Choosing An Entity

                        Forming an Entity

Once you have decided to start a business you will need to choose which type of entity will suit your business. Once you have your entity you are now officially a business. There are several types of entities depending on your business and the size of your business.
                • Sole Proprietor
                • Partnership
                • Corporations
                • LLCs
                • Limited Liability Partnerships
These are all filed at a state level so you will need to follow all the state laws. Many states will require you to file documents, so make sure to file any necessary paperwork with the Secretary of the State. Once you pick the name of your business you will need to file for a FEIN (Federal Tax Identification Number) with the IRS which can be done online and there are no fees for you to pay. Then just fill out the forms on the IRS page and send them to the Secretary of the State for approval. There are a few common reasons people have an entity:
                 • Taxes - If you are a Sole Proprietor you will only need to file one tax. The IRS considers you and your business as one and just needs to know your income. You can also receive tax breaks for Corporations and LLC’s. It is best to talk with your accountant and attorney to see which tax breaks you might be able to get and make sure you have everything you need when filing your taxes.
                 • Structured Business Plans – When you just start a business you may need some guidance on what to do. Since you are an entity you will need to follow the laws of the state which will help give you some structure to start building your business along with following your business plan will give you the support you need to start your business.
                 • Protecting the Business Owner – By having an entity you are protecting yourself from liability. If your company release a product that has a problem your company is responsible instead of you.
                • Your image – Having an entity will make your business look more professional. People are more likely to notice your business as a legitimate business rather than a fly by night.

Take time to decide what entity best suits your business. File for your entity as soon as you can so that you can make your business a real business and get the benefits of being an entity.

The Groomy Team   -   We hope this was helpful