability is a professional corporation (“PC”). A PC limits the owners’ liability for business debts and the obligations of partners in the company. The owners remain liable for their own professional malpractice.
Nonprofit corporation: A nonprofit corporation is similar to a corporation in management structure, but different in how it handles profits. Instead of distributing profits to shareholders, nonprofits must use their revenue to further its charitable purpose. Nonprofit directors enjoy limited liability.
Limited liability company (LLC): An LLC is an entity that combines the flexibility and tax benefits of a partnership with the limited liability of a corporation. All LLC owners have liability protection.
Limited partnership (LP): An LP is a structure where one or more general partners operate the business and are personally liable for the debts of the business, and one or more limited partners are not involved in day-to-day affairs and have liability protection.
To learn more about the different types of businesses and how to select the best option for your enterprise, see our article Business Ownership Structures.
Every state has its own requirements for business names for the different business structures. Many states require or allow registered companies to include a suffix that indicates limited liability. You might choose “Ltd.” as your suffix, or you could go with other options as allowed by your state’s laws. When your state requires you to include a suffix in your name, you must include the suffix on everything with your company name that is visible to the public, such as your website and letterhead.
Some of the common suffixes to choose from include:
A sole proprietorship is a one-person business that is not registered with the state like a limited liability company (LLC) or corporation. You don't have to do anything special or file any papers to set up a sole proprietorship -- you create one just by going into business for yourself.
Legally, a sole proprietorship is inseparable from its owner -- the business and the owner are one and the same. This means the owner of the business reports business income and losses on his or her personal tax return and is personally liable for any business-related obligations, such as debts or court judgments.
Sole proprietorships make sense in a business where personal liability isn't a big worry -- for example, a small service business in which you are unlikely to be sued and for which you won't be borrowing much money for inventory or other costs.
Similarly, a partnership is simply a business owned by two or more people that hasn't filed papers to become a corporation or a limited liability company (LLC). You don't have to file any paperwork to form a partnership -- the arrangement begins as soon as you start a business with another person. As in a sole proprietorship, the partnership's owners pay taxes on their share of the business income on their personal tax returns and they are each personally liable for the entire amount of any business debts and claims. Both sole proprietors and partners in a partnership may qualify for the 20% pass-through tax deduction established by the Tax Cuts and Jobs Act (TCJA). See The 20% Pass-Through Tax Deduction for Business Owners for more information.
Like sole proprietorships, partnerships make sense in a business where personal liability isn't a big worry.
Limited partnerships are costly and complicated to set up and run, and are not recommended for the average small business owner. Limited partnerships are usually created by one person or company (the "general partner"), who will solicit investments from others (the "limited partners").
The general partner controls the limited partnership's day-to-day operations and is personally liable for business debts (unless the general partner is a corporation or an LLC). Limited partners have minimal control over daily business decisions or operations and, in return, they are not personally liable for business debts or claims. Consult a limited partnership expert if you're interested in creating this type of business.
Forming and operating an LLC is a bit more complicated and costly, but well worth the trouble for some small businesses. The main benefit of an LLC is that the structure limits the owners' personal liability for business debts and court judgments against the business.
LLCs provide limited personal liability for business debts and claims. But when it comes to taxes, LLCs are more like partnerships: the owners of an LLC pay taxes on their shares of the business income on their personal tax returns.
LLCs make sense for business owners who either (1) run a risk of being sued by customers or of piling up a lot of business debts, or (2) have substantial personal assets they want to protect from business creditors.
Like an LLC, forming and operating a corporation is a bit more complicated and costly, but the structure limits the owners' personal liability for business debts and court judgments against the business.
What sets the corporation apart from all other types of businesses is that a corporation is an independent legal and tax entity, separate from the people who own, control and manage it. Because of this separate status, the owners of a corporation don't use their personal tax returns to pay tax on corporate profits -- the corporation itself pays these taxes. The TCJA established a single flat tax rate of 21% for corporations, significantly lower than the 15% to 35% rate that corporations paid under prior law. Owners pay personal income tax only on the money they draw from the corporation in the form of salaries, bonuses, and the like.
Corporations make sense for business owners who either (1) run a risk of being sued by customers or of piling up a lot of business debts, or (2) have substantial personal assets they want to protect from business creditors.
