If you are Starting a Business then KISS
Are you thinking about starting your own business or better yet, leap into becoming the next and biggest entrepreneur? You’ve read that 5 out of 6 millionaires achieve millionaire status by owning and operating a business so you want to get on with it.
If you are starting a business KISS. Here are some simple suggestions.
If you still have a full-time job and don’t want to waste time and money creating the right legal entity, keep things simple by using the simplest form of legal entity to run your business and this is a sole proprietorship.
The benefits of this idea are as follows. First, there are no special forms to complete or legal filings to be done with the Internal Revenue Service until you start hiring and paying employees. Your sales and expenses to operate the business are simply reported on your personal tax return but in a separate document called a Schedule C.
If you decide to operate as a sole proprietor but would prefer to use a name of the business that allows you to identify the service you offer, then you would file in your local county or parish a document called a DBA. A DBA stands for Doing Business As and allows you to create a business entity so you can operate your business. For example, if your name is Bill Smith and you want to run an auto repair shop, and the DBA is not being used by anyone else, you could file a DBA for Smith Auto Repair or Bill Smith Fantastic Auto Repairs. Once you file the paperwork in your county or parish, your bank will need a copy so they can create checking and deposit books for you to do your banking.
If you are worried about legal liability and being sued for the product or service you sell, the solution is simple and this is to talk to a commercial insurance agent and get an insurance policy to cover any liabilities you may be exposed to. The cost of the insurance premium will vary with the type and amount of insurance cover you need but this is a very quick and easy thing to do, the cost is tax deductible and the peace of mind it provides is well worth the investment.
Once your business gets established and now becomes a viable ongoing concern, you can then look into the best legal entity for you that provides the right legal protection and tax treatment of your profits. Another advantage of this approach is that it can save you a lot of time and expense if you create and use the wrong legal entity. If you have the wrong entity, everything needs to be unwound and moved to the right legal entity which can be very time consuming and frustrating as well incurring costs.
If you would like more information about selling a business, buying a business, buying a franchise or a related service such as valuing a business, please visit my website Services and choose from the drop down menu the information you would like.
For more immediate help you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.
