Successful And Best Tips For Small Businesses
Every time there is a situation of economic downfall, enterprises start shedding employees to save costs. What’s more, in each financial downturn, a large number of those let-go employees make lemonade out of lemons by starting their own company that they have always dreamt of. Whether it is doing what they were doing as a representative at a bigger company or having a go at something totally extraordinary. With no job in hand and nothing better to do, a let-go employee starts a new business that sometimes grows to become a potential competitor of the same company that had let go of the employee.
All newbies need to start off on the right foot by avoiding legal, tax and financial problems that often trip up the freshly self-employed, just like all small and big business owners.
Here are some tips for making your launch successful.
Whether to operate as a sole proprietorship or as a corporate entity is one of the first questions that every small-business owner has to consider. Initially, you automatically start out as a sole proprietorship. This costs no money because you don’t have to pay to create corporate documents and tax returns as a sole proprietor. Whether you want to continue to operate as a sole proprietor, however, depends on your personal risk tolerance and the kind of business that you plan to start.
It is strongly recommended that people set up a corporation because it gives you some legal protection. The liability that you can engender while setting yourself up as a business owner is actually more than you can imagine when you plan to start a business. There are going to be several incidents when legal authorities will come at you with litigation or try to dun you for bills. If this does not worry you, a corporation at least protects your personal credit rating.
Some scholars are not convinced about the necessity of setting up a corporate entity. They argue that one should not run out and form a corporate entity until they have tried and are sure that they cannot be in business by themselves. These scholars say that it is expensive to set up a corporate and is a waste in both time and money. If you are doing consulting work and you know you can be successful as the sole proprietor of your company, it is probably best to stay a sole proprietor. However, if in terms of cash and sweat entity, if there is more than one person involved, forming an entity that clearly spells out the percentage of ownership, areas of responsibility, and whether the taxes would be paid at the corporate or individual level, is a good idea.
Experts say that while structuring your new business, cost should not be the driving factor. In today’s world of internet, many online sources allow you to create a corporate entity for just a few hundred dollars. All you need to do is contact Hyper Effects with your information and they will create a Brand Identity for your company!
Advertising your business has never been easier. As discussed in my blog Quick Business Development Tips, one of the best things about the internet is that the size of your company does not really matter. If you have a good website, that is user-friendly and sells unique products at competitive prices, there is no reason why your website would not rank ahead of a large multinational competitor on Google, and funnel off some of their traffic. This is an important reason why a website is even more important for a small business than a big one, it helps level the playing field. Once you have a website for your company, advertise as many products as you want on it. Just make sure you contact a good company to create and manage the website. HyperEffects is one company that i totally rely on for all my website related requirements. Along with being extremely professional in their approach and work ethics, HyperEffects also provides free business consultation to entrepreneurs and small-business owners.
The structure of your business will be the deciding factor on how soon you need to begin paying taxes on your earnings. The broad, general rule is that if you are a sole proprietor, you don’t need to begin paying taxes immediately, though there can be twists. Going by the law, you’re supposed to file taxes quarterly, if you make more than $400. However, if you shift from being an employee to being self-employed during the year and you don’t make quarterly tax payments, there are no penalties.
Interestingly, this is not true if you’ve formed a corporate entity. All corporates must begin filing taxes on income as they earn it. If the entity makes money, it must be reported quarterly.
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In my next blog I am going to share some more tips for the success of small businesses. Please share your experiences in the comments section and I will add them to my future blogs.