A nonprofit corporation is a corporation formed to carry out a charitable, educational, religious, literary, or scientific purpose. A nonprofit can raise much-needed funds by soliciting public and private grant money and donations from individuals and companies. The federal and state governments do not generally tax nonprofit corporations on money they take in that is related to their nonprofit purpose, because of the benefits they contribute to society. To learn more about nonprofit corporations, see Nonprofit Basics.
Some people dream of forming a business of true equals -- an organization owned and operated democratically by its members. These grassroots business organizers often refer to their businesses as a "group," "collective," or "co-op" -- but these are often informal rather than legal labels. For example, a consumer co-op could be formed to run a food store, a bookstore, or any other retail business. Or a workers' co-op could be created to manufacture and sell arts and crafts. Most states do have specific laws dealing with the set-up of cooperatives, and in some states you can file paperwork with the secretary of state's office to have your cooperative formally recognized by the state. Check with your secretary of state's office for more information.
For more online guidance on deciding which ownership structure is most suitable for your business, see Choosing the Best Ownership Structure for Your Business.
You may want to also read LLC or Corporation? How to Choose the Right Form for Your Business, by Anthony Mancuso (Nolo).
]]>Which of these forms is right for your business depends on the type of business you run, how many owners it has, and its financial situation. No one choice suits every business: Business owners have to pick the structure that best meets their needs. This article introduces several of the most important factors to consider, including:
One of the first issues you should consider is how many owners your business will have, and how involved each of the owners will be in the day-to-day management of the company. If you own the business by yourself, you can operate a sole proprietorship, a single-member LLC, or a corporation. If you have more than one business partner, you can explore a partnership, an LLC, or a corporation. As the number of owners increases, it becomes more difficult to get a consensus for decision-making, which makes an LLC or a corporation the better choice over a partnership. However, if you have more than 100 owners, you can not elect S Corporation tax status.
An LLC offers the most flexibility in terms of ownership and management structure. All owners of an LLC can be involved in day-to-day operations, or you can designate one or more owners to run the business while the other owners serve as passive investors. You can read more about your options for LLC management here.
The financing needs for your business might impact which business entity type you can form. If you plan on obtaining a bank loan to start your business, you might find that banks are more likely to loan to an LLC or a corporation over a sole proprietorship or a partnership. If you are hoping to work with investors, a corporation is likely your best bet. Unlike other business forms, the corporate structure allows a business to sell ownership shares in the company through its stock offerings. This makes it easier to attract investment capital and to hire and retain key employees by issuing employee stock options.
But for businesses that don't need to issue stock options and will never "go public," forming a corporation probably isn't worth the added expense. If it's limited liability that you want, an LLC provides the same protection as a corporation, but the simplicity and flexibility of LLCs offer a clear advantage over corporations. For more help on choosing between a corporation and an LLC, read the article Corporations vs. LLCs.
Sole proprietorships and partnerships are easy to set up -- you don't have to file any special forms or pay any fees to start your business. Plus, you don't have to follow any special operating rules.
LLCs and corporations, on the other hand, are almost always more expensive to create and more difficult to maintain. To form an LLC or corporation, you must file a document with the state and pay a fee, which ranges from about $40 to $800, depending on the state where you form your business. In addition, owners of corporations and LLCs must elect officers (usually, a president, vice president, and secretary) to run the company. They also have to keep records of important business decisions and follow other formalities.
If you're starting your business on a shoestring, it might make the sense to form the simplest type of business -- a sole proprietorship or a partnership. Unless yours will be a particularly risky business, the limited personal liability provided by an LLC or a corporation may not be worth the cost and paperwork required to create and run one.
In large part, the best ownership structure for your business depends on the type of services or products it will provide. If your business will engage in risky activities -- for example, trading stocks or repairing roofs -- you'll almost surely want to form a business entity that provides personal liability protection ("limited liability"), which shields your personal assets from business debts and claims. A corporation or a limited liability company (LLC) is probably the best choice for you.
To learn more about the advantages and disadvantages of each type of business structure, see Ways to Organize Your Business, a chart that compares the pros and cons of each.
Owners of sole proprietorships, partnerships, and LLCs all pay taxes on business profits in the same way. These three business types are "pass-through" tax entities, which means that all of the profits and losses pass through the business to the owners, who report their share of the profits (or deduct their share of the losses) on their personal income tax returns. Therefore, sole proprietors, partners, and LLC owners can count on about the same amount of tax complexity, paperwork, and costs.
