1. Determine which business entity you want to form: a. Sole proprietorship – an individual who owns an unincorporated business by himself/herself. b. Partnership – a relationship where two or more persons join together to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.
c. Corporation – a relationship where prospective shareholders exchange money, property, or both, for the corporation’s capital stock. Profits are taxed to the corporation when earned and then taxed to the shareholders when distributed as dividends. d. S corporation – a corporation, meeting certain criteria, that elects to be treated as an S corporation. Generally an S corporation is exempt from income tax; the shareholders report the S corporation’s income, deductions, loss and credits on their individual tax returns. e. Limited Liability Corporation – an entity — statutorily authorized in certain states — that is characterized by limited liability for debts similar to that of a corporation, management by members or managers, and pass-through taxation similar to that of a partnership. 2. Register for an Employer Identification Number (EIN), also known as a Federal Tax Identification Number, and is used to identify a business entity. 3. Register your fictitious business name. This is needed to open a business checking account. To obtain a fictitious business name, go to your county’s website. Each county is different when it comes to paperwork and fees. 4. Move forward with licenses and permits. There will be local, state, and federal licenses and permits. Remember, a local and state tax includes workers’ compensation, unemployment and disability insurance. Each city has its own business licenses procedure. For retail seller’s permit, you will need this for those who buy wholesale. 5. Remember your business insurance and learn your employer’s responsibility to hire employees. Hiring employees requires IRS Form I-9 and IRS Form W-4. 6. There are many ways to pay yourself and your employees: traditional paycheck, direct deposit or debit card. Payroll processing is important to running your business. If you are not comfortable to withhold payroll taxes and deductions from paychecks, another alternative to having a reliable and accurate paycheck is the right payroll service. 7. Manage your books and accounting with bookkeeping services such as Alpha B Group Tax & Bookkeeping Services or hire an account manager who you trust and can get the job done. Managing your account is crucial to a successful.
