Choose a Legal Structure Before You Open Your Business
The first decision you need to make after determining that you want to be an entrepreneur is the type of legal structure your business will take. The structure will determine how you pay your business taxes and whether you can lose your personal property in a dispute with a client. There is more to this decision than simply picking the most advantageous structure or the easiest one to establish. Your entire business will depend on this decision and making the most appropriate one in the beginning can save you a lot of time and money later.
Sole proprietorships are easy to establish and typically don't need the assistance of an attorney. You simply need to declare you are in business and purchase the appropriate licenses from your state. With this type of business, you won't need to file a special income tax return or any other annual documents with the government related specifically to your business. You will need to pay any applicable sales tax and keep accurate records if you hope to deduct business expenses from your taxable income. If a dissatisfied customer sues your company, you may have to forfeit your personal property if you lose.
Other options for forming a new business can help you protect your belongings, but they require more detailed setup and ongoing recordkeeping. You will have to register your business in order to get the legal advantages and you will have more responsibilities than a sole proprietorship owner. If you choose an LLC, C Corporation, S Corporation or nonprofit organization as your business structure, it will be very important to keep your business and personal finances separate. Business owners who have made the mistake of commingling their money have lost their personal property in lawsuits.
To learn more about the right way to set up your business, visit http://samaan-law.com/. You can learn about the different legal structures and find out how to get advice from an experienced attorney. Learning all you can before take your first order might prevent future legal problems and help your company stay in business for many years to come.