In this week’s Business Basics we’re going over what it means to qualify as a foreign corporation. Let’s say you form a corporation or LLC in one state, but you’ll be doing business in another state. This is pretty common for a lot of business owners. All it means is that you may be required to qualify for a foreign qualification. Filing a foreign qualification allows you to legally operate your business in another state other than the state of formation. (more…)
Independent, or 1099, contractors run their own businesses. A properly classified independent contractor is allowed to set their own hours, decide from where to work, and are allowed to negotiate payment. When you work as a 1099 contractor, you have to think of the businesses who you do work for as your clients, rather than your employer. And as a small business owner, an independent contractor should treat his or her work like any other entrepreneur would, and that includes considering the formation of a separate business entity. So should 1099 contractors form an LLC? That all depends on their personal situation, but there are some great benefits to it.
Fewer Misclassification Concerns
The state has cracked down heavily on 1099 misclassification after years of erroneous assumptions as to what employers could and couldn’t expect from an independent contractor. Employers had been using the 1099 designator to keep employees from earning the wages and having the protections required by law. (more…)
For today’s business basics, we’re taking it back a little bit. We’ve talked about the ins and outs of incorporating throughout the years, but we thought we’d remind you of the no-nonsense benefits that come along with incorporating with a filing service.
When you incorporate a business with a professional document filing service, you save time, money, and energy. (more…)
As you small business grows, it’s hard to pin down the best time to hire new people. Managers are especially difficult to time correctly. In many cases, they are seen as a luxury for small business and should only be brought into your management team if absolutely necessary. But as your company grows and your job as owner changes, managers are the key to a successful, growing small business.
When you first started you may have ended your day at 6pm, then it became 7pm, and now you leave later than you ever intended. If you find that your days are getting longer because you have to fix every little problem in you company, it’s probably time to hire a manager. As Reza Chowdhury, of AlleyWatch said in an interview with Bplans, ”You’ll likely find yourself trapped in a perpetual hamster wheel, focused on tasks that are not a good use of neither your time nor skill set. At this point, it’s time to bring in the help to allow you to focus on the big picture.” (more…)
Hiring your first employee is an exciting time for your company. Your daily duties have expanded and you need to hire someone to take over some of the responsibility. Before you interview and find the person you want to bring into your company, you need to understand the legal requirements for hiring and maintaining employees.
All businesses pay a federal income tax, whether its as its own entity or through the income tax of the owner. But, sales tax is a completely different story. Sales tax is determined by each individual state and the requirements for multiple state businesses are often complicated. Those requirements get further complex when you are an online business as you may not have any physical presence in the state itself. Whether or not your online business has to pay sales tax all depends on the states’ definition of one word: nexus.
The IRS, nearly every state tax agency, and even some cities require employers to withhold a certain amount from their employee’s paychecks to cover income tax, social security, and medicare obligations. These are payroll taxes, and it’s your responsibility, as a small business owner, to collect and send them in. The amount varies from state to state, and in some cases city to city, but there are three main steps to collection.
Everyone you hire fills out a W-4, which gives you some basic information like family size and other deductions. (more…)
Payroll may seem like a straightforward topic, but there is a lot more to it than just tracking hours and cutting checks. Unfortunately a lot of small business owners don’t realize that and, before they know it, they’re up to their ears in tax forms and reports they’ve never even heard of. Calculating, and staying on top, of payroll can actually be pretty complicated, especially if you don’t have a background in accounting. So what do small business owners absolutely need to know about setting up a payroll system?
You must withhold taxes
The federal, state, and local governments can all levy tax on income, and it is your responsibility as an employer to withhold the necessary amounts from your employee’s paychecks and send that into the proper agency. (more…)
Corporations are appealing for a lot of reasons: there are numerous tax benefits, they offer a sense of protection by legally separating the business owner from the business entity, and they’ve been around for so long that, if done correctly, they’re known as a rock-solid business structure. (more…)
We’ve all heard about the benefits of filing an S Corp election for your C Corporation. You get to avoid paying federal corporate income tax, when with a C Corporation you are subject to double taxation. Filing for an S Corporation status has always been an easy solution to getting out of double taxation. (more…)