/Business Filings

Foreign Qualifying your Business – FAQs

Happy February! With winter now in full swing, we will be talking about a way to get away from the cold with Foreign Qualifying! This month, we discuss the opportunities of Foreign Qualification into another state and what the requirements are for those states.

 

Q: What is foreign qualification?

A: A corporation or LLC transacting business in a state(s) outside of their state of incorporation is typically required to foreign qualify in those other states.

 

Q: What constitutes transacting business in another state and when do I need to foreign qualify?

A: As examples, your company is considered to be transacting business in an additional state if…

  • You have a physical presence in the state
  • You have employees in the state
  • You accept orders in the state
  • You have a bank account in the state

State rules vary and this isn’t a complete list. If you have any questions about whether you need to foreign qualify in a state, you can speak with an attorney.

 

Q: If I incorporated in Delaware or Nevada (but don’t live/work there), does this mean I need to foreign qualify in my own state?

A: Delaware is often chosen as the state of incorporation, especially by larger companies, because it has the most developed and flexible corporate statutes in the country and is considered pro-business.  Nevada has also become popular because of its lack of state corporate income tax, franchise tax and personal income tax.  It also has relatively low fees.

However, if you incorporate out-of-state, such as in Delaware or in Nevada, but do much of your business in your home state, you will most likely need to foreign qualify in your own state. You will then be subject to the same fees, taxes and regulations as if you had incorporated there in the first place, and you will have paid filing fees (and, perhaps franchise taxes) to more than one state.

Example: If you have a small business and are going to be conducting a substantial amount of your business in California, it will likely be beneficial to incorporate in the state of California. If you incorporate out-of-state, such as in Delaware or in Nevada, but do much of your business in California, you will have to foreign qualify in the state of California. You will then be subject to the same fees, taxes and regulations as if you had incorporated in the California in the first place, and you will have paid state filing fees (and, perhaps franchise taxes) not only in the state of California but also to the state of Delaware or Nevada as well.

 

Q: What is the process to foreign qualify?

A: You will need to file a Certificate of Authority, which grants a foreign corporation/LLC permission to transact business in a state. In most cases, you will need to show a Certificate of Good Standing from your state of incorporation/formation in order to get a Certificate of Authority.

 

Do you have a question regarding Foreign Qualifications? Call the CorpNet.com team today for a free business consultation at: 888.449.2638

 

 

What Every Small Business Should Know About 1099s

Every year when tax time rolls around, I field questions from business owners about whether or not they need to send 1099s to their vendors. As common as 1099 forms are, they remain one of the most misunderstood Internal Revenue Service (IRS) requirements.

To make sure you understand the circumstances under which the IRS requires issuing 1099-MISC forms to vendors, I’m going to provide some basic “must-know” information here.

What Is A Form 1099-MISC?

You must issue an IRS Form 1099-MISC to each person you’ve paid $600 or more in services (including parts and materials), prizes and awards, rents or other income payments. The 1099-MISC only applies to payments you made in doing business; it does not apply to payments made for personal purposes.

To Whom Do You Need To Send A Form 1099-MISC?

If your business paid more than $600 to a vendor or sub-contractor [individual, partnership, Limited Liability Company (LLC), Limited Partnership (LP), or estate], you are required to send a Form 1099-MISC to document what you paid them throughout the year. In general, anyone who worked for you—other than your employees—will need a 1099 from you.

Also, unless an exception applies to them, you need to issue a 1099 to your landlord if you are paying rent for business purposes. You must also issue a 1099-MISC to your attorney if you paid for legal services that amounted to more than $600 during the year.

Are There Any Exceptions?

There are. The list is rather long, but most commonly these types of vendors do not get 1099-MISC forms:

Also, you don’t have to send 1099-MISC forms to vendors to whom you made your payments via a credit card, debit card, gift card, or a payment network like PayPal. The onus to report vendor compensation is on those payment companies.

How Do You Figure Out If A Vendor Needs A 1099 From You?

I recommend before you request vendors to do any work for you, ask them for a completed W-9 form. The W-9 will give you all the information you need for filing taxes. It supplies a vendor’s mailing information, Tax ID numbers, and business structure (so you’ll know if the vendor is incorporated or not and does or does not need a 1099).

When Is the Deadline To Send 1099s?

By January 31, 2017, you must do two things to comply with your 2016 tax year 1099 obligations:

  • Submit Form 1099 to each vendor (reflecting what you paid that vendor in 2016).
  • Submit a copy of the Forms 1099 you sent to each vendor, along with a Form 1096 that discloses in total what you paid to all vendors who received 1099s from you.

