Dear John Owner
Our office received your letter requesting advice on how to start forming your business and develop a business plan. Wallace Consulting will provide advice to you on the various business structures with and without partners. Our team can assist with the development of your new company business plan, financial decision, and any legal actions. The information below will assist with you in deciding which business structure fits your needs.
The first step in business structure is to develop your business plan. It is a map that outlines the goals and guideline to organizing thoughts. The plan should be clear and project the future business goals for your company. Financial lenders and investors will ask for your business plan to determine if they want to invest in your company.
Step two is to decide which business structures will meet the need of company. Sole proprietorship, partnerships, corporation and hybrid are business with advantages, disadvantages, and tax consequences. Sole proprietorship is the easiest to form and low cost to start for owners with limited finances. All decision making is make by the owner regarding the management of the organization. Unfortunately the disadvantage is that you are personally responsible for liable for any expenses and debts of your organization. You are also required to keep financial record to meet the federal tax requirement. The net business income is also part of your other income and is taxed on your personal tax return. As a sole proprietorship you are required to pay self employment taxes.
Another business structure selection is Partnerships which require two or more individual to form a business. Advantaged to this partnership is that all partner have the opportunity to invest funds, knowledge, and skills. They will also share in the responsibility of the business this includes any debts the business sustains. Each partner is required to report their net profit or loss on...