One of the most common questions that I receive as a small business owner is how to do a corporation. I have to admit that when I received my license for public practice last year, I did not know how to do a corporation. However, I do now. I just learned how to do a corporation tax return the other day. I hope to share with you some tips on how to do a corporation in the coming articles.
First, you will need to decide whether you would like to be treated as a sole proprietorship, a partnership, or a corporation. Do you want to form a C corporation, an LLC, a disregarded entity, or a totally disregarded entity? After you decide on these questions, you will need to decide how to do a corporation. You will need to select a name for your new corporation. Your county clerk should be able to help you with that.
If you select the option of a sole proprietorship, your new corporation will become a legal corporation in the eyes of the United States government. This means you are personally responsible for all of your company’s debts and profits. A sole proprietorship can be a good choice if you expect to make a relatively small amount of money, but it will not be as stable as a limited liability company or an LLC.
A corporation is formed for the benefit of all of its members. A limited liability company is a type of corporation that has been set up as a legal business entity for taxation purposes. The purpose of an LLC is to separate the management and investment funds of a business from the owners’ personal assets. You will need to determine how much income and expenses you will be taxed as a self-employed person and then apply it to your corporation as well. Self-employed individuals may be taxed at a higher rate than they would be if they had filed themselves as a sole proprietorship.
As with sole proprietorships, there is a possibility you can be sued by an individual for certain activities. This is one reason you want to limit your liability with a limited liability company. However, in some cases, the IRS may agree that you are not personally liable for the debts of your corporation. If this happens, you may be able to settle the debt with the IRS instead of settling with the individual who sued you. The IRS may offer to settle for a substantially less amount than what you actually owe, allowing you to pay off your debts quickly.
Forming a corporation requires meeting some very basic requirements and paying a few state fees. You will need to register your corporation with the secretary of state in the state in which you plan to run your business. You will also have to provide your LLC’s name and register it in a book. It is best to use the same name as your primary business so that your company and its assets will appear on all tax reports. Plus state fees apply to LLCs.
In order to get your corporation up and running, you must file a corporate tax lien form with the county auditor in your county. You will have to provide your name, date of birth, address, and numbers round the bottom of the form. The numbers round the top of the form are for the purpose of showing how much money you made during the year, not your net profit. Also, make sure that all numbers are in order or the county auditor cannot verify the information on your form.
Along with your forms, you will also need to register for liability protection. If you are the sole proprietor and are sued, the state will insist on you providing liability protection and this will be an additional fee. To protect yourself from being sued, you need to include liability protection on your articles of incorporation. Make sure you include the amount of insurance required.
As a sole proprietor, you will have to pay your own payroll taxes and this will be a separate payroll tax from your business profits. However, your accountant can help you complete your income tax return for the year. He can also advise you on whether or not to include a self-employed employee contribution in your income statement. A self-employed employee contribution is an expense not included in the business’s gross receipts. Self-employed employee contributions are only taxded once. If you have any employees, make sure they are included in the income statements and if not, add them later.
Aside from your own payroll taxes, you will be responsible for social security and Medicare taxes. In addition to these taxes, you will also have to pay property taxes, sales tax, and personal income tax. In order to file your taxes, you must follow the procedures in your state. However, if you are an adult with dependents, you will be required to file a joint income tax return.
The process of how to do a corporation is pretty simple and straight forward. First, the corporate tax return must be filed with the state government. Then, your corporation must submit its federal tax returns. All of these things are for your personal safety and security as a sole proprietor. This is not an effort to dodge your taxes. When you file your income tax returns with the IRS, they will contact you to make sure you are making payments on time.
Do not underestimate the liability that comes along with owning a business. This may be the only reason many people seek out help with how to do a corporation. When you own a business, you must be aware of all of the taxes you need to pay and all of the ins and outs of payroll and business licenses. There are many places to get help with this type of issue. Whether it is getting professional payroll service or dealing with small business insurance, there are many ways to go about covering all of the necessary taxes on your own.