Tag Archive | "How to Start a Business"

How to Start a Business: Picking A Business Structure Right For You

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Tips For Starting A Business: A Corporation How To Guide – Most of us out there have some great ideas in life. Some of them are a heck of a lot easier to monetize than others. However, the problem that so many Americans have with their businesses is that they just don’t know how to start a business. As a result, they often end up giving up on their big business dreams, or they end up starting a business that just doesn’t work for them. Figure out how to form a business that works for you with this easy guide to starting a business!

There are several different ways to form a business, but if you starting a business by yourself, you only really have a handful of options. You can just do your business on a Schedule C, or you can form an LLC or form a Corporation. If you elect to have an LLC, you will need to figure out whether you want your LLC to be a corporation or not. If so, or if you just choose to start straight at a corporation, you’ll have to decide whether you want your corporation to be treated as a C-Corporation or an S-Corporation.

Why You Don’t Want To Be A Schedule C: There are really only downsides to being on a Schedule C. The worst reason of all is that the individual is subject to income tax at the state level (if your state has an income tax), along with the federal level, and before you have to pay income tax, you have to pay what is known as self-employment tax. In the years 2011 and 2012, self-employment tax is equal to 13.3% of your bottom line. In other words, if your business made $100,000 and you had $40,000 in expenses to make that $100,000, you would have to pay 13.3% of $60,000 before you ever paid a dime in income tax. That’s a whopping $7,980 in tax BEFORE income taxes kick in.

Why You Don’t Want To Be A C-Corporation: If you are working with just yourself, at this point, there really is no point to be a C-Corporation in most states. Do be sure to check with your accountant before forming a corporation though, as laws for every state are treated just a bit differently. The good news about forming a C-Corporation or an LLC that is treated as a C-Corporation is that you have what is known as corporate protection. That means if your product or service that you are selling ends up causing harm to one of your clients and they try to sue you, they can only sue the assets that belong to your corporation. In other words, they can’t go after your personal house, your personal car, and the likes. C-Corporations have their own tax structure, but that structure is higher than that of a personal tax return. Generally, if your business is making legitimate money, a C-Corp will cost you a ton in taxes.

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Why You Do Want To Be An S-Corporation: Again, before we begin, we have to reiterate the fact that you should really speak to an accountant before starting a business depending upon what state you are in. Generally speaking though, starting an S-Corporation is the way to go if you are a single business owner and don’t intend on ever having partners. Remember that 13.3% self-employment tax that we were talking about before with a Schedule C? That goes out the window. You only pay income tax on the bottom line of the corporation. So if you had $100,000 in income and $40,000 in expenses, you would only pay income taxes on that $60,000, not that whopping $7,980 in addition to income taxes as we spoke about before. You also get all of the perks of corporation protection that we spoke about earlier.

The downside to an S-Corporation is that there is a lot more paperwork that needs to be filled out for you to be in business. You have to take what is known as a “fair value salary.” Think of that as your corporation’s way of paying you for your services. You will have to pay that annoying 13.3% on the salary that you pay to yourself, but you won’t have to pay anything more than income tax on the rest of the money that you make. So what is a “fair value salary?” The good news is that there really isn’t a rule in the book that shows you what a “fair value” is for the services that you provide to your own business. Generally, if you’re making less than $50,000 for the year, if you pay yourself a $10,000 salary, you should be just fine. And if you’re making more than $50,000 or so, make sure that you give yourself a salary of at least 20% of what you make for the year.

So now you know the tricks of the trade and can form your own business right away! Now go out there and live out the great American dream of owning your own business and starting making big money today!

How to Start Your Own Business – Tips and Advice on How to Start a Successful Business

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How to Start Your Own Business – Tips and Advice on Starting a Successful Business: Many people dream of being their own boss, setting the rules and calling the shots. For most people, the only way this is ever going to happen is to start their own business. Doing so is easier said than done, and there are a number of steps that are required to get a business up and running. However, there are a few things you can do to help ensure that you are successful in starting your own business.

The obvious first step in the process is to come up with an idea to base your business around. This can be anything from a brand new invention or service to an improved version of an existing product or service. Whether you choose a field you are passionate about, one you know, or simply one you think will be profitable, starting your own business begins with an idea.

From there, you need to establish a business plan, and it needs to be a little more in depth than produce, sell and profit. You need to determine how much it is going to cost you to produce your product or provide your service. These costs include more than just materials needed to produce a product. Storage space, an office, and a new phone line are just a few of the extra costs that could be required depending on the type of business you plan to start. Don’t forget to factor a salary for yourself into the equation. After all, you still need to live your life.

You also need to determine what you can charge consumers by examining competitors in the field. From this basic business plan, you can get a rough idea of the sales figures you will need in order to make enough money to cover both your business and personal expenses. If the sales figures seem unrealistic, then you should consider altering facets of your business or changing the plan completely and starting over.

The next step is securing financial backing. The easiest way is to fund the business with your own money, using personal savings or money earned at another job. You can also secure a loan from a bank. With this method, you will usually need to present the business plan to a loan officer when applying for the loan. If you need some more funds but want to avoid the banks, you can approach other individuals to serve as financial backers. These people will provide you with the money necessary to start the business in return for some pre-arranged compensation, usually a percentage of the business’ income.

With a plan in place and the necessary money secured, your next goal is to promote your business and begin gaining and judging customer interest. While print ads and commercials are an option, the Internet has become a cheap and effective way to advertise through the use of email as well as chat rooms related to your business. If you begin to receive positive feedback or people inquiring about how to purchase from you, it’s time to get things running.

As your business opens its doors, make sure to keep good sales records and record as much customer information as possible. You will be better equipped to make your business more effective if you have a strong understanding of your customer base.

Even when you follow the basic steps, starting your own business is going to require a huge time investment in your part. Remember, you are going to be new to the market, competing against established companies that already have a customer base. You may have to run sales and specials initially in order to get people in the door, but if you provide a quality product or service, you will build a lasting business in the long run.

Please leave a comment below as we are always interested in hearing feedback on our articles or even other tips and advice we forgot to mention that you have used to make money starting your own successful business.

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