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Your Official Documents
Quote This section is somewhat specific to the United States - if you are outside of the United States, you may still find some benefits here, however feel free to skip to the next section on page 20. The first steps are somewhat boring, but necessary in order to run a real legitimate business and as we go through these steps, you will understand why. If you have avoided taking work on because you are afraid if you can legally take on work or not without having the proper licenses or appropriate registrations, you may be possibly overly cautious. There is a small threshold of income that you can make where your work would be considered a "hobby" - in my state, that threshold is $600. You should check with a legal or accounting professional what the guidelines are where you are located. Most CPA (Certified Public Accountants) will do a free consultation with you and to invest the time to meet with 3 or 4 people will offer you two benefits: 1 - You will know the basics of what you need to legally do to operate a business in your location, as well as how much it may cost, and 2 - You will know who you like as an accountant, who you mesh with and who you would like to hire when the time comes. This may not necessarily have to be the first thing that you do, however it should be something you consider doing in the first 30 days. When you meet with your potential accountants, be prepared to explain to them that you intend to provide Internet services and that you are just starting out, and you want to know how you should structure your business (ie. an LLC, a corporation a sole proprietorship, etc.) This is how I have structured my business: My business is a corporation - I know it is more accounting, however I run several businesses and by filing all of them as it's own entity as separate corporations, I do not complicate my personal taxes since I just get paychecks from my various companies as I deem fit to pay myself. Additionally, the liabilities of the business being separate from me personally works with me better - it is a personal choice on how to structure your business and there are advantages and disadvantages to every structure, however this is what I chose. Furthermore, I like that I do not have to openly disclose that I am self-employed when I am dealing with my personal business matters because technically I am not. I am an employee of a corporation and I receive a paycheck just like any other person that has a regular job does. In fact, I get a few paychecks. I have paycheck stubs and my corporations pay taxes and payroll taxes just like any other company. There are very few situations that arise where I have to disclose that I am a shareholder of my corporation, however for most practical purposes, when I am asked if I have a job, I say yes. When I am asked where I work, I give them the company name. When I am asked for paycheck stubs, I have them and everything checks out because everything is legitimate. I actually incorporated my businesses myself, and I have a CPA that just handles my taxes. I incorporated in Wyoming because that state has minimal records that need to be filed annually, has little to no state taxes that need to be paid and has very private options in regards to the filings of my businesses (ie. most filings and records are disclosed only by court orders, as opposed to other states where such filings are made part of public record, etc). This is how I chose to structure my business because it was right for me - obviously, there are other ways to do things and you can explore those options if you so chose! I hired a registered agent who basically does all the paperwork for me and advises me of filings I need to do - it all runs really smoothly. Here is where I started the process for myself: http://wyomingregisteredagent.com/ If you do decide to form a corporation, you will receive documents back that are called Articles of Incorporation. These are very important documents (although I have to admit they do not look all that official LOL). Now with these documents, no one can sue you personally for things relating to your business and these documents are what you would present if someone attempts to do so. Furthermore any legal or financial thing you do on behalf of your business (such as open a business bank account) will require you to present these documents. Once you have filed for your incorporation papers, you will need an EIN number - this is basically a social security number for your business. This is free to file and you can file it all yourself and do it online and get the number pretty instantly. Here is where you start the process and it is fairly self-explanatory as far as how to obtain it. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online (Click where it says "APPLY ONLINE NOW" toward the bottom) Once you have both of these documents, call the city clerk's office in your town or city, and if you are a home based business, ask the clerk if home based businesses need a business license. They should be pretty friendly and helpful and let you know if you need a license. If you do need one, it should be pretty inexpensive and worth picking up so that you are operating legally. While you are on the phone, ask the clerk if she knows if you need a state license, and if so, what number to call to pick one up - you may or may not need one depending on your state, and the city office will likely point you in the right direction of who to call. Now that you have all your paperwork, you are ready to open your business bank account! Source: Content Machine | |
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