Make sure you check on your state’s rules, too. Some states require they also receive your 1099s.

What Happens If You Miss The Deadline? 

Sending the required 1099-MISC forms late (or not at all) could cost you. The penalties vary depending on how far past the deadline you wait to issue the forms. If your business had gross receipts of $5 million or less, the amount you’re smacked with could range anywhere $50 to $260 per form (for tax years 2016 and 2017). If you’re caught intentionally not providing a payee with a correct statement for tax year 2016, you could face a fine of $520 for each form not submitted (that amount will increase to $530 for tax year 2017).

Where Can You Get 1099 Forms?

Unfortunately, you cannot download 1099 Forms from the IRS website. You can, however, order them from the IRS site and have them mailed to you, or you can pick them up at an IRS service center, post office, or another location that supplies them.

Eliminate Headaches—Do It Right From The Start!

Whether you’re in the early stages of launching a startup or already running a small business, I recommend you talk with a tax professional who can share more details about 1099s and the other aspects of filing your tax returns.

Starting a business or ready to change your current business structure? Contact us about making the registration process hassle-free and as fast as possible. We’re here to handle all of your legal document filing needs!

Should You Buy A Business Or Start One From Scratch?

Hope your New Year is off to a great start! As you’re looking to make 2017 a year of prosperity, have you set your sights on becoming a business owner? If so, you’re probably wondering whether buying an existing business or starting your own company will offer the best chances of success.

Both have their advantages and challenges, so how do you choose? I wish there were an easy answer, but I’m afraid you’ll need to do some research and put some serious thought into your decision. As you explore your options, consider the following pros and cons of starting a business from scratch and buying an established one.

Pros Of Starting From Scratch
• You begin with a squeaky clean slate, establishing and building your brand reputation from Day 1.
• You build your team fresh and new, selecting the right people for the right positions.
• You create your workflows to maximize productivity, without having any inefficient past processes to “fix.”
• You choose and develop the products, services, and packages you’ll offer to your customers.
• You establish your pricing to ensure profitability from the start.
• You choose your business’s legal structure to ensure the degree of liability protection you need and the most favorable tax situation.

Pros Of Buying A Business
• You have customers and incoming revenue immediately.
• You have employees who already know how to do their jobs and don’t need training.
• You have built-in processes and systems to operate your business efficiently.
• Your services and products are already to market, and you have established sales channels to get them into customers’ hands.
• Your business is already registered and has the necessary permits and licenses to operate legally in your state.

Cons Of Starting From Scratch
• You do all the legwork, including researching the registration requirements to form an LLC or incorporate your business and filing your state, federal, and local paperwork to operate legally.
• You don’t know for certain that your business idea will be viable and sustainable.
• You have to develop and put into place all the internal systems and processes needed to operate your business.

Cons Of Buying A Business
• Existing employees may be resistant to accept your leadership.
• If you find processes aren’t working efficiently, it may be difficult to initiate change because everyone is used to doing things a certain way.
• You may discover the legal business structure the former owners selected isn’t ideal.
• You may find your brand’s reputation isn’t as positive as you’d like it to be—that might be difficult to turn around.

As you can see, there’s a lot to think about as you weigh the options of starting your own business or purchasing one that is already up and running. I advise you to do your homework before deciding which route to travel. And consider seeking the guidance of respected and reputable professionals (attorneys, accountants, business consultants, etc.) who can help you understand the financial and legal aspects of what’s involved.

Remember, whether you’re starting a business or opt to buy and run one that’s already established, CorpNet is here to assist you with all your business registration and compliance obligations. Contact us today to help you take care of your filings so you can take care of business!

 

 

Business Information Zone (B.I.Z) – FAQs

Welcome January and 2017! With the holidays behind us and a bright new year ahead of us, it is a great time to start a business.  This month, we discuss the ways CorpNet can assist with our Business Information Zone or B.I.Z. in keeping your company in compliance!

Q: What is B.I.Z.?
A: Think of B.I.Z. as your business’ personal concierge service. Once you sign up, you’ll receive email reminders on tax and compliance alerts. You can also use B.I.Z. to store your business documents, and keep a personalized business profile that tracks important data about your company — such as formation date, Federal Tax ID number, business licenses and permits, and more.

Q: I didn’t use CorpNet to form my business, can I still use B.I.Z.?
A: Absolutely. Any Corporation, LLC, nonprofit, or professional company can use B.I.Z. to stay on top of their yearly compliance requirements. It doesn’t matter if you formed your company through CorpNet or not.