Owners of these unincorporated businesses must pay income taxes on all net profits of the business, regardless of how much they actually take out of the business each year. Even if all of the profits are kept in the business checking account to meet upcoming business expenses, the owners must report their share of these profits as income on their tax returns. However, under the Tax Cuts and Jobs Act (HR 1, “TCJA”), owners of pass-through businesses may be eligible to deduct up to 20% of their net business income, reducing their effective income tax rate to 80%.
In contrast, the owners of a corporation do not report their shares of corporate profits on their personal tax returns. The owners pay taxes only on profits they actually receive in the form of salaries, bonuses, and dividends.
The corporation itself pays taxes on any profits that are left in the company from year to year (called "retained earnings"). The TCJA established a new single flat tax rate of 21% for corporations. This replaces the corporate tax rates ranging from 15% to 35% that corporations paid under prior law.
This separate level of taxation adds a layer of complexity to filing and paying taxes, but it can be a benefit to some businesses. Owners of a corporation don't have to pay personal income taxes on profits they don't receive. Corporations have to pay taxes on dividends paid out to shareholders, but this rarely affects small corporations that seldom pay dividends. And, because corporations enjoy a new lower flat tax rate of 21%, a corporation and its owners may have a lower combined tax bill than the owners of an unincorporated business that earns the same amount of profit.
Your initial choice of a business structure isn't set in stone. You can start out as a sole proprietorship or partnership and later, if your business grows or the risk of personal liability increases, you can convert your business to an LLC or a corporation.
Nolo's book LLC or Corporation? How to Choose the Right Form for Your Business, by Anthony Mancuso, provides lots of real-world scenarios that demonstrate how these options work for different types of companies.
After learning the basics of each business structure and considering the factors discussed above, you may still find that you need help deciding which structure is best for your business. A good small business or tax lawyer can help you choose the right one, given your tax picture and the possible risks of your particular situation.
]]>You might have another company in mind that can fill in what your company lacks and take your business idea to the next level. And if the other company likes your idea, then you both might decide to enter into a mutually beneficial arrangement: a joint venture (JV).
Although JVs are often associated with large companies or international deals, if used under the right circumstances, they can be effective for small business owners as well.
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A JV is created when two or more established businesses agree to pool their resources and respective talents to achieve a particular goal. Typically, JVs are formed for a limited time to accomplish a specific business goal.
Under a JV arrangement, each party contributes cash, property, assets, or other resources to the business venture. Then the parties agree on how profits, losses, management, and control of the venture will be divided.
You can formalize a JV either by entering into a contract—usually called a “joint venture agreement”—or by forming a separate business entity. Though if you form a separate business entity, you usually also have a JV agreement or some other contract or document that governs the business venture.
Forming a contractual relationship. If two businesses agree to join forces and cooperate with each other in a limited and specific way, then they might create a contract. The JV contract would set out the terms and conditions for how the business arrangement would work, such as what resources each company would contribute and how profits will be divided and taxed. For example, if you want to sell your product through another company’s distribution network, you and the other business could enter into a contract that details each party’s responsibilities and rights in the product and profits.
Establishing a new, separate business entity. Two businesses might decide to set up a separate and independent company to handle the JV work or project. For example, you and another business owner might decide to form a corporation, limited liability company (LLC), or partnership to produce and sell a new product through a joint arrangement. The business entity you choose will inform how you own and manage the business as well as how you’re taxed. (For more, read how to choose the best ownership structure for your business.)
However you decide to set up your JV, you should have a written legal agreement setting out how the venture will work. (For tips on how to negotiate your business agreement, read our article on 11 strategies in contract negotiation.)
Although a JV shares many of the same characteristics as a partnership, there are two key differences: the scope and duration of the business. A JV is usually based on a single project that lasts for a limited period whereas a partnership usually involves an ongoing business relationship that lasts for an indefinite period.
To learn more about the differences between the two business structures, read our article on partnerships vs. JVs.
JVs are often confused with mergers. While JVs can lead to mergers (or acquisitions), the concepts and legal relationships are distinct.
A merger involves two separate businesses combining to form one new business. In a merger, the old businesses no longer exist—only the new consolidated company is left. Where there were once two companies, now there's just one.
In a JV, the two companies can combine to form a new company, but the two original companies still exist. So, where there were once two companies, now there are three companies.
