The often advertised advantage of incorporating, that you can manipulate your salary in order to save on tax dollars, is real because of corporation laws. However, the IRS frowns on this practice. When your businesses are successful and making a lot of money, definitely check with your accountant on the advantages of incorporating.
As a corporation, you’ll be subject to a number of other drawbacks as well: generally higher state taxes, stricter laws concerning the operation of your business, more elaborate accounting procedures, and legal papers that are required just about every time you make a major move or sign almost any contract. Thus, your legal and accounting fees will be much higher as a corporation than will those required for a sole proprietorship type of business.
As a sole proprietor or partnership, you’ll find many areas require the registration of your business name. The cost however, is minimal, ranging from $5 to $100. About the best way to find out what laws apply in your area, is to call your bank and ask if they need a fictitious name registration card or certificate in order for you to open a business account.
Selecting a name for your business is quite important to you and particularly relative to advertising. Your business name should describe the product or services you offer. Fancy names such as, Linda’s Clipping Service will lose potential “walk-in and passing” customers to the beauty shop across the street that calls itself, Patti’s Beauty Salon or Jane’s Hair Styling shop.
The advantage of using your full name in the title of your business, such as Johnny Jones’ Meat Lockers, has the advantage of making credit somewhat easier to come by – provided you pay your bills on time – but it also includes the disadvantage of confining your services to a local or at most, a regional area.
Should you buy, lease, or rent space for your business? Think twice before you make any decision along these lines. Most businesses tend to grow quickly or they never get off the ground. There are a few exceptions, but only a very few, that tend to grow at a modified rate.
So, buying a piece of property and setting up your business on or within that property obligates you to ownership regardless of what happens to your business.
Leases are almost always very strong contracts written by attorneys to the advantage of the property-owner. When you sign an agreement to pay someone for the use of their space over any length of time, you’re “nailed in” to paying for that space regardless of what happens to your business.
In the beginning, it’s wise to either get the shortest-term lease possible, or arrange to rent with an option to lease at a later date. This does not apply to a retail business, unless your particular business happens to be an untried one.
Definitely, you should open a business bank account. In selecting a bank for your business, scout around and look for one that can, and will help you. Determine what your banking needs will be, and then via telephone, interview the managers of the banks in your area. The important thing is to be discretionary and not select just the most convenient bank to your business location.
Uchenna Ani-Okoye is an internet marketing advisor.
Sign Up to my mailing list NOW at: Internet Based Affiliate Marketing and Receive my FREE E-Course Worth $67!
