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The Sole Proprietorship, Incorporation, Partnership
Most new businesses choose the Sole Proprietorship. It is the least complicated. It requires no paperwork. The proprietor you, or you and your spouse as the owner, or owners, are taxed for all net profit from your business. You add the income of the business to other income, or deduct the business loss from other income. Your tax adviser can give you specific information. The disadvantage of the Sole Proprietorship is that as the owner you can be held fully liable in a lawsuit. Incorporation, on the other hand, will give you some protection. In this case the "INC" rather than you is the legal business entity. If you are starting a business that tends to have liability exposure the corporation may be the way to go. In this and other legal questions, only your attorney can give you competent legal advice.
Partnerships are generally chosen when unrelated individuals own a business. An attorney should set up a partnership, or all kinds of problems can develop later. Designing Your Work-space
First, you must determine how much space you need. Chances are what you may initially think is quite large may be crowed or not enough space. While many businesses are started from a corner of the bedroom or kitchen, if the space is available it would be far better idea to take a spare area of the house and convert it into your office. There may be space in the basement, garage, or a spare bedroom. Having a separate space is more efficient and will make for maximum efficiency. It is also psychologically important. You do not want home activities to interfere with your business, or vice versa.
Friends and family will need to be told politely firmly that business hours mean business and dropping in, or calling to chitchat is not acceptable. Psychologists suggest that you work "from" home not just in your home. There is a danger of becoming isolated. Inasmuch as time allows, participate in seminars and local business activities and organizations Financial Planning
It is said and also my own personal experience that owners of new businesses never have enough time or money. The majority of small businesses that do not succeed will fail because they are not properly financed. Your financial planning carefully review all required start-up expenses as well as on going expenses before revenue will be generated. Estimate your profit margins and all fixed and controlled expenses. Almost all entrepreneurs will tend to be much more optimistic about their estimate of the financial performance of a business taken what is necessarily realistic. There are always unforeseen expenses. It is a good idea to only invest in absolutely necessary expenses. This applies to furnishings, supplies and all equipment. Computer equipment in recent years has become outdated within a short period of time. So, if what you acquire will serve you well for 2-3 years will be able to upgrade your equipment later on. Your emphasis should be on conserving capital. As your business develops, unexpected hurdles will come along and periods of low revenue. Your capital will make it possible to keep your business operating during these times.
Why Should You Have A Business Plan?
While writing a business plan can be made into a highly sophisticated undertaking especially by large corporations, it’s easy to do when done for a new or small owner operated-business. Essentially, you will be committing your plan to paper. As you do so your thought will become more formal and concrete and this will tremendously assist you in the development of your business. If you are considering obtaining financing for your
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