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Business Formation FAQs

One of the first decisions you’ll make is the type of business you will open. You have several options to explore, including where you’ll do business, how you will structure your business, and how you will conduct business. Additionally, you should explore opportunities that exist for people with specific characteristics. Email us, or give us a call, and we can discuss the various types of entities, and what works best for your situation.
While bylaws are not required by law, they do need to comply with state law and are essential to the success of your company. Bylaws list membership requirements, duties and responsibilities, and other operational procedures that allow your company to run smoothly. Articles of incorporation and bylaws must be adopted by the majority of your members according to most state laws. Operating agreements are not required by most states and are not filed at your state office. However, an operating agreement is highly recommended for multi-member LLCs because it structures your LLC’s finances and organization, and provides rules and regulations for smooth operation. Percentage of interests, allocation of profits and losses, member’s rights and responsibilities, and other provisions are usually included here..

The legal name of your business is required on all government forms and applications, including your application for employer tax IDs, licenses and permits. However, if you want to open shop or sell your products under a different name, then you may have to file a “fictitious name” registration form with your government agency.

A fictitious name (or assumed name, trade name or DBA name, which is short for “doing business as”) is a business name that is different from your personal name, the names of your partners or the officially registered name of your LLC or corporation.

For example, let’s say Mary Smith is the sole proprietor of a catering company she runs out of her home. Mary wants to name her business Seaside Catering instead of using her business’ legal name, which is Mary Smith. In order to use Seaside Catering, Mary will need to register that name as a fictitious business name with a government agency. The appropriate government agency depends on where she lives. In some states, you have to register fictitious names with the state government or with the county clerk’s office; however, there are a few states that do not require the registering of fictitious business names. 

Employers with employees, business partnerships and corporations, and other types of organizations, must obtain an Employer Identification Number (EIN) from the U.S. Internal Revenue Service. The EIN is also known as an Employer Tax ID and Form SS-4 

Most businesses are not individuals but instead business entities such as corporations or limited liability companies (LLCs). This is because there are substantive (and substantial) liability protections as well as tax advantages to being “incorporated” as opposed to being “self-employed”. Most jurisdictions in the United States require that any business entity that is formed or doing business within their borders designate and maintain a “Registered Agent”. This person may be known as the “Resident Agent” or “Statutory Agent”, depending on the laws of the individual jurisdiction in which the business entity is registered. The purpose of a Registered Agent is to provide a legal address (not a P.O. Box) within that jurisdiction where there are persons available during normal business hours to facilitate legal service of process being served in the event of a legal action or lawsuit. Generally, the registered agent is also the person to whom the state government sends all official documents required each year for tax and legal purposes, such as franchise tax notices and annual report forms. It is the registered agent’s job to forward these suit documents and notices to the entity itself. Registered Agents generally will also notify business entities if their state government filing status is in “Good Standing” or not. The reason that these notifications are a desired function of a registered agent is that it is difficult for a business entity to keep track of legislative changes and report due dates for multiple jurisdictions given the disparate laws of different states. Penalties for not maintaining a registered agent generally will cause a jurisdiction to revoke a business’s corporate or LLC legal status as well as in some cases, assess additional penalty fees on the entity.
In most states, you essentially have to file your corporation in reverse. This typically involves filing articles of dissolution, in addition to a public notice requirement.

Accounting FAQs

Different types of entities are taxed differently. email or call us, to discuss your specific situation.

Income Tax – All businesses except partnerships must file an annual income tax return. Partnerships file an information return. The form you use depends on how your business is organized.

The federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year. An employee usually has income tax withheld from his or her pay. If you do not pay your tax through withholding, or do not pay enough tax that way, you might have to pay estimated tax.

Self-Employment Tax – Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. Your payments of SE tax contribute to your coverage under the social security system. Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits.

Employment Taxes – When you have employees, you as the employer have certain employment tax responsibilities that you must pay and forms you must file. Employment taxes include the following: Social security and Medicare taxes , Federal income tax withholding and Federal unemployment (FUTA) tax.

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You can deduct the cost of operating your business. These costs are known as business expenses. These are costs you do not have to capitalize or include in the cost of goods sold. Contact us to discuss your specific situation. 
Good records will help you monitor the progress of your business, prepare your financial statements, identify source of receipts, keep track of deductible expenses, prepare your tax returns, and support items reported on tax returns.m
You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes. 
Purchases, sales, payroll, and other transactions you have in your business generate supporting documents. These documents contain information you need to record in your books, and will be necessary when time time arrives. 

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