Dotting the I' s and Crossing the T's
By Donesia Muhammad
Copyright©KDM Publishing
Note: This tutorial is not meant to replace any legal advice regarding business start ups, accounting, taxes, or any zoning laws in your state. Please refer to those guidelines as well when setting up your business. This tutorial is meant to give you an idea of what you are facing when starting your business.
Always discuss this with a tax professional and/or a lawyer first before taking anyone's advice.
Last time we looked at corporations and the different structures involved. We also looked at the process of getting your business license along with some helpful hints from other fellow marketers on what business structure works for them.
Now you can learn more on the different types of
Corporations,
how to obtain a federal tax id number,
working with international customers.
Corporations.. Not as Easy as you think
As I mentioned in part two, corporations are very different from the other two business structures. It is a "legal person" all it's own. It is separate from the actual business owner (s). So it is legally entitled to enter into contracts, lend or borrow money, etc.
But don't assume that corporations will separate you indefinitely from repaying any debts the corporation incurs. There are always loopholes and ways that will make sure you pay so try not to start getting yourself in debt right away or you may be in a for a rude surprise.
Some of the types of the corporations that can be formed are:
S Corporations
These are really a special tax designation granted by the IRS for existing corporations. This combines the advantages of sole proprietorships, partnerships, and corporations.
Profits and losses go to the shareholders and also taxed at that level too.
LLC ( Limited Liability Company)
An LLC, gives the advantage of giving business owners protection from their personal assets and keeping them separate from their business assets. There is a lot of flexibility in their the business organization, similar to partnerships.
LLC' s are a combo of partnerships and corporations.
This is also ideal for foreign investors, due to less owner restrictions.
LLC' s are not technically corporations therefore, do not have the same stock ownership benefits.
How Do I Get My Federal Tax ID#?
A Federal Tax Id number also called a Employer Identification Number or Tax Identification Number is normally for all businesses for legal and tax purposes. If you are a sole proprietor, you may choose to use your social security number instead.
Note: If you change your business name or your business structure, you may need to obtain a new tax id. Consult with your attorney for this matter.
Now I have seen a lot of site that offer to get your tax id number quicker for a fee. Please don't fall for that. I applied by calling the IRS's tax id number and received my tax id within 10 minutes to use immediately. I received the paper copy within a couple of weeks, all free.
The number to call is based on the state that you live in. You can go to this page to find out what number to call.
http://www.irs.gov/businesses/small/article/0,,id=97851,00.html
More Information is available here for federal tax id numbers.
http://www.irs.gov/businesses/small/article/0,,id=97860,00.html
Quick Tip:
If you plan on doing any drop shipping online, you
will need a federal tax id number. As a sole proprietor, you may use
your social security number instead, except under certain
circumstances.
YOU DO NOT HAVE TO PAY
SOMEONE TO OBTAIN A TAX ID NUMBER. Don't fall for those
scams, just go straight to the IRS site and get yours free.
Unless you are paying someone to set up your
business such as your accountant or lawyer, then don't fall for those
scams online.
Obtain a federal employer
identification number from the Internal Revenue Service Office nearest
you. Ask for a Business Tax Kit. You can get this packet online
at:
www.irs.ustreas.gov or call 1-800-829-3676
and ask for the business tax kit
What About My International Clients?
Since you are doing business online, you are open to a broad range of clientele. You will deal with people from all over the world, which means different cultures, social, and economic background.
You don't want to end up offending someone because you were not aware of any cultural differences. Do not assume that any common phrases you may use won't be viewed as offensive to others.
Stay neutral with "slang" terms and jokes. Don't think that because you find that joke funny, someone else will. The next thing you know, your business deal went sour, and you are sitting there wondering why.
I did include an article from my archives from Nucha Aquino from Global eBiz Tips about cultural differences. This article first appeared in my ezine over a year ago but it still applies to us all. It is a great primer to understand that the world does not revolve around your country, so you have to if you want to really be successful online understand people of all types of race, religion, ethnic, and cultural differences.
More Resources
Paying Taxes in the U.S. internationally, here is some help
Click
Here
Tax and Accounting Sites Directory
http://www.taxsites.com/
Not sure of International Cultures? Learn how to expand your business international and professional.
http://www.executiveplanet.com/index2.jsp
Start Up Journal, the Wall Street Journal for Entrepreneurs
http://startupjournal.com
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