You’re Starting a Business
You’re starting a business, and this is a major life event involving lots of work and many decisions. Any phase of the process without a plan is overwhelming. Hence, following a prescribed list of steps will help new small business owners with business incorporation and starting a business correctly from day one.
Determine business entity type
First, you will need to determine what type of business entity is appropriate for you. Consult an attorney specializing in this area of law to get this step right. This is the foundation for everything else that follows. Here is a very brief description of the options available:
|Sole Proprietorship||Not required to form a legal entity, but offers little liability protection|
|General Partnership||Requires two owners, partnership taxation|
|C Corporation||Owned by shareholders, liability protection, tax at the business level|
|S Corporation||Owned by shareholders, liability protection, pass-through entity|
|Limited Liability Company||Liability protection, pass-through entity, partnership taxation|
|Professional Corporation||Necessary if providing a professional service (law, accounting…)|
Is professional licensing required?
Determine if any business or occupational licenses are required for your type of business. There may be industry specific requirements established by your state, for example the Florida Department of Business and Professional Regulation (DBPR). You must meet any related requirements and apply for these licenses.
Now you are ready to handle the business incorporation. You will form your business by incorporating through your state’s regulator such as the Florida Division of Corporations. Once you have done this you can kick off the remaining steps.
- Register a DBA name if you wish to operate under a different name
- Obtain an Employer Identification Number (EIN) using IRS Form SS-4
- Contact a local bank and open a bank account under the business name and EIN
- Consider if making the S-Election is appropriate, if so file IRS Form 2553
- Set up business insurance for liability, property losses, worker’s comp, etc.
- Contact the state department of revenue at the appropriate time to establish account numbers for paying state taxes such as reemployment tax and sales tax, etc.
Finally, the work of operating the business begins. You will need to establish the rhythm of managing your ongoing bookkeeping, payroll tax returns and income tax returns for the business.
Put a repeatable process in place and stay up to date with these activities to avoid unnecessary, and potentially very costly, state and federal penalties. An experienced professional such as a certified public accountant or tax accountant can help you do this correctly and save you time.
As a result, you will expend far less effort and endure less stress by keeping all your record keeping current and your tax filings on time. This translates to time and energy you want to reserve for building your business and making it the best it can be for you and your customers.