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Attributes of different entities - Choosing a Business Entity
When launching a new venture, one of the first decisions you will make is determining which structure, or "entity," your business will assume. Depending on which entity you choose, the decision may affect your own and your business's tax situation, the level of protection your personal assets (including your home) receive, and the amount of control you have over the business.
Following is a brief primer to help guide you in your choice. You may want to consult a qualified attorney or financial professional before making your final decision.
Formalities of existence Some types of entities are simple and inexpensive to form and maintain, while others must meet specific requirements. If you want to keep the overall management of your business as simple as possible, you might choose an entity with few formalities.
Tax Issues for Household Employers
If you pay for household help, you may be liable for the "nanny tax," even if your employee is not a nanny, per se. The nanny tax refers to three federal employment taxes that household employers may have to pay for their domestic workers — Social Security, Medicare, and unemployment taxes. If you hire someone to work in or around your home, you'll need to know what federal income tax issues (if any) apply, and what forms may be required. Although you may have to withhold and pay federal employment taxes in certain cases, you won't have to withhold federal income tax from your household employees' wages (unless you choose to do so).
Your Business Roadmap: Do you have a plan in place?
Become enlightened and establish your North Star
A budget is the first step in actively managing the financial health of a company and establishing reasonable goals for the budget period. The first budget exercise is often the most enlightening and difficult. It is a worthwhile, but time-consuming undertaking. Determining the most basic inputs (revenues) and outputs (expenses) can shed considerable light on the operations and help management assess where money should and should not be spent.