During these uncertain times we are living in, there are many people re-evaluating their lives. One of these evaluations deals with starting a business.With job lost due to COVID-19, many people are looking for other ways to create income.
Let me provide tips to start:
1. Figure out what business you want to get into – Business (Wholesale, Retail, Custom Made Products, Coaching),Education (Online Teaching, Contract with Schools), Health (Health Coach, Private Health Practice), Law (Private Law Practice), Engineering, Construction, Architecture, Creative Arts, Performing Arts, Accounting, Music, Coaching (Business, Health), Real Estate (Buy and Flip, Coaching) and Nonprofit (Social Justice)
2. Come up with a creative business name. Try a unique name. If you need help generating a name go to https://www.thebalancesmb.com/top-free-business-name-generators-2951856. When you have figured it out, conduct a business search to make sure no one is using that name. Got to https://www.thebalancesmb.com/how-do-i-research-my-business-name-397568
3. When you have the name, you need to choose how to form your company – Sole Proprietorship, DBA, LLC, Corporations and Partnerships. Note: PLEASE SEEK A LAWYER FOR FURTHER EXPLANATION ON THE FORMATION OF YOUR COMPANY.
Sole Proprietorships and DBAs under sole proprietorships are usually very risky. If you go into debt or have any financial lawsuit against you, your business and personal assets will be used to pay off debts. Learn about the advantages and disadvantages here: https://www.thebalancesmb.com/sole-proprietorship-2947269
The most popular is LLC formation. This is because your personal assets are separated from your business assets. The personal assets will not be pursued if there is a lawsuit. Learn about the advantages of LLC here: https://www.thebalancesmb.com/limited-liability-company-llc-1794304
For corporations, there are personal service corporations, professional corporations, B Corporations, C Corporations and S Corporations.
In a corporation, shareholders and officers are protected from personal liability.
This is different for professional corporations which consist of a group of professionals (accounting, actuarial science, architecture, consulting, engineering, health – including veterinary services, law, and the performing arts) when being sued for malpractice. For professional service corporations, its employee-owners own more than 10% of the fair market value of its outstanding stock and 20% of the corporation’s compensation cost for its activities of performing personal services. Go to: https://www.thebalancesmb.com/professional-vs-personal-services-corp-398415
“B” Corporations are benefit corporations that make a profit and at the same time doing public good. For example, working at a company where a certain amount of your work hours are for doing non-profit work. Check out this link: https://www.thebalancesmb.com/forming-a-b-corporation-for-social-benefit-397841
“C” Corporations are more complicated than sole proprietors and LLCs but at the same time has many benefits. It is independent of its owners, no personal tax liability, has a board of directors and shareholders. Read more here: https://www.thebalancesmb.com/the-basics-of-forming-a-c-corporation-2951771
“S” Corporations has between 1 and 100 shareholders that pass their net income and losses to their shareholders. They do not pay corporate tax rates and are exempt from federal income taxes except for certain capital gains and passive income. Read more here: https://www.thebalancesmb.com/what-is-an-s-corporation-3193230
A Business Partnership is between 2 or more people that work as co-owners. The partners must bring in capital to the company and lay out in writing the percentage of profit that each partner gets. Partners are personally liable for the partnership’s debts.
We have Limited Partnerships and Limited Liability Partnerships.
Limited Partnerships involve one partner running the day to day of the business and the other doesn’t involve itself in the operations and have no personal liability
Limited Liability Partnership involves not taking personal liability for the other partner’s debts
4. Now it’s time to register to your business. I use legalzoom to register my company online. Just note:if you are registering non profit, seek a lawyer. You may not be able to register online. This is the link to Legalzoom: https://www.legalzoom.com.
You can seek a lawyer through Legalshield: https://www.legalshield.com/
5. Open up a business bank account – Your business account should not be mingled with your personal bank account. If you live in the United States, here is a link to the top banking institutions:
6. Financial Software – Keep account of your financial transactions through a financial software ( Sage, Quickbooks). Check out the link for the best softwares:
Congrats On Your New Business!!
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