Tax number? What's this?

    Just as people have social security numbers, a business also has an identification that is necessary for filing purposes. Whether you have a Sole-Proprietor, LLC, S-Corp, or Partnership, the business needs to be registered for tax purposes. A tax ID # can be an EIN (Employer Identification Number), a TIN (Tax Identification Number), ITIN (Individual Taxpayer Identification Number); they all mean the same thing. The government  requires and issues a nine digit number to any business that earns more than $600 in a calendar year. This number is writen a little diferent than a social security number, usually in xx-xxxxxxx format.
     Banks, financial services companies, and merchant accounts will require an EIN to use use their services. When registering the business name, it is a good idea to includethe paperwork tor the tax id number at the same time and file everything accordingly. The true principle officer, owner, trustee, or any responsible party can file for the EIN.
    Registering is an easy process. A tax consultant may include this in the paperwork when they help to register the business entity, or a person can easily contact the IRS website and file electronically.    
www.irs.gov.
    Once this step is completed, there are three more that are recommended by the Small Business Administration. Then, a company is ready to start marketing!

What's in a Name?

     Ask any newly expecting parents how difficult it was to agree on a name for the child. Mommy thinks one thing; Daddy another. Will it be a boy or a girl? That will surely make a difference, and then even if a name is agreed on will that child actually look like a Bobby, or more like a Peter? Is she a Cindy, or a Marsha? The baby's name must transcend all confusion and will certainly shape the character of the person.
     The same is true in the business world. The name of the business will determine what kind of market it will attract. The more catchy a name, the easier people will remember it and tell their friends about it, especially if the business provides a good product or service.
     While the SBA says that registering the name is the sixth step in starting a business, most entrepreneurs will have a name picked out even before writing the business plan. It will shape the character of the business just like it would a baby.
    Registering a name is not always a must, but may be important for various reasons. A sole proprietor doesn't have to register the name of the business; the name  is the legal first and last name of the owner. LLC's do not need to register a name because the paperwork that is submitted to incorporate will have it. S-Corps, C-Corps and other entities will need to register a name because the liability and licensing do not belong to one person.  Registering a name will, however create a credibility that banks, investors, and other businesses will see and know the company is legit.
    Often business owners will wish to create a ficticious name or what's known as "doing business as" (dba).
For example, owner Frank McClurg who runs an automotive shop wants his company to be known as "Frank's Auto". In this situation he will need to register a ficticious name with either the county clerk, or Secretary of State, which ever the law requires. The Small Business Administration lists individual state requirements regarding these laws.  An LLC would also need to register a (dba) it wished to drop the LLC identifier from its name. Frank's Auto, LLC would then become legally just Frank's Auto. Every time a business owner needs to legally use the name for documentation, application, or liability, it can use the registered (dba).

     Trademarks and image branding are also important in choosing a name. A brand is easily reconized, and trademarks protect other businesses from using the unique name that has been selected.  The United States Patent and Trademark Office helps business owners search for unused names through the Trademark Electronic Search System . Through a 90 minute process an entrepreneur can have his/her business name and brand registered and a trademark created. Protection is given to the first name that is registered so this is important to avoid conflicts with other business that may have a similar name.
    In the end, a business has an image to maintain and the name must be recognizable to the government, banks, and of course, the customers. The name wil provide credibility and protection along with an identity. Just as a baby's name shapes his/her character, so too will the name of the business!

LLC, Partnership, S-Corp??? What's this about?!!

     Thinking about how to structure a business can be an overwhelming task. The tax benefits or consequences of a particular business structure are mind boggling at the very least, and understanding the tax laws takes a special type of thinker. For this step, it is highly recommended to consult a tax professional. In any case visiting http://www.irs.gov/ is a must!
     The legal structure of a business will determine several factors relating to taxes, employees, shareholders, and liabilities. Each structure has its own rules, as well as different advantages/disadvantages to its operation and organization. We will review the differences below.

• Sole Proprietor-Often an individual entrepreneur will open as a self-employed business person. This is the easiest structure to understanding taxes. With this type of structure, there is no need to register the business because the entity will be the name of the owner. Filers can use a 1040 schedule C or schedule SE and avoid large amounts of paperwork. This type of business is often reserved for independent contractors, or consultants. A draw back to this type of business is that it is often hard to raise capital, as investors are looking for established organizations or corporations.
• LLC- A limited liability company is set up through state statutes. Here additional documentation is required, and often have registration fees for the start-up. The government does not recognize LLCs as a legal entity so taxes are passed through to the owner who files individually. The owner will file as as sole-proprietor, partnership, or corporation, but is obligated to pay employment tax on all net income. An LLC can have multiple owners that are called "members", it must have a registered agent and articles of incorporation. It is not necessary to have an operating agreement, but it may be encouraged when dealing with multiple owners discussing terms like profit or other business issues. The biggest incentive for having an LLC of course is the benefit of its liability protection. A member is not responsible for indebtedness or financial obligations with personal assets, and legal obligations are directed to the entity instead of the member personally.

I Need Money!

     The fourth step according to the Small Business Administration is getting financing for your business. This step, however seems to be the biggest challenge for most entrepreneurs and the hesitation or fear of getting through this step will certainly bring any venture to a halt.
     Truth is, every business needs money to make money so financing is a must. Much advice and research is needed prior to launching any business, so the proper homework is needed in order to obtain a source of capital.  The first question that needs to be asked is what is the money for?
     Your written business plan should give a rough idea as to what exactly is needed. Are you trying to raise capital for costs of starting, or just to cushion against the risk of failure? Are you looking ahead for needs expected in six months, one year, or three years down the road? Most sources indicate that planning for expenses ahead of time is much more effective than trying to find money while under pressure.
     The obvious expenses occur after planning step three (posted September 26th) looking at overhead, and cost of operation. Is money needed for property, inventory, or employees? Is there a need to borrow for innovation, research, or expansion? Is your business seasonal or cyclical? What about the strength of the business? Are you planning to open a franchise, or nation-wide chain? How is the competition factor? Will the guy down the road force you to close your door early? All of these factors and more lead to the type of financing an entrepreneur will need.
     Basically, there are two types of financing; equity financing and debt financing. Both are useful for different applications and both will serve a business's needs is used correctly.  Here is where research is needed. Try going to a bank and request a loan or a venture capitalist without a plan and you will certainly be rejected.