You may have been thinking about going into business for yourself. You hear of all these people going into business for themselves and making all of this money. You believe that you can do the same thing or do better, but you do not know how to start a business. Not only going into business for yourself but what type of business do you want to start.
There are many different businesses you can start, the main issue, how to form or setup that business as a sole proprietor or a corporation or as a partnership. Knowing what form of business to setup affects your tax filing status, your obligations and liabilities as well.
Let's get started on how to start a business, once you determined your form of business, sole proprietor, or corporation or partnership, and you have given your business a name, then you can proceed to your local hall of records to record the name of your business. The fee to file a fictitious business name is around $35.00 to $50.000 depending on the city or state you reside. When that is completed you have to place your new business name in a local paper for 3 to 30 business days, informing the public that you are going into business as whatever is your business name. The paper charge could be around $40.00 as well.
As I stated early you need to determine before you file this fictitious business name, are you filing a sole proprietorship, corporation, or a partnership? Let me explain the differences among these three fillings.
Sole Proprietorship - the owner is the business. You as the owner are responsible for all of its income, taxes and all liabilities. You can also use your own name as a Sole Proprietorship. As a sole proprietor, you have many of the same deductions or write-offs as other forms of ownership.
Corporation - If you form your business as a corporation, corporations are treated as if they are an individual person doing business. When you form your corporation more than likely you will need the assistance of a lawyer or attorney or filing services. Also, there are some online assistance companies that can file the paperwork to incorporate yourself. Fees vary depending on which services your choose. Corporations have corporate stocks which are transferable. Also, investors who invest into your corporation, have a liability only to the investment into the corporation's stock or their initial investments. As an investor in the corporation you could be taxed twice, once at the corporate level and then as stockholder of the corporation, so be aware of this during tax seasons. Speak with your tax attorney or tax accountant.
Partnerships - A partnership is when you have more than one person involved in the business at the same time of the filing. A partner can be a person, corporation or another partnership. There are two types of partnerships, one is a general partner and the other is a limited partner.
Partnerships - General partner or the individuals who are formed as general partners are responsible for all of the obligations severally liable. Each person can be liable separate or as a group liable together. The general partner is responsible for all the debts or liabilities without limit.
Partnerships - Limited partnership must have at least one person or corporation who acts as the general partner of the limited partnership. Limited partners are resposible for their initial investments only and any other responsibilities that they as a limited partner assumes, is theirs.
Limited partnerships do not pay any federal income taxes, the limited partnership files a partnership form information return of their income earned.
Partnerships - Each partner has to file their individual returns on income, losses, investments, capital gains, interest on investments separately of the partnership.
Partnerships - When someone in the partnership dies or there is an injury that causes one or more of the partners' to become disable this may terminate or end the partnership. The majority of the time partnerships may or may not be freely transferable. Speak with a professional lawyer or attorney before forming general or limited partnerships. Know all of your rights before you become involved in a partnership.
Once you have completed all of the paperwork of forming, filing and posting of the fictitious business in a local newspaper, the next thing you need to do is to open a bank account with that information. The bank employee will ask you for the filing papers of your fictitious business and the posting in the local paper. When all of the require times has elapsed on all notices then you are officially in business.