New Business Formation
Helping You Build a Strong Foundation for Your Business Success
The decision to start a new business can be very exciting. However, as all experienced business owners know, there’s more to a business than just developing a product or service and hoping it sells. As one with an entrepreneurial spirit, you’re probably a “big picture” sort of person with a vision. You would rather not have to think about the nitty gritty details of your business like choosing a business entity; handling sales and payroll tax; or setting up accounting systems that help you manage the financial aspect of your business.
The good news for you is that MIS Tax Pros is here to assist you in figuring everything out.
Here’s what we are able to do for you:
- Determine which business entity best meets your goals and minimizes your tax liability.
- Set up an accounting system using software that works for your business requirements.
- Make sure you are compliant with state, local, and federal tax laws such as sales and use tax, payroll tax, and have a Federal EIN (Employer Identification Number).
- Prepare annual tax returns and quarterly estimated taxes as needed.
Planning for Your Success–and Profitability
The keys to a successful and profitable business are meticulous planning as well as a methodical approach to running your business. Failing to do this in the initial stages of business formation is often a recipe for disaster, and it’s the reason most businesses fail. Don’t let it happen to you.
Say “yes” to making your dreams come true.
What is involved in getting a business setup?
- Do you have a business plan? If not, it is imperative that you create one. Businesses that fail to plan will be planning to fail. We can help you create your business plan or we can review the one you’ve created. The business plan will clarify your marketing, management, and financial plans. It can be seen as a living document to be maintained throughout the life of your business. It should be updated regularly to keep you on course to reach your goals and expand to new ones. Take a look at a sample outline in the expandable section below. We would use a similar framework to begin designing your custom Business Plan.
The following rough high-level outline can be used as a framework to develop and write your business plan: Executive Summary Section One: The Business Section Two: Financial Section Three: Supporting Documents The above outline is for reference only and does not include the many subsections you'll have in your Business Plan. The sections listed in this outline are high-level only. The outline of your actual Business Plan will have deeper levels to the outline when finished. Let our team design a Business Plan to fit your business. We're just a phone call away! Business Plan Outline
- While working on your business plan, you’ll need to choose the correct legal/tax structure for your new business.
- In addition, all of the necessary paperwork will need to be filed with the State and the IRS.
Basic Structures for Your New Business
You can review the information in the following expandable sections to determine which business structure would best suit your new business. We can provide guidance in this area for you to help making this decision.
Sole Proprietorship
Advantages:
- Complete Control
- No corporate tax payments
- Minimal legal costs to setup
- Few formal business requirements
Disadvantages:
- Personally liable for all debts
- You pay self-employment tax on all profits
- Limited number of years allowed to be unprofitable
There are no legal documents to file to start your own business under this structure. It is strongly recommended that you register the business name with the county clerk’s office. If you require guidance or other general help in getting started, we will charge a flat fee of $200 – this will include the clerk’s cost to record your “dba.”
Partnership
Advantages:
- Shared financial commitment
- Pass-through entity
- Pool resources among Partners
- Possibly save tax dollars
Disadvantages:
- Personal liability
- Disputes
- Shared business control
Partnership Agreement
A Partnership Agreement will need to be created that will serve as a contract between partners in a partnership. It outlines the terms and conditions of the Partnership. This includes ownership percentages, profit and loss distributions, termination clauses and more. Partnership agreements prevent unwanted and unnecessary conflicts later on.
For a flat fee of $895 we'll be able to form this type of business entity for you. This fee includes the State charge not to exceed $310.
Limited Liability Company (LLC)
Advantages:
- Pass-through entity
- Different taxing options
- Possibly save tax dollars
- Multiple owners or only one
- Distributions are typically tax free
Disadvantages:
- Must be paid a reasonable salary, cannot completely avoid self-employment tax
- Federal government looking to change rules
- Tax filings can be cumbersome
Articles of Organization
The articles of organization is a document that will need to be created that legally establishes a business as a separate business entity. It provides important information about the business to the state.
For a flat fee of $895 we'll be able to form this type of business entity for you. This fee includes the State charge not to exceed $310.
C-Corporation
Advantages:
- No personal liability (unless fraud)
- Can sell stock
- Deduct cost of benefits
Disadvantages:
- Takes more money and time to setup
- Double taxation
- Possible additional regulations and over-sight
Articles of Incorporation
The articles of incorporation is a document that will need to be created that legally establishes a business as a separate business entity. It provides important information about the business to the state.
For a flat fee of $895 we'll be able to form this type of business entity for you. This fee includes the State charge not to exceed $310.
S-Corporation
The S-Corporation is formed for tax purposes after the C-Corporation is created. A tax election is made within a time limit after forming the C-Corporation and the entity will then be taxed as an S-Corporation. The advantages and disadvantages are the same as for the C-Corporation except the entity is taxed as a pass-through entity. This means the S-Corporation is not taxed directly. Each of the shareholders is taxed according to percentage of ownership. Therefore, there is no double taxation as there is with a C-Corporation.
Articles of Incorporation
The articles of incorporation is a document that will need to be created that legally establishes a business as a separate business entity. It provides important information about the business to the state.
For a flat fee of $895 we'll be able to form this type of business entity for you. This fee includes the State charge not to exceed $310.
Not-for-Profit Organization
A not-for-profit organization is a creation of the United States Tax Code and is reserved for those organizations that exist for a charitable purpose. Creating these types of organizations is more involved than normal business types of entities as there is much more paperwork involved.
Preparation and Electronic Filing of Form 1023-EZ Federal application for tax exempt status
Fee: $400 -- Does Not Include Federal Fee ($275* this can change)
Preparation of Form 1023 Federal Application for Tax Exempt Status
Small Tax-Exempt entities average $600 to $1,500 -- Does Not Include Federal Fee (About $400 to $850)
Basic Steps to Business Entity Formation
- Confirm business name availability with your State.
- Prepare Articles of Incorporation, Articles of Organization, or Partnership Agreement. The Articles of Incorporation are your basic corporate documents if a Corporation. The Articles of Organization are your basic company documents if an LLC. The Partnership Agreement are the documents that control the Partnership.
- Complete then file the aforementioned paperwork with the State.
- Once approved by the State, file for an Employer Identification Number (EIN) with the IRS. An EIN, is a unique 9-digit number assigned to your new business. The main purpose of an EIN is for identification purposes. Having an EIN is important when hiring employees; opening a new business bank account; and establishing business credit.
- Depending on your business structure, there may be additional documents to file with the IRS.
- State and Local business license/tax registration may be required.
Additional Business Startup Considerations
- Determine your start-up capital needs.
- Identify sources of start-up capital and backup sources if needed.
- Evaluate and quantify your borrowing power so you know how much money you can get your hands on if needed.
- Select the right accounting software by evaluating your budget, needs and hardware.
- Prepare a Cash Flow Budget so you know exactly how much money you need to keep the business alive each month for the first few years. Unplanned cash requirements are always emotionally painful.
- Establish billing and collection procedures to maximize your cash flow.
- Establish procedures to monitor and control costs.
- Setup a home office so you can maximize your tax deductions.
- Comply with employment laws so you don’t get hit with fines and unhappy employees.
- Identify your business insurance needs.
