How to incorporate your home business

Filed in archive management on March 24, 2010

© jrdn7730


In the early stages of your business, you might feel overwhelmed by choices. Work from home or brick and mortar? Keep regular hours or flex time? Hire employees or independent contractors? One of the looming questions you may have is how to incorporate.

There are multiple options and a lot of things to take into account. The most important things to remember is how you imagine your company to be structured. Decide what you want and then try to find the best strategy to fit your needs. Quickly let's go over your options:

1. Sole Proprietorship: This small business is owned by a single entity who runs the corporation day to day. The law does not distinguish the business from the owner.

2. Limited Liability Corporation: LLC are considered a kind of hybrid business, taking into account the limited liability of a corporation with the flexibility of a partnership.

3. Partnership: Much like a sole proprietorship, except that it allows multiple entities to own the business. But like the sole proprietorship, it does not distinguish the business from the owners.

4. Nonprofit: A nonprofit in essence works solely as a charitable organization, while you can take a salary the business must not run solely for profit.

5. Corporation: A corporation is a completely separate entity from its owners which are taxable by the state. Owners are in fact shareholders and must have a board of directors.

It's a good idea to do a little more research on each of these kinds of business. Many of them have subcategories as well, so check those out too. Also a good idea to look into what the IRS expects of each one too.

What kind of business do you have and why did you pick it?