HOW TO ORGANIZE YOUR BUSINESS

Before you can get a handle on your taxes and accounting, you need to get a handle on your business structure. If you are still receiving personal checks written out to one person, you are creating potential liabilities for yourself and passing up tax benefits.

If your business faces any legal or financial difficulties in the future, you can protect yourself now by separating your personal and business assets by creating a legal entity. There may also be tax benefits available to you once you set up your legal entity, and more often than not, companies will feel more comfortable working with you if you present yourself as another company.

To get started, you only need to decide which legal entity structure is right for you. There are several for you to choose from: DBA (doing-business-as), LLC (limited liability company, for state protection)/S-Corp (for federal tax purposes), C-Corp, and non-profit.

You may opt to remain a DBA until you start signing contracts, hiring employees, and turning a profit, at which point you would transition into an LLC. You may then transition again to a partnership or corporation, depending on the management and directorial structure, and on any plans that you may devise to raise capital, distribute shares, take your company public, or sell your company.

Whichever entity you choose, you will file your articles of incorporation, obtain your EIN (employer identification number), sign off on your own operating agreement and by-laws, and pay any fees that are relevant to you based on your state.

From there, you then turn your attention to accounting – determining what you need to do and what you can do.

For even more empowering guidance and information, consult with your legal and tax professional today.