Q: It states that B.I.Z. is free. Is there a catch?
A: No. B.I.Z. is completely free, no strings attached. We know how challenging it can be to run a small business – and sometimes all the tedious state filing and fees can fall through the cracks. Small business owners don’t always know when their annual report is due or why their business fell into bad standing with the state. We created B.I.Z. to help small businesses keep track of all these filings, so they don’t have to pay an extra dime in fees or risk falling into bad standing just because they missed a deadline.

Q: What information do I need to create an account for free compliance monitoring on B.I.Z.?
A: You will need the following information: your business type (e.g. C Corporation or LLC), your filing state (where you filed your corporation/LLC paperwork), and your filing date (the registration date of your corporation/LLC with the state).

Q: Why do you need to know my filing date for B.I.Z.?
A: Each state has its own rules regarding when and how often corporations and LLCs are required to file their annual report. By knowing when you formed your LLC/corporation, we can send you an email alert before your annual report is due.

Q: What particular deadlines does B.I.Z. track?
A: B.I.Z. will track and notify you of upcoming compliance deadlines with the state, such as your Annual Report (if required in your state). It will also alert you of upcoming tax deadlines based on your business type. In addition, if you provide information about your business licenses and permits, B.I.Z. will alert you when they’re coming up for renewal.

Q: Can I keep track of multiple businesses with B.I.Z.?
A: Yes, you can monitor multiple businesses from a single B.I.Z. dashboard. It’s an ideal for attorneys and CPAs to keep track of their clients’ businesses.

Do you need help registering a business or have questions regarding the process? Call the CorpNet.com team today for a free business consultation at: 888.449.2638

What Should You Do If Your Business Is “Inactive”?

Just because you’ve stopped working with customers, taken down your website, and aren’t making money from your business, it doesn’t mean your company is considered “closed.”

Closing a business, whether an LLC or corporation, requires formally dissolving it with your state. If you don’t, you could be stuck with the responsibilities of filing your inactive business’s annual reports and state/federal tax returns. And you may be legally obligated to renew your business licenses and permits, too. All of that costs time and money. So if you’ve stopped doing business and are sure you want to retire your company, the sooner you legally dissolve it the better.

With the end of 2016 around the corner, now is a wonderful time to take action and close your business if it’s inactive. Wouldn’t it be nice to set yourself free from any tax and filing obligations related to that inactive business in the New Year?

But, what’s the right way to go about closing your company?

 

Here’s a checklist of what you need to do:

 

  1. Formally Dissolve The LLC Or Corporation.

You’ll need to formally dissolve the legal entity with your state.

  • With a corporation, all business associates need to vote on closing the business. If your corporation hasn’t issued shares, you need the approval of your Board of Directors to dissolve your business. If your corporation issued shares, two-thirds of the voting shares need to agree to dissolve the company.
  • With LLCs, dissolution rules vary from one state to the next. Make sure you review the requirements in your state’s Limited Liability Company Act.
  • Depending on the state where your LLC or corporation is registered, you’ll either need to file an “Articles of Dissolution” or “Certificate of Termination” with the Secretary of State’s office.

 

  1. Pay Your Debts.

To properly close your business, you must settle all your company’s financial obligations. Typically, LLCs and corporations need to pay their debts before they can legally distribute money or assets to their members. If your business falls short with its resources to pay its debts, seek an attorney’s help to determine your options.

 

  1. Contact Your County To Cancel Your Business Licenses And Permits.

Don’t forget to cancel your business license, seller’s permit, and any other types of licenses and permits your business filed for to operate legally. If you neglect to cancel them, the county will think your business is still in operation and they may continue to charge you fees and taxes.

 

  1. File Final Tax Returns And Close Your Business’s Federal And State Tax Accounts

In addition to your state, the IRS will also need to know you’re closing your business. File your final state and federal tax returns. On your tax return, you can indicate it’s your final return by checking the box that specifically identifies it as such. Also, cancel your Employer Identification Number (EIN). If you have/had employees, make sure your business’s payroll withholding taxes are current. If you don’t, you or other owners/members might find yourselves personally liable for paying any outstanding payroll taxes.

 

Wrapping It Up

Besides the four steps I’ve mentioned above, also inform your customers, contractors, and vendors that you’re officially closing your business. Even if you haven’t actively worked with them for a while, it will show consideration and respect if you proactively communicate the dissolution of your company.

While your current business may be closing, don’t underestimate the power of maintaining and nurturing the professional relationships you’ve built along the way. As you move on to a new career or start a new business, keeping the lines of communication open may open the door to new and exciting opportunities, as well.

Do you have an inactive business? File your Articles of Dissolution with CorpNet and get the peace of mind that your dissolution paperwork is filed accurately by asking CorpNet to help!