If you want to achieve a particular goal but you only have some of the resources to reach that goal, then a JV could be a good option—especially if your goal is just one part of your business plan. Forming a limited arrangement with someone else can help you advance your business ambitions without significantly altering what you’ve already built for your company.
By entering into a JV and combining resources with another business, you can potentially experience better growth and profitability than you or the other business could achieve on your own.
Some of the benefits that businesses can provide to each other in a JV arrangement include:
JVs are also useful where there are licenses and regulatory requirements to do business—a standard hurdle for companies trying to access foreign markets. If you’re trying to access a regulated market, a JV can help you leverage another company’s established presence. By using another business’s license, you can avoid having to go through the licensing and regulatory paperwork that would otherwise be required, a potentially enormous benefit.
A JV should be beneficial to both parties. You can take advantage of another business’s strength in an area where your business is weak and offer a complementary benefit to the other party.
For example, suppose you have a product you want to sell but no presence in that market. So, you decide to establish a JV with a business that has an existing distribution channel capable of reaching customers for your product. Through the JV arrangement, you immediately gain access to customers and expand your market presence without having to hire a sales force, take on debt, seek outside investors, or otherwise commit your own resources. In turn, having a new product to market to an existing customer base is a complementary benefit that you provide to the other company.
While you and the other company might share the same goals, you might have different ideas on how to reach those goals. It’s important to iron out the details of your JV arrangement now to avoid any confusion or dispute later on. You should answer five important questions before you put your agreement into writing.
When you form a JV, the first thing you need to talk about is money—and the initial monetary issue you need to resolve is costs. It might be the case that the creation of a JV doesn’t incur any additional, material costs for either company. For example, the parties might simply agree to allow each other to use mutual resources and services either free of charge or at a discount.
However, in instances where costs must be incurred (for example, if the parties need to lease commercial property for their JV operations), then your JV agreement should specify:
You should draft these provisions to be as detailed and comprehensive as possible, while also contemplating any potential future expenditures.
The second monetary issue that the parties need to address is how profits will be split. As with the cost provisions, the terms and conditions of the agreement dealing with profit sharing should be as detailed and forward-thinking as possible.
Your profit-sharing arrangement can be based on any criteria that you and the other party agree on. But a general rule of thumb is that your relative entitlement to profits should be proportional to your contribution to the JV.
For instance, suppose Brooks Advancements, a regional company, creates the initial designs for a motorcycle. Limited by its current trade channels and financial resources, Brooks Advancements decides to create a JV with Mason Mechanics, a national manufacturer. Mason Mechanics takes Brooks Advancements’ initial designs, improves upon them, and finances the marketing and production of the motorcycles. Because Brooks Advancements didn’t finance the project and only provided the initial designs, it wouldn’t make sense for the company to take home most of the profits.
Further, to minimize potential disputes over profit calculations and disbursements, your agreement should include specific terms regarding each party’s responsibilities in maintaining and sharing financial records related to the JV. For example, your agreement might say that if you request the other party’s financial records, then the other party has 10 business days to provide these records to you.
The management and operations of a JV can be tricky when executive decisions must be made. If your JV has only two companies involved, then the simplest solution would be to require that decisions outside of the ordinary course of business be approved by the mutual written consent of both companies’ principals. If there are three companies involved in the JV, then the solution could be that such decisions require the approval of at least two of the principals.
In any case, JVs naturally involve owners who are accustomed to running their businesses with a certain degree of independence. The purpose of the JV agreement is to define how major decisions are to be made in the interest of minimizing clashes of autonomous personalities.
You and your co-venturer will also have to plan for disputes in case one side fails to perform their end of the contract (or "breaches" the agreement). Typically, people decide between three main termination provisions.
Allow the breaching party to fix (or “cure”) their breach. If you want a more friendly solution to a contract breach, you can provide a cure period. Under this approach, once you’ve notified the other company in writing about their breach, they’ll then have a time period within which to fix the problem, or else you’ll have the right to terminate the agreement. For example, suppose a JV agreement requires Elm Street Packaging to ship 100 pounds of gravel every two weeks. But Elm Street has a mix-up at the plant and misses their shipping deadline. Fortunately for Elm Street, their agreement gives them a 15-day cure period. So, Elm Street has 15 days to make up for their missed gravel shipment.
