Blair Stover

You’re starting a new business but one question is bugging you: do you need an accountant? Is it necessary to hire one? It certainly sounds important but what if you have nothing to account for? How do you know if and when you need one? .

There are no hard and fast rules regarding this problem. It all depends on how much money you have and the number of deductions you have to make. One thing to remember is that deductions are more important than your income. You read it right. How come?

Well, you don’t have to be a genius to figure out how much money you’re making as long as you can count. You don’t need a degree in physics to add up your Clickbank or PayPal receipts. But deductions are a different matter. Do you have any idea what to deduct? If you don’t, that can be bad for your business and getting an accountant makes perfect sense.

As you know. accountants have a wide range of services. A good accountant can advise you what records to keep for your business, how much you should set aside for income tax and national insurance, and whether you have to register for VAT among others.

An accountant can also help you in raising money, making a business plan, telling you what accounting software to use, and in payroll preparation if you’re hiring people. As your business grows, that person can advise you on personal financial planning, tax planning and other business matters.

As you gain more experience, you may find that your accountant and attorney may overlap in the services the provide. But don’t worry. In most cases, the two work together to help you succeed in your business.

For many entrepreneurs deciding whether to hire a lawyer is similar to a visit to a doctor. If you have a big medical problem,. chances are you won’t hesitate to call a physician or run to the nearest hospital emergency room. But if you simply have a bad cold, you’ll normally wait for a couple of days or until things get bad before you go to a doctor.

In business, however, it’s difficult to take chances. You should get a lawyer when dealing with a serious legal problem. Obviously, this holds true if you’re being investigated for securities fraud by the Securities and Exchange Commission or a client has been seriously injured by one of your products.

Starting a business without any legal counsel can be a huge mistake. If you don’t have a lawyer representing your interests, you should hire a business lawyer experienced on corporate matters and start-up ventures. One good place to start your search is the Internet. Your search will give you plenty of choices to make a good decision.

There are two kinds of business lawyers: those that handle lawsuits or business litigators and those that handle corporate and contract matters or transactional lawyers. Some lawyers can do both but most concentrate in one area or another. If you’re starting a new business, a lawyer who handles business transactions is a good choice.

Anticipate your future needs as your business grows. For instance, retain a lawyer or a law firm that specializes in areas that affect your anticipated business needs. It may be wise to get a “full service” firm that does both transactions and litigation. It’s also good to have access to lawyers experienced in other legal areas affecting your business like labor or employment law, tax law, real estate law, banking and finance or intellectual property.

No mater how big or small your business is, you need to know your federal tax responsibilities. This is essential since there are a lot of legal and tax issues that often arise with any business. To avoid being caught with your pants down, connect with a tax professional and an attorney before you start your business. They can take care of certain legal and tax issues that come up.

The Internal Revenue Service tells taxpayers to follow specific guidelines to determine whether an activity is a business or a hobby, that is, a non-profit activity. To know your filing obligations, decide whether your activity qualifies as a business and what limitations apply if it’s not a business. Incorrect deduction of hobby expenses take up a huge chunk of the overstated adjustments, deductions, exemptions and credits that amount to $30 billion yearly.

As a rule, taxpayers may deduct ordinary and necessary expenses for a trade or business. The former is a common expense that’s accepted in the taxpayer’s trade or business. A necessary expense, on the other hand, is one that’s appropriate for the business.

Next, decide which business structure is suitable for your business. There are several to choose from and each has its own advantages and disadvantages. These are sole-proprietorship, partnership, limited partnership, corporation, S-corporation, or limited liability company. To know what’s best, take into account liability issues associated with your business and choose one that will give you the best tax structure for your particular line of work.

Depending on the kind of business you plan to pursue, you may require a number of licenses or permits. At the least, you need a business license and tax registration. Research on licensing requirements to get a clear picture.

Related articles by Zemanta

• Finance: Credit Card Reform & Small Biz (womensblog.score.org)
• Non-Shocking Tax Shockers (myventurepad.com)
• Business Formation – Partnerships (artistshousemusic.org)
• IRS requires firms to report iffy tax breaks (seattletimes.nwsource.com)

There are several legal issues to take into account when starting a business. Everything from your business name to its structure to its operation is affected. That’s why you need the help of a good lawyer. Here are some common legal concerns you have to address:

Business Name
Ensure that the business name you intend to use is original and isn’t used by another entity. Check this by conducting a name search with the correct state agency which is often the office of the secretary of state. If your chosen name is available, you can reserve it with the secretary of state’s office for about 120 days. This will give you enough time to prepare your articles of incorporation, articles of organization, or a partnership agreement.