Do you need help filing your dissolution or have a question regarding the process? Call the CorpNet.com team today for a free business consultation at: 888.449.2638

Filing an LLC – FAQ

We are excited to bring you another post in our monthly FAQ series! This month, our CEO Nellie Akalp is answering questions about one of the hottest entity types for small businesses – the LLC. What are the requirements of filing an LLC? What are the benefits? Read on to find out!

Q: What are the benefits of forming an LLC?

A: In an LLC, the owner’s personal assets are shielded from business liabilities just as they would be in a corporation. In addition, the IRS views the LLC as a “disregarded entity.” Thus, an LLC does not file separate taxes; company profits and losses flow through to the owners and are subject to each owner’s individual tax rates. The LLC is great for a business that wants liability protection, but seeks minimal formality. It’s also the perfect structure for a business with foreign owners since anyone (C Corp, S Corp, another LLC, a trust, or an estate) can be an owner of an LLC.

Q: Do I need to prepare an Operating Agreement to form an LLC?

A: You’re not required to create an operating agreement in order to form an LLC, but in many states you will be required to keep an operating agreement at your place of business to maintain your corporate compliance. And even if your state does not require a formal operating agreement, it can be an important document to help clarify verbal agreements between owners and prevent misunderstandings.

Q: What is an Operating Agreement?

A: The Operating Agreement is an official contract that spells out the management and ownership of the LLC. It can outline details like how much of the company each member owns, everyone’s voting rights; how profits and losses should be distributed among the members; and what happens when someone wants to leave the business.

Q: Do I need to submit my LLC’s Operating Agreement?

A: You’re not required to submit a formal operating agreement to the state or any other entity. But, most states do require that an LLC has an operating agreement in place and kept at their place of business.

Q: Are there any differences between how an LLC and S Corporation are taxed?

A: Both the LLC and S Corporation can be taxed on a pass-through basis; taxes aren’t paid on the entity level, but at the individual owner level. Profits and losses are passed through and reported on the individual’s tax return. While both LLCs and S Corporations are pass-through entities, there are a few differences.

One difference is that the income of an LLC flows to the members involved with the business and is subject to self-employment tax. With an S Corporation, only salaries are subject to self-employment tax; any distributions that are paid out to members are not subject to self-employment tax.

Another key difference is that the LLC offers a lot more flexibility in terms of how owners can be taxed. With the S Corporation, owners must be taxed based on their pro rata ownership interests; if you own 50% of the business, then you’re taxed on 50% of the company’s profits. With an LLC, owners can determine their allocations for the year and be taxed accordingly.

Q: Can one person form an LLC?

A: Yes, all states allow one member LLCs.

Q: Does an LLC have stockholders?

A: No. LLCs are not permitted to issue stock in any state. Only corporations (C- or S-Corporations) can issue stock.

Q: How is an LLC structured?

A: LLCs have members – these are the owners of the LLC and are similar to stockholders in a corporation. Members typically receive an ownership stake in the LLC commensurate with their investment (either financial investment or ‘sweat equity’). In addition, members choose a manager to manage the LLC – this position is similar to a director of a corporation. A manager can be a member or could be someone from outside the LLC.

Q: Does an LLC need to hold an annual meeting?

A: No state requires an LLC to hold an annual meeting. This is one of the benefits of the LLC – it has fewer formalities than a corporation. However, if your LLC’s operating agreement requires an annual meeting (or other meetings), then you’ll need to hold such meetings in order to stay compliant. Many owners choose to make meetings optional in the operating agreement.

Q: What’s the difference between an LLC and PLLC?

A: In many states, licensed professionals, such as lawyers, doctors, architects, and accountants, aren’t allowed to form LLCs. Instead, these professionals can form a PLLC (Professional Limited Liability Company). One of the key differences between an LLC and PLLC is that members of the PLLC must be licensed professionals, and you’ll need to show proof of a valid license to register the PLLC. In most cases, members of a PLLC are personally liable for their own malpractice claims, but aren’t personally liable for another professional’s malpractice claims.

Do you need help registering an LLC or have a questions regarding the process? Call the CorpNet.com team today for a free business consultation at: 888.449.2638

Should I Incorporate Now or At The Beginning Of The Year?

So you want to change your business structure from a sole proprietorship to an LLC or a corporation? Great! But you might be wondering if you should make it effective now, or wait to file your paperwork until the New Year.

If you’re one of those hyper-organized people, like me, you probably love the idea of having a neat and tidy January 1 effective date. After all, who wants to deal with filing two sets of tax forms—one for the period of time in this year when you operated as a sole proprietor and another for the part of the year the new structure was in place? But at the same time, I’ll bet you want to have all your ducks in a row right now, so you don’t risk filing too late and facing the same situation next year.

