An Employer Identification Number, or EIN for short, is basically a social security number for your business. Like with social security numbers, the IRS uses EINs to track what businesses need to certain types of tax. However, not all businesses are technically required to have an EIN as sole proprietorships can be identified by the owner’s SSN instead. That doesn’t mean, though, that you should avoid filing for one, as there are three main reasons why obtaining an EIN is important for a small business.
It allows the business to hire employees.
If you run a sole-proprietorship and you are the only employee that works for the business, all of the profits and losses are going to be reported as part of your personal income. You then pay whatever state and federal taxes you need to, just like you would if you received an income from anywhere else. However, when you hire an employee, you are responsible for withholding any necessary taxes from that employee’s income. The IRS then cannot simply use your SSN to keep track of what they are owed as there are now two different employees, and that’s where the employer identification number comes in. EINs let the IRS and other tax-collecting bodies know what businesses need to be sending in the usual payroll taxes.
We have talked a little bit about the different reports that the state requires corporations and limited liability companies to file, but what happens if you forget to send your annual report in? Or what if you find that you simply don’t have the money to pay for the franchise board tax, or the filing fees associated with all of that regulatory paperwork ? Well, you may find your business placed in ‘bad standing,’ branded with a non-compliant mark and, if you don’t take any action to get back into good standing, your business could be involuntary dissolved. Over the years we have talked to a few business owners who were forced through the dissolution process, and often one of the first questions they ask is ‘how do I reinstate my business after dissolution?’ Luckily it is usually a straight-forward process, though it can get a bit expensive.
Get all of your ducks in a row!
Every state is different when it comes to corporate law. Some, like Nevada or Delaware, are known for their business friendly atmosphere and extremely low corporate tax rate. As for other states, well let’s just say that not every state is as friendly towards small business as it should be. Knowing how each state stacks up in terms of laws, fees, and friendliness is enormously helpful when trying to figure out where to form your corporation. Over the next fifty weeks, we are going to look at the basics of corporate law and culture in each of the fifty states on our blog to help our readers better understand how to form and run a corporation in each state. And today we start with Alabama.
Alabama, despite not being as well known as Nevada or Delaware when it comes to incorporating, was actually ranked the second most business friendly state in the United States by thumbtack.com. Over the last few decades Alabama has made it extremely easy to start and run a business, and the lack of an over-regulatory government has meant that small businesses across an array of industries have been able to flourish and help the local economy.
Obviously, we struggled a little bit with the letter X. There aren’t a lot of topics that lend themselves well to this particular letter, so unless we wanted to discuss the ins and outs of running a xylophone business, we had to expand beyond our normal vocabulary. Enter xenodochial, a long word that essentially means being nice to strangers – a quality that businesses must exhibit if they ever hope to attract new customers! But for simplicity’s sake, you can also think of X as standing for (e)Xcellent customer service.
Truly the most confusing letter.
There are a lot of theories on how to best serve your customers, but in reality there is no one answer on how to provide good customer service. Instead, there are multiple factors that have to built into how a business interacts with its customers.
This week’s letter-based-topic might seem like a stretch since, really, the subjects are trademarks and copyrights – neither of which begin with an r. But putting registered in front of those terms is not just a cop-out that a lazy writer has used to fit with a weekly theme. There are actually very important distinctions between registered and unregistered intellectual properties.
Technically, you do not have to register trademarked or copyrighted property. An unregistered trademark simply needs the little ™ symbol next to it and, voilà, the property is unofficially trademarked. You can even establish a proprietary right to the mark by using it in the market.
The same general principle is also applicable to copyrights. When the United States signed onto the Berne Convention in the late 80′s, it effectively agreed to see an author copyrighting his or her work as an automatic right. That means that, thanks to the Berne Convention, no registration is required to copyright something in the United States.
Welcome to our weekly Business Basics post! This week we decided to explore a service that nearly every Corporation and LLC uses – registered agents. If you are thinking about forming an LLC or incorporating your business, you will need to find a registered agent. But what exactly do they do again?
What is a registered agent?
This week on the ABC’s of MyCorp, we’re focusing on the letter “O” for operating agreement. State laws are fairly lax when it comes to operating agreements – a handful of states require that an operating agreement be drafted, and even fewer require that Limited Liability Companies hold onto written copies of it. So, typically, LLCs choose to either forgo creating an operating agreement, or simply say that their operating agreement was agreed to orally.
However, the lack of government oversight for operating agreements does not make them any less important or valuable. Even if your LLC was created in a state without laws governing operating agreements, it is still a good idea to draft one and keep copies of it on hand for a few important reasons.
2013 started with a bit of a bang – with the looming fiscal cliff threatening tax hikes and benefit cuts, Washington scrambled to pass a budget that would allow the USA to continue trying to climb out of the recession. However, many small business owners are wondering what this means for tax laws in 2013. Is anything going to change? Do they have to do anything special? To help sort through the chaos, MyCorporation has prepared a list of important items and small business tax advice for owners to be aware of when filling out their 2012 returns.
2012 Returns and Deductions
One of the biggest concerns that business owners have is how the fiscal cliff discussions will affect their 2012 returns. The American Taxpayer Relief Act of 2012, which was passed on January 1st 2013, was the piece of legislation that averted the fiscal cliff. And for many businesses, its contents will not affect their 2012 return. However, it did retroactively affect a few things, most importantly Section 179 and the Research and Experimentation Tax Credit. Continue reading
About two weeks ago our CEO Deborah Sweeney was featured over at Mike Michalowicz’s great blog with her tip on negotiation tactics. The actual topic was ‘How to Win a Negotiation’ and Deb had 500 characters to distill her philosophy regarding negotiation into an easily digestible blurb. We liked the topic and all of the tips provided so much that we decided to take negotiation topic (sorry Mike!) and give Deborah a chance to expand on her quick little answer through a longer post. Plus it’s her blog, so she can use as many characters as she wants.
Can’t we all just get along?
So we don’t have to re-print the answer, you can either go read all of the responses over at Mike’s blog (which you should, because it really is a useful site and psst, Deborah’s tip is number 28), or you can settle for the quick and dirty version – when approaching a negotiation, be honest, be prepared, and be willing to compromise. Continue reading
Deadlines are definitely a necessary evil – no one likes to feel the pressure of a deadline on their back but without them, we would procrastinate. And procrastinate. And procrastinate. This week on our ABC’s for small business blogging segment, F is for filing, and meeting, deadlines.
We need a bit of a push if we ever expect to get anything done. And, for many, that “deadline” is the end of the year. It’s a simple enough deadline, and gives you 364 days of wiggle-room. We hear from a lot of people that say they want to start a business by the end of the year. They have an idea, they have a plan, and they just need to actually get that paperwork filed and their business opened. So they put it off, month after month, because they gave themselves until the end of the year. Continue reading