Choosing Your Business Structure
By Laurel Romanella, Vantage360
Facilitator, Small Business GPS: Business Basics Session 2
Starting a business is exciting. Yet when you dig in to the details, your enthusiasm may turn to confusion. Or you may feel overwhelmed by just figuring out what to do next. Don’t let these feelings slow your momentum. There are answers, and you don’t have to make decisions alone. Our Small Business GPS: Business Basics sessions guide you through the process of Strategic Planning. Choosing Your Business Structure and Successful Relationship Building.
Register for the “Choosing Your Business Structure” class on Tuesday, March 14 to interact with other entrepreneurs as well as a business advisor and attorney, who will respond to your questions and provide clear guidance.
What legal structure is right for your business?
We initially focus on the first important detail – the legal structure. Michigan recognizes partnerships, LLCs, and corporations; the IRS recognizes sole proprietors, partnerships, and corporations. Each structure works differently with unique benefits and drawbacks. You should consider several factors, like the tax implications, your risk tolerance, prior business experience, and how you will run your business.
Register & Protect Your Business
There are many items on the to do list for starting a business. We help you explore other topics on that list. Here are just a few to consider.
- Your business should be registered with the state of Michigan, the IRS, and the Michigan Department of Treasury.
- You’re working hard to build a brand – know how to protect it. Learn the difference between trademarks, service marks, and copyrights. Be certain that you’re using your name and logo consistently in order to gain brand recognition. And consider registering with the state of Michigan or applying for a federal trademark registration.
- Employees perform services and are paid via payroll; taxes are withheld; and a W-2 is issued at year-end. Before hiring, be knowledgeable about key federal and state employment regulations. And understand your rights related to employee substance abuse and the Michigan Medical Marijuana Act.
- Independent contractors also perform services but are paid from operating expenses; payroll taxes are not withheld; and a 1099 is issued at year-end. Before contracting, evaluate whether you can classify the individual as an independent contractor based on numerous IRS, Department of Labor, and state of Michigan factors. This decision should be made carefully because misclassification can result in significant penalties.
- Insurance coverage for your business is critical. But insurance is a complicated area with unique regulations – did you know that your insurance agent doesn’t work for you? Purchase with confidence by understanding Michigan laws and recognizing the difference between property, business interruption, and other coverage.
- Contracts and leases are complex legal documents that can be enforced in court. Working with an attorney is important to ensure your interests are protected. You’ll encounter agreements frequently in your business, so it’s a good idea to understand a few basics. Always read the entire agreement. If you don’t understand something, ask for clarification. Negotiate your agreement, especially leases that are often written to benefit the landlord. And be diligent about meeting deadlines and complying with requirements.
Our programs are created to help you maintain your focus and enthusiasm without being overwhelmed. Join us for our upcoming Small Business GPS: Business Basics, and especially session #2, which is “Choosing Your Business Structure” for guidance on important business issues.