Allow the non-breaching party to end the agreement when there’s a breach. If you want a stricter approach to a breach, you can allow either party to end the contract when the other party violates the agreement. In this case, you don’t allow the other party to fix the issue. Instead, as soon as you’re aware of the breach, you can end the agreement. You should still require that any notice to end the agreement be delivered in writing.
Allow either party to end the agreement at any time for any reason. Instead of waiting for or requiring one party to prove a breach, you can permit either party to terminate the agreement at any time for any reason. But you should require that the terminating party give at least a minimum number of days advanced written notice to the other party. For instance, your agreement could allow either party to terminate the agreement as long as they give the other party 10 days’ advanced written notice.
The terms of your JV agreement should address the procedures you and your co-venturer will follow if the agreement is terminated by either party (or both parties). The termination provisions should address:
These provisions should utilize as much language as possible involving good faith, cooperation, and reasonableness. If the JV ends on bad terms, you’ll want to still have both parties cooperating to tie up any loose ends. Ending the business arrangement properly is in the best interests of both parties.
Forming a JV might only require a few steps, but the thought and effort you put behind each step are crucial. Follow these steps to set up your JV.
To create a JV, the first thing you'll need to do is choose a partner. Having a well-defined business objective in mind will allow you to look for and identify a co-venturer that complements your business and can help you achieve your goals.
For example, suppose you’ve developed an exciting new sound speaker but lack adequate resources to access the right market for your product. In that case, you might look for a company with a good market presence in the electronics industry that you can join forces with to sell, promote, and distribute your product.
Performing a SWOT (strengths, weaknesses, opportunities, and threats) analysis can help identify potential areas where you might want to align your resources with another company.
You’ll also want to see whether you and the other business—and the key players in each company—will be able to work well together. Spend time getting to know the people you'll be working with and the company’s core values. Ask the following questions about the other business:
You and your co-venturer should decide whether you want to form a contractual relationship or set up a separate entity for your venture.
The main considerations for choosing one form over the other are:
If the venture is relatively small, the costs associated with creating a separate legal entity might not be justified. On the other hand, if liability is a concern, you might want to invest in forming a corporation or LLC to protect yourself from business debts and obligations.
Once you’ve identified your co-venturer and thought about what type of JV arrangement you want, you should put your terms in writing. If you’re still figuring out the finer details of your arrangement but you want to reflect each party’s commitment, you can sign a letter of intent (LOI). The LOI can document what the parties already agree on and provide a roadmap for the more complicated agreement ahead.
Some people skip LOIs and proceed directly to drafting their JV agreement. JV agreements can be lengthy and complicated depending on the proposed business venture and the relationship between the parties. The key provisions in a JV agreement should include:
A formal contract is necessary for all parties’ protection and to make sure everyone understands the terms and conditions of the venture.
If your JV calls for you to create a separate legal entity, you’ll need to take steps to form one. If you’ve chosen a corporation to run your JV, learn the steps to start a corporation. If you’ve chosen an LLC, read about how to start an LLC.
To form and run a successful JV, you’ll need to thoroughly research and analyze the venture’s aims and objectives as well as the parties involved in the transaction. Ultimately, to succeed, the JV must be beneficial for both parties.
Here are some tips for success:
If you have experience working with other businesses and understand what makes a successful relationship, you can probably form and run a JV on your own. But if you’re not sure whether a JV is the right choice for your business or you’re having trouble reaching an agreement with the other side, consider talking to an attorney who has experience with JVs.
A lawyer can help you decide which type of JV makes the most sense for your business’s goals. They can also help you negotiate and draft your JV agreement and reevaluate your employment contracts to make sure your JV is ready to launch.
]]>The majority of people in business by themselves are sole proprietors. Many have attained this legal status without even realizing it. Quite simply, if you start running a business by yourself and do not incorporate or form an limited liability company, you are automatically a sole proprietor.
Unlike a corporation, LLC, general partnership, or LLP, a sole proprietoship is not a separate legal entity. The business owner (proprietor) personally owns all the assets of the business and is in sole charge of its operation.
One big reason sole proprietorships are so popular is that they are by far the simplest and cheapest way to organize a one-owner business. You don’t have to do anything special or file any papers to set up a sole proprietorship, other than the usual license, permit, and other regulatory requirements your state and locality imposes on any business.
Sole proprietorships do have one big drawback: They offer no limited liability protection. Corporations, LLCs, and LLPs provide limited liability, which is the main reason why many business owners use them. However, when you run a one-person business, the limited liability you’ll obtain by forming a corporation or limited liability company is not by any means all encompassing. For example, you’ll still be liable for any damages caused by your personal negligence. For this reason, it ‘s a good idea to have liability insurance.
