Posts
You have your concept, you've thought about your tax structure and you know what type of entity it is you want to form and have reserved the company name with the Secretary of State. Now, you say, what's next...
So far things have flowed pretty easily, or have you forgotten something... It is easy to get so involved in the start-up details that you completely forget about what to expect when you have that first sale.
At least that is where I was at. I was so focused on my visibility on the web that I completely forgot about the basic function of accounting. I was not 100% certain that I would ever get anyone to look at my site let alone make that first sale. You will make that first sale... Believe me...
You will need a bank account and an EIN number (employer identification number) for tax purposes. Sole proprietors can use their social security number as a tax identifier, but I would suggest applying for an EIN to avoid co-mingling your money with your company's. In the long run, it will make your year end accounting less painful. You can find out about EIN numbers by following this link to the IRS website: http://www.irs.gov/businesses/small/article/0,,id=98350,00.html . The IRS also has a fill-able SS-4 Form that you can fill out and file in a matter of minutes to retrieve your EIN number.
You will need this EIN number for your bank account and tax filings. You will need to specify whether or not you intend to have employees on your EIN application. They will also ask your intended business start date and how you are to be taxed (S-Corp, C-Corp, Partnership or as a disregarded entity -sole proprietor). The Department of Revenue will be notified by the information you provide on the EIN application as to employees and will contact you by mail with their tax and filing requirements. You should take the initiative and be ahead of the game by contacting them first. They will give you an indication as to how they would assess your employer situation. Follow this link to the Illinois Department of Revenue website: http://www.revenue.state.il.us/ElectronicServices/Businesses/index.htm.
The Illinois Department of Employment Security is another taxing body that you will need to get your head around if you are going to have employees. I found this pamphlet from IDES to be a useful informational tool: http://www.ides.state.il.us/pdf/employers/FastFacts.pdf. Lastly, check with your local municipality to see what their requirements are. The City of Chicago makes everyone jump through a multitude of hoops, some local villages and townships do the same, either way, you should ask what is required whether you have a brick and mortar business or an on-line business.
Illinois Registered Agent, Inc.
Wednesday, February 25, 2009
Tuesday, February 17, 2009
Reserve Your Company Name!
Let's review: You've had an epiphany! The company name is absolutely obvious and available! Tax thing still kind of boggles the mind and you are still undecided as to your company's structure... The one thing you are sure of, and you know in your heart of hearts that the name you have chosen is the perfect name for your business. It says it all....
Then, by all means, reserve your company name with the Secretary of State so that no one else sneaks up and takes it while you are pondering what to do next. It will not matter at this point what ending (Corp, Inc., LLC) you finally decide to go with., because the State will cross reference that name with existing corporations and LLC's and once the name reservation is filed, it will effectively block anyone from using that name for 90 days. This gives new entrepreneurs some additional time to organize their thoughts.
OK, you say, but what if your name is not available and you absolutely have to have that company name? I would choose a name that is similar to your chosen name, then adopt an assumed name for business use. Of course, any additional filings you make with the State will cost additional money, so if you are working on a shoestring budget, I would suggest finding a name that really trips your trigger, but is available for use with the Illinois Secretary of State.
If anyone is having difficulty in preparing any of your Illinois forms, I am well versed in Illinois formations and can offer assistance. Go to my website and email me. I am sure I can assist you.
Illinois Registered Agent, Inc.
Then, by all means, reserve your company name with the Secretary of State so that no one else sneaks up and takes it while you are pondering what to do next. It will not matter at this point what ending (Corp, Inc., LLC) you finally decide to go with., because the State will cross reference that name with existing corporations and LLC's and once the name reservation is filed, it will effectively block anyone from using that name for 90 days. This gives new entrepreneurs some additional time to organize their thoughts.
OK, you say, but what if your name is not available and you absolutely have to have that company name? I would choose a name that is similar to your chosen name, then adopt an assumed name for business use. Of course, any additional filings you make with the State will cost additional money, so if you are working on a shoestring budget, I would suggest finding a name that really trips your trigger, but is available for use with the Illinois Secretary of State.
If anyone is having difficulty in preparing any of your Illinois forms, I am well versed in Illinois formations and can offer assistance. Go to my website and email me. I am sure I can assist you.
Illinois Registered Agent, Inc.
Saturday, February 14, 2009
To incorporate or not to incorporate: Taxing Considerations
So, at this point you have decided on a name. Now, what about the ending? Corp, Co., LLC, Ltd... and what does it matter anyway....
Well, it could make a huge difference to you depending on the type of business you have, how susceptible to liability is your company and its products, how many partners or investors are involved in the decision making process and/or whether you are going to be a sole proprietor. This decision will ultimately be a tax based decision.
