FORMING A SOLE PROPRIETORSHIP
May 24, 2016
No matter where you go in the United States, in order to start up your new business, you will need to determine what kind of business you want. They range anywhere between sole proprietorship or general partnership all the way up to C Corporations. If it is just yourself, you have saved up your money to make your own dreams come true, and you know exactly how you want everything run, you may be interested in opening a sole proprietorship.
This is the simplest and most common form of business startup. It would not exist if not for the owner. Due to the fact that there is no one else involved, it also offers no protection from liability to its owners and operators, however, the owner also has total control and benefits from all of the profits of the business. There cannot be more than one person involved, otherwise it becomes a general partnership. Although, with that being said, there is an exception to the rule. If you are married and you are operating as a husband/wife team, you are still qualified to start up as a sole proprietorship. A few of the key features to a sole proprietorship are:
The startup costs are relatively small;
It is advised to open a separate bank account for business operations;
The business and the owner are the same, there is no separation;
It only exists while the owner is alive, once the owner passes, so does the business; and
It is recommended to have insurance to cover the risks of your business.
HOW TO BEGIN
If you are starting your own business, it can be extremely exciting, yet overwhelming. You may want to do extensive research and speak to business advisors. Once you are certain that you would like to start on the adventure of business ownership, the process can be fairly quick.
Generate a business name that is different from the owner’s name;
A Fictitious Business Name statement must be filed in the county pertaining to your business;
Obtain all the licenses, permits, and zoning clearances if applicable to the type of business you are starting;
If you are hiring employees, it is required that you obtain an Employer Identification Number (EIN) for tax purposes;
An EIN may still be obtained if you are not going to have employees because you may choose to use your Social Security Number (SSN); and
Once tax time come about (between January 1 and April 15 annually), taxes should be filed dependent on the operations of the business.
While you may be attempting to save money and get started as soon as possible before you lose your motivation or someone takes your business idea or location, it is advisable to consult with a legal professional during the startup process of your business. Without this process, you may find yourself in a difficult situation later on. Be sure to cover all of your bases from the beginning and build a strong foundation for your business and it will be less likely to crumble for something minor in the future.
If you are interested in finding out more information, the Law Offices of Steven E. Springer has offices conveniently located in the downtown areas of Fremont, San Jose and Morgan Hill, CA. If you are seeking an experienced San Jose business law attorney, we offer you more than 30 years of experience and will be able to walk you through the life of your business. Call us today at 408-779-4700 for your free 20 minute initial consultation.