• LegalShield & IDShield posted an update 1 year ago

    Are you thinking of structuring your business? SCORE is one of the great resources. Are you a HBB? Check out LAUNCH.
    From the Record Eagle:
    Making and selling tie-dye T-shirts is very different than operating a canoe rental company. When considering what type of business entity to set up for your new endeavor, a key question to ask yourself is this: What is the potential liability? In other words, what are the chances of getting sued?
    When putting together a business plan, one of the first things to consider is whether you should operate as a sole proprietor or under the protection of some type of corporation. There are advantages and disadvantages that must be considered for all types of business structures.
    Let’s say, you want to make and sell a simple product — like a custom clothing item. You do not plan to hire any workers, you do all manufacturing as a cottage industry within your home, all goods will be sold online or at retail establishments owned and operated by others, and, both your business and personal assets are fairly small. This type of operation has little potential for worrisome liability.

    So, in this case, it would be safe to consider the simple option of operating as a sole proprietor. Under this structure, all you need to do is secure a D.B.A. (Doing Business As) license through your local county clerk. Your social security number is used for all bank accounts and IRS reporting. A simple Schedule C is all that is needed for your annual income tax return.
    Now, let’s say your new business involves customers coming to your place of operation. This opens up a whole new set of risks. The protection of a corporation is the safest way to go in this case — or in any other circumstance where customers could sustain any injury at your place of business or while using your product.
    The protection of a corporate structure can help insulate your personal assets in the event of a lawsuit against your company.

    There are several different options when considering the best corporate structure. When you meet with a SCORE mentoring team, you will most likely be advised to take advantage of a free consultation with one of our partner attorneys. This important meeting will help you decide between a Limited Liability Company, a Limited Liability Partnership, Limited Partnership, S-Corp or a C-Corp.
    There are varying levels of complexity when setting up and maintaining each of these different corporations. An LLC, for example, is the simplest and can easily be set up online at the corporation division of www.Michigan.gov. This easy-to-maneuver website will guide you through the forms you need. The fee is low and the process is simple.
    SCORE also can connect you with a partner accounting firm for a free consultation on the various tax implications for each type of corporate structure. When selecting the right kind of corporation, it is important to talk with both an accountant and an attorney. Let SCORE pave the way for you.

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