Corporations are considered individuals in the eyes of the IRS and generally takes the same deductions and pays taxes on net income or loss the same as a sole owner would, however, any profits that are made by the corporation after expenses and taxes, get distributed to shareholders who then must declare that income on their individual income tax returns and pay tax again on the profits that the corporation has already paid taxes on. So, in reality, any remaining profit after loses and taxes of the corporation, gets taxed again through the shareholders. Furthermore, shareholders can not deduct any of the corporation's loss on their individual income taxes.
S-Corporations are a bit different as they can avoid double taxation if they meet IRS requirements and file additional forms with the IRS within an allotted time frame. S-Corps are exempt from federal income and are treated much the same as a partnership. S-Corps are taxed on some capital gains and passive income. Shareholders include their share of the company's income and loss, deductions and credits on their own personal income tax returns.
Taxation on limited liability company's depends on how many members or managers the company has. If there is only one member, the company can be considered disregarded in the eyes of the IRS and file taxes under the sole member/manager's social security number. The company can decide whether to obtain an EIN number for tax purposes. If the limited liability company has multiple members/managers, the company can choose to be taxed as either a corporation or a partnership - an EIN (Employer Identification Number) at this point is necessary.
Needless to say, this is something that should be discussed with someone who understands your finances, the company's potential or weaknesses and can give you various tax scenarios to consider.
Illinois Registered Agent, Inc.
Well, it could make a huge difference to you depending on the type of business you have, how susceptible to liability is your company and its products, how many partners or investors are involved in the decision making process and/or whether you are going to be a sole proprietor. This decision will ultimately be a tax based decision.
Corporations are considered individuals in the eyes of the IRS and generally takes the same deductions and pays taxes on net income or loss the same as a sole owner would, however, any profits that are made by the corporation after expenses and taxes, get distributed to shareholders who then must declare that income on their individual income tax returns and pay tax again on the profits that the corporation has already paid taxes on. So, in reality, any remaining profit after loses and taxes of the corporation, gets taxed again through the shareholders. Furthermore, shareholders can not deduct any of the corporation's loss on their individual income taxes.
S-Corporations are a bit different as they can avoid double taxation if they meet IRS requirements and file additional forms with the IRS within an allotted time frame. S-Corps are exempt from federal income and are treated much the same as a partnership. S-Corps are taxed on some capital gains and passive income. Shareholders include their share of the company's income and loss, deductions and credits on their own personal income tax returns.
Taxation on limited liability company's depends on how many members or managers the company has. If there is only one member, the company can be considered disregarded in the eyes of the IRS and file taxes under the sole member/manager's social security number. The company can decide whether to obtain an EIN number for tax purposes. If the limited liability company has multiple members/managers, the company can choose to be taxed as either a corporation or a partnership - an EIN (Employer Identification Number) at this point is necessary.
Needless to say, this is something that should be discussed with someone who understands your finances, the company's potential or weaknesses and can give you various tax scenarios to consider.
Illinois Registered Agent, Inc.
Sunday, February 1, 2009
So you've got this great idea...
One morning you wake up and jump out of bed with this amazingly perfect idea for a money making business. You have already decided on the most perfect and catchy name for the company that says it all.... You are all gun-ho and you belly-up to the computer to research where to start. Before you begin preparing documents to legally form this business, check the company name with the Secretary of State. There is nothing as disappointing as finding out upon filing of the formation documents that the name of your company is not available for use.
The first thing you should do when you have a bu sines epiphany is check the name availability with the Secretary of State prior to setting up the company. It is the first thing you should look into, because if the name you want to identify your business is not available, you may want to use a d/b/a (doing business as). So, your first step should be to check name availability and if need be, reserve the name with the Secretary of State to hold that name until you are ready to file all of your formation paperwork.
If you intend to have a web presence, I would suggest checking domain name availability as well. Also, you should do a search on the major search engines (Google, Yahoo, MSN) for your product description to see what your competitors names are and how many of them are out there. It would be ideal to have your web reflect the same business name as with the state. Sometimes you have to adjust your company name to what is available. That is one of the reason's why I chose Illinois Registered Agent, Inc. the name has many variations on the web, but in my case, this is exactly what my business is.
Illinois Registered Agent, Inc.
The first thing you should do when you have a bu sines epiphany is check the name availability with the Secretary of State prior to setting up the company. It is the first thing you should look into, because if the name you want to identify your business is not available, you may want to use a d/b/a (doing business as). So, your first step should be to check name availability and if need be, reserve the name with the Secretary of State to hold that name until you are ready to file all of your formation paperwork.
If you intend to have a web presence, I would suggest checking domain name availability as well. Also, you should do a search on the major search engines (Google, Yahoo, MSN) for your product description to see what your competitors names are and how many of them are out there. It would be ideal to have your web reflect the same business name as with the state. Sometimes you have to adjust your company name to what is available. That is one of the reason's why I chose Illinois Registered Agent, Inc. the name has many variations on the web, but in my case, this is exactly what my business is.
Illinois Registered Agent, Inc.
Subscribe to:
Posts (Atom)