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Friday, September 16, 2011
Save Time and Money with Professor Tax's Bookkeeping Services
Professor Tax USA provides bookkeeping and tax services for the small business from coast to coast. For over twelve years Bill Bailey have been using our bookkeeping services to help run and grow their business. Bill Bailey's Affordable Auto Sales is located in Lake Charles Louisiana. Meet Daniel Bailey as he explains how their small business has been able to save time and money ... two critical pieces of a small business.
Friday, September 09, 2011
Choosing which entity for your brand new business?
September 9th, 2011
.....Many times when I am visiting prospective clients, I get asked about how they should form the new business they are creating. "Should I be a sole proprietor or some other entity?" they would ask. The common choices are: 1) "C" Corporation; 2) "S" Corporation; 3) Limited Liability Company; 4) Partnership; 5) or Sole Proprietorship.
.....The easiest form is a sole proprietorship. It generally does not have many regulations and fees to get started. The tax information gets reported on your Form 1040 instead of filing a separate tax return. You don’t have to get a federal identification number if you have no employees. If you use your own name, you don’t have to file a DBA (doing business as). A simple sign and you could be in business very quickly.
.....If you file your return late (not a good idea but...), the Internal Revenue Service does not hit you with a late filing fee like they do with corporations and partnerships ($195 per month per partner or shareholder even if you owe NO money!). But if you owe money on a sole proprietor return (Form 1040) then there is a late filing and late paying fee based on the amount owed. At least this fine is more reasonable.
.....If you are creating a brand new business, I usually recommend that you start out as a sole proprietor first to see if the business will be successful. Too many businesses fail because they do not know the regulations, nor do they prepare bookkeeping reports on how their business is doing. A financial report usually has a Balance Sheet and a Profit and Loss statement.
.....The balance sheet shows a listing of the business assets you have and the liabilities (debts) you owe as of a specific date (usually last day of your current month). The profit and loss statement or P & L (also known as a Statement of Income) will show your total sales, cost of goods sold, and operating expenses for the full month or the totals for the year. Without these reports, it is dangerous to operate your business because you do not know if you are making any profits or wasting any money. Nor do you know what your potential tax liability would be.
.....If you create a corporation instead, you may have an attorney expense for setting up the corporation and filing fees to the state when you decide to close down your business. Generally, you will not have any expenses like this when you create your sole proprietorship. I believe that we should make operating a business simple in the beginning. It is already complicated enough to start a business without adding all the regulations and fees by creating a corporation or LLC.
.....I will continue to discuss the forms of business entities in a future blog, but for now, know that it is usually better to start your business with the simplest format.
.....Henry (CEO)
.....Many times when I am visiting prospective clients, I get asked about how they should form the new business they are creating. "Should I be a sole proprietor or some other entity?" they would ask. The common choices are: 1) "C" Corporation; 2) "S" Corporation; 3) Limited Liability Company; 4) Partnership; 5) or Sole Proprietorship.
.....The easiest form is a sole proprietorship. It generally does not have many regulations and fees to get started. The tax information gets reported on your Form 1040 instead of filing a separate tax return. You don’t have to get a federal identification number if you have no employees. If you use your own name, you don’t have to file a DBA (doing business as). A simple sign and you could be in business very quickly.
.....If you file your return late (not a good idea but...), the Internal Revenue Service does not hit you with a late filing fee like they do with corporations and partnerships ($195 per month per partner or shareholder even if you owe NO money!). But if you owe money on a sole proprietor return (Form 1040) then there is a late filing and late paying fee based on the amount owed. At least this fine is more reasonable.
.....If you are creating a brand new business, I usually recommend that you start out as a sole proprietor first to see if the business will be successful. Too many businesses fail because they do not know the regulations, nor do they prepare bookkeeping reports on how their business is doing. A financial report usually has a Balance Sheet and a Profit and Loss statement.
.....The balance sheet shows a listing of the business assets you have and the liabilities (debts) you owe as of a specific date (usually last day of your current month). The profit and loss statement or P & L (also known as a Statement of Income) will show your total sales, cost of goods sold, and operating expenses for the full month or the totals for the year. Without these reports, it is dangerous to operate your business because you do not know if you are making any profits or wasting any money. Nor do you know what your potential tax liability would be.
.....If you create a corporation instead, you may have an attorney expense for setting up the corporation and filing fees to the state when you decide to close down your business. Generally, you will not have any expenses like this when you create your sole proprietorship. I believe that we should make operating a business simple in the beginning. It is already complicated enough to start a business without adding all the regulations and fees by creating a corporation or LLC.
.....I will continue to discuss the forms of business entities in a future blog, but for now, know that it is usually better to start your business with the simplest format.
.....Henry (CEO)
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