Important Considerations When Starting Your Business
During periods of economic downturns, corporations usually lay off employees in order to lessen costs. And in every slide in the economy, many of those employees who are laid off start their own small business. Those who are new in the world of business making should start off on their right foot by avoiding different problems like financial, legal and tax related problems which often rip up the self employed people. Here are some tips in successfully launching your business.
- Create a legal structure. Perhaps one of the very first questions that every small business owner should consider is whether to operate as a corporation or a sole proprietorship. You will automatically start as a sole proprietorship. If you operate as a sole proprietor, it will cost you no money since you will not have to pay anything in creating corporate documents as well as tax returns. Whether you need to continue to operate as a sole proprietor will depend on the growth of your business and in personal risk tolerance.
- Experts say that they will urge people to set up corporation since it will give you some legal protection in the long run. You will be surprised at the amount of liability which can endanger when you set yourself up as an owner of a business. People will come at you with claims and legal litigation or there are those that will dun your bills. It also protects your personal credit rating.
- Be vigilant in paying your taxes. The way that you structure your business will provide you with guidance on how soon you will have to begin paying the taxes on your earnings. Though there may be some considerations, the general rule is that if you are operating as a sole proprietor, you need not immediately pay your taxes. You need to be familiar with the law so that you will know what the necessary taxes that you need to file. However there are no penalties if within the year you shift from being a full time employee to being self employed and if you do not make quarterly payment of taxes. Paper Mart has become successful in its business endeavor as it plays by the rule of law.