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    1. Bluewonder is offline

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      #1

      Tax Considerations For New Businesses

      New businesses frequently come up with queries on tax considerations for beginners. They want to know if there are any key considerations to pay heed to before establishing and operating a new business. This guide should answer some of these common questions. The time you spend establishing and operating a business can be an exciting undertaking in itself.

      It helps to be careful, for even registering a business name inaccurately can stop the best business from operating. Following are important steps to set the stage for a successful business:

      1. Register your business name: Registering a business name is the first step. With the exception of conducting business in your own name, state law requires you to register a trade name.

      Confirm that your business name is not already used, as this would make it invalid. The state may also require you to procure and maintain licenses. Inquire with your licensing authority as to the fulfilment of all legal documents. Conducting business in your specific state without incumbent licenses and tax and sales IDs could put your customers, company, and you at legal risk. Obtain all required licenses before starting business.

      2. Find a suitable ownership structure: A good number of businesses like to start as sole proprietors. As the name suggests, a sole proprietorship allows all the benefits as one owner. The advantages to a sole proprietorship structure include the ease of founding and convenient tax reporting. One major disadvantage is the personal liability; all legal and financial responsibility falls upon the sole proprietor.

      Where more than one business owner is involved, a partnership may be an ideal option. Most partnerships have same benefits of a sole proprietorship, but a key disadvantage is the shared responsibilities partners have.

      Corporation is an independent entity. One chief advantage is the shareholders’ limited liability and the convenience it allows for raising capital. Drawbacks include greater tax liability and manifold documentation and legal work.

      Many businesses opt for a limited liability corporation, or LLC. A relatively new ownership structure, an LLC may be a good structure owing to the limited liability of a corporation, the tax benefits, and the operational convenience of a partnership. Discuss all the ownership structures in detail with your attorney and financial advisor before opting for the best one.

      3. Insure your business: It is important to protect your business against natural forces and incidental damages. Without insurance, your business can tumble overnight owing to fire or natural calamities, and you may be forced to suffer years of personal financial liability. Insure your business against such calamities. Get a robust insurance policy by speaking to an insurance agent, and fully understand the risks and rewards of protecting your business.

      4. Operational procedures: Businesses come with different responsibilities; one such area is administration. Some states like New Jersey require business owners to report wages, withhold taxes, and forward payments on a monthly or quarterly basis. You may need to submit information on wages, employee withholdings of gross income tax, state unemployment insurance, workforce development partnership fund, and liability insurance.

      Some states require all employers not covered by federal programs to have workers’ compensation coverage or be approved for self-insurance. Consider outsourcing these administrative responsibilities so you can focus on your key responsibilities and progress.

      5. Make the rules: While starting your company rules, make strong policies to set a benchmark. Take examples from former employers, and discard the weak ones. Do not allow slipshod industry standards to form your company rules. Set company benchmarks that exceed the norm and help you perpetually improve and excel. Quality-driven services and products will result in more referrals and additional clients for your business.

      Founding a business requires hard work and commitment. Hopefully, the above outlined steps will help you establish a sound legal business and help you increase your success. You may or may not be able to understand all the complexities, financial implications, and liability on your own. It helps to seek professional assistance to get all the formalities, licenses, and documents in place.
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    2. Thank you for this post:

      Kyle (09 Aug 2011)

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