Small home business legal issues
Small home business legal issues
Small home business legal issuesSmall home business legal issues,Some home business owners start out as a sole proprietorship. This means all your personal and business assets are combined. Your business is now a part of you and it's not a separate entity. This is the riskiest home business as it leaves all of your personal assets at risk in the event of a lawsuit. It will also make it harder for you to acquire financing for your home business, forcing you to use your personal credit history to acquire funding for your business.http://www.ixgw.com/ Best Financial Advice - Financial Planning | www.IXGW.com
The best legal entity for home businesses is a LLC. A LLC is called a limited liability corporation. An LLC protects your personal assets as lawsuits can only come after the business assets. The LLC can be created as a single member or you can create it with multiple partners. When you form a LLC as a partnership, you will have employees unlike you do when you create a sole proprietorship or a single member LLC.
How can you legally declare your business as an LLC? You can easily do it online in just a matter of minutes. There are a number of websites you can use to declare your business as a separate and legal entity. Depending upon your state, it will usually cost you about $800 or so to declare a single member LLC. You will need to apply for a Federal ID number. You can do this at irs.gov and it will only take a few minutes to apply for it.
After you declare your business a legal entity, your next step is to create a business bank account. This is where all the money will go in and out of your business. You must have a business bank account to make sure your business is considered legal as lenders will use this to qualify you for a loan. Most loans will require that you set up an automatic payment plan for the loan. The business bank account also provides you with credibility and takes you into the playing field instead of just being part of the home business crowd.
You also need to make sure you are paying your quarterly business taxes. Depending upon the type of business entity you have declared, you must pay taxes at a higher rate, usually 15.3% compared to corporations. Since your personal assets and business assets can get mixed up, it's important to keep an inventory of all your assets. You also need to work with a CPA to make sure you are getting the right business tax deductions since you are taxed at a high rate.
Now that you have all the legal things taken care of your next step should be to create credibility for your home business. Build your own website, purchase a business phone line, have a PO Box set up for your business. You need to make sure you cover all the steps of setting up a small home business to make sure the IRS is happy and that you are able to remain in business because you have covered everything. Running your own home business is not going to be easy but with persistence and hard work you will be able to turn it into a great success.http://www.ixgw.com/2010/06/small-home-business-legal-issues/
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