If you have been toying with the idea of starting your own business, it might be time to take that plunge and go for it! You probably already have a head-full of great ideas. Now, you just need to understand the administrative work involved. Here are three administrative tasks you need to prepare for before starting up your startup.
First, you need to decide how you will be organizing your business. Will it be a sole proprietorship, an LLC, or a corporation? Each of these entities will have its own distinct tax laws. If you are the sole owner of a sole proprietorship or LLC, you can report both your business income and expenses on your personal tax return. If you will be running your business as a corporation, whether as an S corporation or a multi-member LLC, you are required to submit a corporate tax return. An S corporation is a business that passes all financials through to their shareholders. Be prepared to keep a faithful record of your earnings and expenses, and to submit your taxes in accordance with your entity’s regulations. You will also be required to submit various taxes for any employees that you hire.
Payroll is another major administrative task. First, you must understand the payroll regulations set by the IRS. Each of your workers needs to be appropriately identified as an employee or an independent contractor. This distinction will impact tax requirements and payment methods. Next, You should be aware of deadlines you need to meet when completing payroll. You will have both income tax and W-2 form deadlines. You will also be required to pay your employees according to the frequency laws of your state. You should consider automating your payroll, which will simplify the process and help reduce mistakes from occurring. You might even choose to outsource your payroll and avoid dealing with the hassle altogether.
Hiring is a big job. It requires advertising, recruiting, reviewing applications, interviewing candidates, and selecting your employees. Additionally, hiring is regulated by the United States Department of Labor. You are prohibited from showing any form of discrimination within each stage of the hiring process. Because it can be hard to retain employees, hiring will likely become something that you are perpetually engaged in as a business owner.
Owning a business is not for the faint of heart. However, it can be extremely rewarding to grow something amazing from the ground up. Do your homework, prepare yourself for the heavy administrative lifting you will be doing, and get started now on fulfilling your dreams!
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