When you’re a sole proprietor, you and your business are one and the same for tax purposes. Sole proprietorships don’t pay taxes or file tax returns. Instead, you must report the income you earn or the losses you incur on your own personal tax return (IRS Form 1040). If you earn a profit, the money is added to any other income you have—for example, interest income or your spouse’s income if you’re married and file a joint tax return—and that total is taxed. Sole proprietors may also be eligible for a 20% income tax deduction for pass-through entities established by the Tax Cuts and Jobs Act. See The 20% Pass-Through Tax Deduction for Business Owners for more information.
When you’re a sole proprietor you are not an employee of your business entity. Instead, you are a business owner—also called self-employed. Your business doesn’t have to pay payroll taxes on your income or withhold income tax from your pay. It need not file employment tax returns or pay state or federal unemployment taxes. You need not be covered by workers’ compensation insurance. All this can save hundreds of dollars per year.
However, you do have to pay self-employment taxes—that is Social Security and Medicare taxes—on your business income, called self-employment income by the IRS. Self-employment taxes consist of a 12.4% Social Security tax on income up to an annual income ceiling, and a 2.9% Medicare tax not subject to any ceiling. Self-employment taxes are equivalent to the total Social Security and Medicare tax paid for an employee.
Even if your business has only one owner—you—it can still be legally organized as a corporation, with you as the sole shareholder as well as the president and director. One-owner corporations are common. After you form your corporation in whatever state you choose, you can choose to have it taxed as an S corporation by filing an election with the IRS. This simply involves filing IRS Form 2253 with the IRS.
Since an S corporation is a corporation, it provides its owners—the shareholders—with limited liability. In theory, the shareholders are not personally liable for any of the corporation’s debts. In practice however, such limited liability often has holes in it, particularly where the corporation is small. You’ll often be required to personally guarantee corporate debts. And you’ll still be personally labile for your own negligence or other wrongdoing.
The main reason business owners form S corporations is because of the tax benefits. First, an S corporation is a pass-through entity—income and losses pass through the corporation to the owner’s personal tax return. The income taxes you’ll pay on your business income, and the business deductions you’ll be allowed to take, differ little from being a sole proprietor. Like sole proprietors, S corporation owners are also eligible for the 20% pass-through tax deduction established under the Tax Cuts and Jobs Act for pass-through business entity owners.
Where S corporations shine is in the realm of Social Security and Medicare taxes. When you’re a sole proprietor, all the profit you earn from your business is subject to these taxes. However, this is not necessarily the case if your business is organized as an S corporation.
S corporation tax treatment can provide a way to take some money out of your corporation without paying Social Security and Medicare taxes. This is because you do not have to pay this tax on distributions (dividends) from your S corporation—that is, on earnings and profits that pass through the corporation to you as a shareholder. The larger your distribution, the less Social Security and Medicare tax you’ll pay. The S corporation is the only business form that makes it possible for its owners to save on Social Security and Medicare taxes. This is the main reason S corporations have been, and remain, popular with small business owners.
However, not all the money you get from your S corporation can be in the form of a corporate distribution. An S corporation shareholder who performs more than minor services for the corporation will be its employee for tax purposes, as well as a shareholder. A shareholder-employee must be compensated for his or her services with a reasonable salary and any other employee compensation the corporation wants to provide. This salary will be subject to the same amount of Social Security and Medicare tax as the profit earned by a sole proprietor from his or her business.
Example: Mel, a consultant, forms an S corporation in which he is the sole shareholder and employee. In one year the corporations has profits of $70,000. It pays Mel $35,000 as employee salary and $35,000 as a corporate distribution. The salary is subject to Social Security and Medicare taxes, but the distribution is not. As a result, he pays $5,355 less than he would have had Mel been a sole proprietor and the entire $70,000 subject to these taxes.
However, when you form an S corporation you will have some additional expenses that will eat into your tax savings. For example, most states require that each employee be provided with workers’ compensation and unemployment insurance coverage, which costs at least several hundred dollars per employee. Some states also require all corporations, including S corporations, to pay minimum annual state taxes, no matter how much money they earn. In California, for example, there is an $800 minimum annual tax. You will also have a more complex tax return to file.
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