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The financial side of how you set up your business
Sole proprietorship Since you are paying yourself, you do not need to establish a payroll. It is much easier to set up a bank account for your business so that you do not confuse your business funds with your personal funds. This makes it much easier to handle your business finances and have enough money set aside for taxes. A sole proprietorship is directly linked to you. You will be responsible for legal fess and any debts the company encounters. You are also responsible for growing your company and finding outside investors to help it grow. LLC You will be responsible for paying taxes on the business. You will need to pay taxes for your employees and provide them with a W-2 at the end of the tax year. The nice thing about a LLC is that you will avoid the double taxation of paying corporate tax and individual tax. You will need to file all the necessary paperwork to begin your LLC which includes documentation with the Secretary of State. You must also pay fees to the Secretary of State and legal fees to the attorney or lawyer that draws up the paperwork. In order to start your LLC, you will need to obtain a business license and comply with your local and state regulations. If you declare bankruptcy or you die, your business will be dissolved. If you want your company to grow and eventually take it public, you are better off to declare a corporation. You will need to register your corporate name with your city and your state, as well as web site domains and other areas. This cost varies with each state, but it is normally around $50 or more to get started. You also need to decide what your corporation type is, an S-Corporation or a C-Corporation. You will be responsible for filing your quarterly and yearly taxes and making sure all the numbers match. When you are setting up a corporation, you will need the help of a lawyer to get all the paperwork completed properly.
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