If you have been following me the past few months (which I hope you have ?), I’ve walked you through the process of creating a mindset that is conducive to success in your business, identifying a business idea and validating that it will be profitable, and becoming laser focused on your ideal client.
Today, we will talk about the not so fun side of business-the legal and tax information. Please note, the information I am providing below is general, because each state has different requirements. Please ensure YOU do your homework and research! If you’d rather spend your time running the business, you can delegate all your tax needs to 3 Wise Bears or an accountancy firm similar.
One of the first things you need to decide on is what type of structure you want to set up for your business. The following are the main ones:
a) Sole Proprietorship
b) Limited Liability Company (LLC)
g) S Corporation
Each of these have their “pros” and “cons” so please make sure your research the type that best fits the type of business you want to start. The Small Business Administration is a great place to start. Consulting a lawyer may help as well.
Also, make sure you consider: business license, Doing Business As (DBA), Employer Identification Number (EIN)/also known as Tax Identification, insurance etc. You can check with your local county/state about your business license and DBA. Check with IRS.gov for information about EIN/Tax ID # information. Considering whether you need insurance for your business is also important. You can check with a local branch to see if you need any.
Another thing you need to consider is business bank accounts. You want to ensure that you separate your personal and business accounts. This shows that your business is not just a hobby. Also, it helps when it comes time to file your taxes. Speaking of taxes, PLEASE ensure you have a system for tracking your business expenses and income. There are both online and computer software programs that you can use to help you track them. You may also want to consider working with an accountant like this tax accountant Chicago for example, who can help you save time and money when tax season comes around! Tax season is never a fun time for anyone, however, if you are a student and have been paying off your student loan debt throughout the year you could be able to have an interest deduction on your student loan, check out sites like SoFi to gain more information on the subject.
Many people do not like talking about the legal and tax side of owning a business, because it can all be so overwhelming. However, to ensure you are running your business the right way, it is key that you know and understands these business components. I hope today’s article made it all just a little less confusing ?.