YOU WANT TO START A BUSINESS:
So you’ve decided to start your own business – congratulations! It’s a huge leap to take care of your own taxes, accounting, payroll, inventory, and a myriad of other activities necessary to run a business. However, running your own business has its advantages, too. You get to be your own boss, set your own hours and days to work, and are responsible for your own success. It can be a great way to free yourself from the tedium of 9 5 and work at doing what you love, but you have to begin by asking a few questions:
1. Are you doing what you love, or just doing something you’re good at? A desire to get away from the regular working world can be a good motivation to work for yourself, but you have to be excited to get up in the morning to do what it is you have chosen to do for a living.
2. What is it you are planning to do? What niche is it going to fill? Is there a need for what you can provide? Will the market bear another entry?
3. What technical skills or talents do you have? Just being able to do something may not be marketable enough to convince customers or financiers that you are a good financial investment.
4. Who are your competitors in your chosen profession and how are you going to do it better? Why should customers come to you? What do you have to offer that no one else does?
Once you are satisfied with the answers to these questions, it is time to decide what business structure you will use. Will you be a sole proprietor responsible for every facet and the penultimate authority as to how to run the business? Will you enter in with a partner? Is it better to share the cost and workload, but also the profits and the business decisions? Perhaps the decision will be made to incorporate. This is our topic, Incorporation.
Corporations are the most common form of business organization and are chartered by a state and given many legal rights as an entity separate from its owners. This form of business is characterized by the limited liability of its owners, the issuance of shares of easily transferable stock. The process of becoming a corporation, called incorporation, gives a company separate legal standing from its owners and protects those owners from being personally liable in the event that the company is sued (a condition known as limited liability). Incorporation also provides companies with a more flexible way to manage their ownership structure. In addition, there are different tax implications for corporations, although these can be both advantageous and disadvantageous. In these respects, corporations differ from sole proprietorships and limited partnerships.