When it comes to your small business, knowing how to legally set up your business from the beginning is going to set you up for long-term success. From the type of business you set up to the licensing you may need, you will want to learn the different ways to set up a small business so that you are fully registered and insured. If you have employees on your payroll, you will also need to learn about how to be an employer, whether you need workers' compensation insurance and how to set up your payroll in order to pay taxes correctly. While you may have a great business plan, it can only be as strong as the foundation you build when you get started.
Setting Up for Tax Purposes
When you are running your business on your own, you can set up as a sole proprietorship. If you want a bit more protection, you can create a Limited Liability Corporation, or LLC. If you are the only owner, you are taxed as if you are a sole proprietorship and your business income and losses are attached to your personal income taxes. When you have an LLC and a business partner, taxes are paid by the corporation and your personal income taxes are a separate entity.
Know What to do With Employees
If you hire employees right at the start, you'll have to set up your payroll correctly. You can hire a payroll company to handle it for you if you have a number of employees and don't want to deal with it. You will have to have insurance that protects your business and employees in the event of an injury. Workers' compensation insurance is generally mandatory, and you will need to have it in order to hire employees to work for you.
Your Business Plan
As you prepare to open your business, make sure that a small business lawyer takes a look at your overall business plan. You can work with an attorney to develop your business plan, or simply have it reviewed by an attorney who works with small businesses. Your plan should be specific and give you a clear guideline to follow regarding how you are going to run your business as you get started.
Your small business can be very successful, but you have to build a strong foundation first. Work with an attorney on the legalities of your business, and know your licensing requirements before you open.