What are the "DO'S" and "DON'TS" when creating your own business entity?
KNOW THAT THERE IS NO LEGAL ADVICE BEING PROVIDED OF ANY KIND IN THIS BLOG.
Ask yourself what type of business you want to have.
o Such as:
· Legal Representation
· Medical Practice
· And so on…
o Ask yourself if anything you want to do require a license, or permit.
o Ask yourself if you have a business partner or not.
o Ask yourself if you plan on branding your name or the company.
o Ask if you plan on having employees or not, or if you plan to outsource.
· Figure out what you want to do.
· Always register with your state.
· You have to use a physical address or your application will be denied (They know if it a PO. BOX or not).
· Apply online it is easier and faster.
· Make sure, with your state, if you have to pay for your company to be registered once a year or 10 years etc.
· Get your EIN from www.irs.gov. They are open online Monday through Friday from 9am-5pm your time zone. You can only apply for 1 EIN once per business day.
· Make sure you set up your E-file for taxes to get a TIN number from the IRS. This way you can pay for your state and government taxes much easier. You can pay the government taxes through your E-file TIN number, and you can pay the comp controller for your state via online for your state website.
· If you have a business partner you have to either file for a Partnership, LLP– LTP (for United Kingdom), General Liability, Private Association (Great for businesses that practice alternative methods and require a license or permit), S-Corp (best for big companies that want extra protection– comes with a hefty price worth it if sued), C-Corporation (same as S-Corporation). If you are one entity then LLC is what most do (this is because you can only be sued for as much as you invested into your company, no more). Sole Proprietorship is the most dangerous one, because you can be sued for everything…Including your home, car, and the whole enchilada!
· If your Sovereign have:
o A Memorandum and notarized
o A Business Agreement and notarized
o A Membership Agreement and notarized
o An Articles of Association and notarized
o A Business Trust and notarized
o File for Sales tax only.
o Get an EIN from www.irs.gov
o Get an e-File NUMBER (aka: TIN Number)
o Get a Dun & Brad Street number for your business at www.dnb.com
Guessing when you are filling out paperwork.
o This is a legal binding contract and the state and government will cease the opportunity to take you for all you have. Take a moment to read documents. It is self-intuitive it take less than 5 minutes to read and fill out. I mean come on…not worth the fines and penalties.
o Filing the wrong entity.
o Making changes to your company and not filing the changes.
o Practicing without a license or permit when required.
o Forgetting to file for taxes, (when you can request to defer them.)
· Not lawfully protecting yourself by not registering your entity.
· Forgetting to register with your state.
· Using a PO. BOX for address (They know! Trust and believe they do. They have to have a physical address, so they know where to serve you if you are being sued. Or worse, IRS wants to be the nosy “Big-Brother”).
· Applying in person (unless a foreign entity wanting to practice in the states).
· Not knowing when you have to renew your business registration.
· Forgetting your EIN.
· Filing or the wrong EIN.
· Not filing for a TIN.
· Having a partner and not having them registered.
· If your Sovereign NOT:
* Having a Memorandum and notarized
* Having a Business Agreement and notarized
* Having a Membership Agreement and notarized
* Having an Articles of Association and notarized
* Having a Business Trust and notarized
* Filing taxes period.
* Filing the right taxes (such as paying government taxes– your exempt from government taxes except sales tax).
* Registering for an EIN from www.irs.gov
* Getting an e-File NUMBER (aka: TIN Number)
* Getting a Dun & Brad Street number for your business at www.dnb.com
Did you know there are only 2 types of organizations. A non-organization and an organization.
o Self Employed (Your social is a registered business– a sole proprietor has more rights than you)!
o Independent Contractor/Freelancer/Consultant/ Entrepreneur (You better have license or permits if you need them)
o Sole Proprietor (Only 1 owner– Hence “SOLE”)
o Limited Liability Company (LLC– one 1 owner)
o General Partnership (One partner runs it and the other is like a silent partner)
o Lower Tier Partnership (Basically upper management– Upper Tier Partnership aka: UTP, absorb any fees and taxes because it owns the LTP. This is for company’s that operate from United Kingdom and registered to do business in the United States with the IRS).
o Partnership (Not as protected. It has the same protection of a Sole Proprietor– almost nonexistent).
o Limited Liability Partnership (LLP– same protection as an LLC– can only be sued for what was invested into the company).
o Incorporated (Inc.– this means this business is under another business. Like Inc. is the Captain of the ship, and whatever business it is under is the Captain of the fleet).
o Subchapter S Corporation, aka: Small Business Corporation (S-Corp– owned by shareholders, who pay the taxes).
o Subchapter C Corporation (C-Corp– company is owned by shareholders, who pay the taxes for the business and for the shareholders– basically taxed twice).
o Non-Profit Organization (NPO or Non-Profits: can be particularly or fully taxed exempt, but you still must file or you are still taxable. If company has 25 employees or less, then it can file for E-Z tax with the IRS. Once approved, then you will no longer have to pay taxes but you still have to file them).
o Private Association (P.A.–It is a mix of a non-organization and that has to have a license. You still file with the state. It is not sovereign. This one can be tricky if you do not know the law and your rights. Can have great benefits if you are familiar with the law, if not, don’t risk it).
o Non-Profit Organizations (Depending on what type of Non-Profit will depend if it will be partially tax exempt, or fully tax exempt. It does not matter if you registered with the IRS and state as a non-profit, or call yourself that. You have to file for tax exemption with the IRS. E-Z exempt is for 25 or less employees and that can take 30-90 days. While the other one can take up to 180 days before you can be approved. Once it is approved you do not have to pay taxes, but if you receive funds before approval then all of it is taxable).
o Private Members Association (P.M.A.- this is the only type you do NOT register with the state, you HAVE to represent yourself and your company in any lawsuit. If you are sovereign you can never go to jail unless you violate one of the 4 main LAND LAWS, otherwise no government entity can search you books, house, or thrown in jail. You have to know the law. This requires far more effort on your own behalf, but if you have a full understanding of the AIR, LAND, and WATER LAWS, it can be highly beneficial. This is the only business that you only have to pay sales taxes on, and that is it).
All in all, get familiar with the law regardless what entity you decide!
ONCE AGAIN THIS IS NOT LEGAL ADVICE. THEY ARE DISCOVERIES MADE AND OUR OPINION, BASED ON PERSONAL EXPERIENCE AND RESEARCH.