Trademarks
You also have to register your trademark. Reserving a domain name won’t guarantee legal rights. Federal trademarks normally take precedence over domain registrations so register the trademark federally. Choose a distinctive name so it won’t be confused with others.

Co-Founders
Make a note of your deals with co-founders. This is important to help you settle any disputes that arise later.

Employees
Take into account the legal issues of hiring employees. The largest area of potential liability for an entrepreneur happens to be employment law. Don’t neglect the rights of your employees.

Bank Accounts
Your business and personal account are two different things so keep them separate. You require a business checking account to pay for goods at wholesale prices while your sales tax certificate shows that you’re entitled to wholesale prices from suppliers. Take note if you borrow personal money to pay for your business. This will tell you at the end of the year whether you made a profit.

Related articles by Zemanta

• Be Aware of a Domain Name’s Previous Business Activity – Elliot’s Blog (blog) (domainmacher.com)

The major thing that distinguishes ordinary people from successful entrepreneurs is a strong belief in one’s self. Indeed, you can become whatever you like if you believe in yourself and work towards that goal. The entrepreneurs listed below are known for inventing new things and starting services that touch our lives.

Steve Wozniak of Apple Computers

Image by Brymo via Flickr

Steve was hooked on science and technology in the fourth grade after reading a book about a young engineer who owned his own company and could design anything. This inspired Steve to create the first personal computer in 1977.

He and his partner Steve Jobs soon started a company to build and distribute their invention. Their first office was in a garage. To get funds, Jobs sold his Volkswagen van and Wozniak sold his programmable calculator to raise $1,300. Jobs managed to sell 50 Apple I computers at $666 each. Six years later, Apple was listed in the Fortune 500.

Bill Gates of Microsoft

Bill Gates via last.fm

Bill started programming computers at 13. He eventually became the chief software architect of Microsoft Corporation, the world leader in software, services and solutions. Since then, the company had revenues of $36.84 billion in 2004 alone and employs over 55,000 people in 85 countries.

Mary Kay Ash of Mary Kay Inc.

Image by kenjonbro via Flickr

Mary used her $5,000 life savings to open her first store in Dallas in 1963. She began with only nine independent beauty consultants. With her strong Christian faith, she encouraged women and gave them new opportunities that led to their personal and financial success. The company was later recognized by Fortune magazine as one of “The 100 best companies to work for in America.”

Related articles by Zemanta

• Gates on Jobs is good (robbiz1978.blogspot.com)
• Appletuga: Pirates of Silicon Valley (appletuga.com)
• Apple Co-Founder and IT Innovator Steve Wozniak to Appear on WebmasterRadio.FM’s Rainmaker, Thursday November 12 at 6PM Eastern (prweb.com)

Finding the right legal structure is important for any business. This will save you thousands of dollars in taxes yearly. There is also a benefit by having protection from lawsuits, the ability to expand your business, low operating expenses and minimal paperwork.

Should you consider a limited liability company or LLC over an S corporation or C corporation? If you do, understand that there are no tax advantages (or disadvantages) to forming an LLC. Setting up an LLC won’t affect the taxes you pay. Single-owner LLCs are taxed just like sole proprietorships while multiple-owner LLCs are taxed similar to partnerships.

Still, forming an LLC could make you a candidate for additional state taxes. This holds true in certain states like California where LLCs are subject to franchise taxes aside from the usual income taxes.

The C corporation is the standard corporation while the S corporation differs only in that it has a special tax status with the Internal Revenue Service (IRS). The latter is named after Subchapter S of the Internal Revenue Code. In to get ant S corporation status, Form 2553 must be filed with the IRS in addition to S corporation guidelines.

Unlike other business structures, C corporations are taxable entities meaning that the corporation itself is taxed on its income (compared to other entities that just pass the income to the owner). If you don’t plan to distribute all profits from your business, you could benefit from forming a C corporation and using “income splitting.” This is where the business’s income is divided so that one part is taxable to the corporation and the other is taxable to the corporation’s owner.

Related articles by Zemanta

• IRS Suspends Penalty Collections for Small Firms (online.wsj.com)
• One week left to go back five years with your tax losses (myventurepad.com)