How did you get started with your own business, how do you organize it?

Thanks ezminisites,

I'll check that out. Any other great sources to get started, great website or amazing book on that topic that some of you wished they had before they started out.

Any advise would be helpful.

Cheers,
Mario

Check out your local SCORE office. I can't remember exactly what the first two letters mean (society core or society counselors?? of retired executives.) They usually have an office close to SBA. Services are free. All the volunteers were management and/or entrepreneurs.

They also have an excellent website at SCORE
You can also sign up for email mentoring. There are hundreds of mentors categorized by industry and state. You can sort through them and contact one whose experience matches what you are looking for.

Also, the SBDC, Small Business Development Center, might be able to help you. Their services are free too. Once you contact one agency, you will learn about the others-- they work together.

Good luck,
Tam

Forgot to add: I highly recommend the book: Small Time Business Operator: How to Start Your Own Business, Keep Your Books, Pay Your Taxes & Stay Out of Trouble by Bernard Kamoroff. I believe a new edition comes out every two years.

My understanding is that the IRS stopped issuing EINs for sole propietorships several years ago. You must use your own SSN. Quoting from the above link, which is somewhat ambiguous:

AFAIK, that "one EIN" is your SSN. You used to be able to apply for any number of EINs.


(Part of the problem is that they're running out of numbers! So they don't want to allocate more than one to any "legal person", which includes individuals and entities.)

-David

You can get an EIN. It is different than your Social Security number. You can only get one as a sole prop though. If you form a separate legal entity such as an LLC, S-Corp, etc you get new ones for those.

When you think of your business structure there are different parts you need to think about. It is not usually a straight forward decision though it can be easy if you have the right knowledge. I have started a series of articles on different business structures with their pros and cons.

http://www.askthewealthsquad.com/blo...roprietorship/ covers sole props. If you have questions I will be glad to answer them for you just PM me or use my contact form on my website.

1) Taxes
2) Legal liability
3) Simplicity
4) Capital
5) Exit strategy

1) Taxes - When you talk to a CPA, they will tell you to do what is best from a tax standpoint (and not all CPAs are experts in taxation. They are accountants - they keep excellent records but may not have a lot of experience in setting up a business structure to minimize the taxes you pay or the liability you have). Ask them for the reason they suggest what they suggest. Don't take it on faith that they know what they are talking about. The different entities have different tax benefits and advantages. Just make sure you understand the benefits of doing it the way they suggest.

2) Legal liability - Piercing the veil was mentioned above. Treat your business as a separate being. It is not you. Have a separate checking account, etc to reduce your liability. Usually setting up your business in the state you do business in will be the easiest and best thing to do. People often mention Delaware but unless you are going to physically operate in many different states and be a several million dollar business it probably is not worth it. You also have to register in the state you are doing business in as well as a foreign entity. This only applies to physical presence. Doing business on the internet would not create a nexus in that state. Also realize that some affiliate programs are starting to drop certain states. Amazon doesn't like NC because of some recent changes in the nexus laws (Nexus is how they get a physical presence. NC decided that an affiliate in the state meant they had a physical presence and had to collect sales tax on every thing sold by an affiliate in the state. So Amazon simply dropped all affiliates in NC.

3) Simplicity - Every decision creates its own consequences. Being a sole prop is the simplest business structure. It is the least tax favorable and has the least legal protection. Combining a C-Corp with an S-corp provides the greatest tax reductions with the greatest legal protection but also has the greatest complexity due to the number of forms required, different bank accounts, tax returns, etc. It also has a higher cost because of those reasons too. So you have to decide if the advantages outweigh the consequences.

4) Capital - As a sole prop, you have difficultly getting capital if you need it. As a business structure, you have to establish and build your own business credit. You do have more options though for selling private stock, taking on investors, etc. If capital is not an issue, don't worry about this one.

5) Exit strategy - If you plan on one day selling your business, the structure you have will have some impact on how easy it is to sell. A sole prop business is harder to sell IMHO. Most people will only buy the assets and not the business so you will have to close the business unless you are just selling parts of it. Having separate business accounts makes it easier to show the value of what you are selling.

Disclaimer - I am not an attorney, accountant or other legal professional. I do coach small business on a regular basis on how to reduce their taxes and be more profitable so I have learned the basics over the years. Some things will change by state. In SC a S-Corp is far simpler to set up and maintain than an LLC but you also have to issue yourself a W2.

I am happy to help with any specifics,just contact me.

Thanx
Scott

One way to cut the cost of changing your business structure is to start a new one in the form you want. Have it subcontract to your existing business to manage every thing. You do end up with two sets of tax forms to file but saves the headaches of trying to switch.