While everyone was picking out their new year’s resolutions, you decided that forming your own businesses suited you best. Now it’s time to put your money where your mouth is; as well as your time, energy and 100% undying focus. Only you can decide if entrepreneurship is truly for you or if this is just another fad that you won’t feel so strongly about a few weeks from now. If you want to know how to form your own business just in case the new business bug has struck you in the right place at the right time, here are a few basic steps to get you started.
Your Business Name
Before we get into how to form your business, you should come up with a legal name. This name should be unique to your business and industry so that there are no battles for ownership of the name later on. Consider your name carefully. Unless you want to go through the tedious process of rebranding your company at a later date, you’re pretty much stuck with the business name you choose.
Forming your business will eventually require you to make a trip to your local county processing office. Here you will fill out the required paperwork for forming your business legally, and your business name aka DBA (doing business as) will be one of the first things listed on most official forms.
The next step in forming your business is to choose the structure you prefer. A sole proprietorship is ideal for learning how to form your business from home. Some examples include freelance graphic designers or writers who lack a staff or management team. In many cases, the sole proprietor’s name and the business are the same.
A partnership is when two or more people share all benefits and risks of that business, a Limited Liability Company (LLC) will protect your assets in case you are ever brought to court and a Corporation (C or S) will allow you to divvy up ownership of your company on a grander scale.
Keep in mind that your business structure can change at any time. You can start out as a sole proprietor now and move into a partnership or corporation status later on as you grow and develop your original idea. For right now, choose the business structure that best suits your needs and fill out the official form accordingly.
LLCs and Corporations will need to apply to receive a Tax ID number, which allows the IRS to track your business transactions. If you are forming your business as a sole proprietorship or partnership, the parties’ social security numbers should more than suffice.
Permits, Tax Forms and Income Tax
To learn how to form your business so that it abides by federal and local laws, find out which permits you might need and file them accordingly and well on time. If you plan to hire staff or use general contractors, such as freelance coders or painters, find out which tax forms you are required to file and make sure they go out to the proper personnel at the proper times.
You may have noticed that this advice for how to form your business focuses heavily on tax preparation. Get used to this fact, because you will need to think about taxes, the way you are collecting taxes and the way you pay them all throughout the year.
To make organizing your tax information and the payment of your taxes much easier on everyone involved with your company, hire an accountant. If you are a sole proprietorship or even a partnership, you may be able to get by with a good accounting software program, but an accountant will push your taxes to the backburner, where they belong if you don’t want the stress of taxes to ruin your vision or business performance.
Your 2014 business has a high chance of success as long as you follow the rules and stick to your business plan no matter what comes your way. Now that you know how to form your business, it’s time to take action. Come up with a name that customers will easily remember, visit your local county processing office and fill out all the necessary paperwork. When your business is legal and official, nothing can stand in your way. It’s only then that the road to success becomes wide open, with only your ambition and your rock-solid business plan to propel you forward. Get started today to experience a much more successful tomorrow.