Sigh. What’s an entrepreneur to do?

Delayed Filing To The Rescue
Guess what? Most states offer a Delayed Filing option. It provides you a way to perfectly time the effective date of when your business officially changes to your new structure of choice.

Delayed Filing enables you to submit your application for whichever business structure you’ve chosen, but delay the actual incorporation date until a specific date in the future. In short, it lets you control your effective date of incorporation or LLC formation.

Whether you want to make a clean break with a January 1 start date or you have reason to schedule your new structure to take effect on some other date next year, you can get the paperwork out of the way now. That leaves you with one less task to take care when you need to be focused on marketing strategy, customer service, and all else.

Nice, right?

When To Submit Your Delayed Filing
You can use the Delayed Filing option at any time of the year. Check with your state to find out how far in advance you need to file. The requirements vary from state to state. Typically, you would need to file between 30 to 90 days before your requested effective date.
What To Do
When filling out the online forms to form an LLC or incorporate, indicate the number of days after filing that you want your business structure to be effective. When registering your business structure for a delayed start date, your Articles of Incorporation (or Articles of Organization) will need to reflect that effective date, as well.

Final Words of Insight
Even though the end of the year is near, you still have time to submit a delayed filing for January 1, 2017. You will, however, need to use the fast track service to expedite review and approval by your Secretary of State department in time for your intended start date.

Worried you won’t be able to handle the filing details with the busy holiday season upon you? Contact us! We’ll be happy to help you file your paperwork now, so you can get right down to business in the New Year.

 

Setting Up a Corporation – FAQ

Happy November! We are excited to bring you another post in our monthly FAQ series!

When starting a business, one of the first questions an entrepreneur must ask themselves is, “What entity type should I register?” Here at CorpNet, we are often asked to explain the differences between a C Corporation and an S Corporation, how to file a corporation, and even, “What is a corporation?” In this month’s FAQ post, our CEO Nellie Akalp answers all your burning questions about corporations!

Q: What is a C Corporation

A: A C Corporation is a standard corporation. It is considered a separate entity from its owners. This means that the corporation is responsible for any of its debts and liabilities. This is often called the “corporate shield” as it protects the owner’s personal assets from debts and liabilities of the business.

A corporation has a formal structure consisting of shareholders, directors, officers and employees. Every corporation must select at least one person to serve on its board of directors and officers are required to manage the day-to-day activities of the company.

As a separate business entity, a corporation files its own tax returns. As a C corporation owner, you’ll need to file both a personal tax return and a business tax return. In some cases, this can result in a “double taxation” burden for small business owners (see the question on double taxation below for more details).

Q: How do I create a C Corporation? 

A: To create a C Corporation, you’ll need to file the proper formation documents, typically called the Articles of Incorporation or Certificate of Incorporation, with your state’s secretary of state agency. You will also need to pay the necessary state filing fees. If you incorporate with CorpNet, you simply need to complete the online order form (or give us a call!). We’ll prepare the necessary paperwork and file it with the state.

Q: Who can form a C Corporation? 

A: There really aren’t any restrictions on who can form a C Corporation. Some states do require that the directors of a corporation are 18 and older, but there aren’t any age, residency, or other legal requirements for who can form a C Corporation. Keep in mind that the IRS places several restrictions on who can elect S Corporation status.

Q: What organizational roles are required in a C Corporation?

A: C Corporations have three groups: shareholders, directors, and officers. Shareholders own the C Corporation (via their shares of stock), yet the shareholders typically don’t manage the company. Shareholders do elect and remove directors, and can vote on major corporate issues.

The board of directors manages the affairs of the C Corporation, and can appoint and oversee officers. It’s the officers who are responsible for the day to day management of the corporation.

It’s possible to be a shareholder, director, and officer. In fact, in most states, you can be the sole shareholder, director, and officer for your C Corporation.

Q: What’s the minimum number of directors required for my C Corporation?

A: Most states allow just one director for a C Corporation, but you can have more. In some states, the minimum number of directors depends on the number of shareholders.

Q: What is double taxation?

A: Income earned by a C corporation is typically taxed at corporate income tax rates. Then, after the corporate income tax is paid, any distributions made to stockholders are taxed again as dividends on the stockholders’ personal tax returns. This is often called “double taxation” since corporate profits are first taxed on the corporation and then dividends are reported on the individual stockholder’s return.

Q: What is the difference between a C Corporation and S Corporation?

A: C Corporations are subject to double taxation as described above. A C Corporation entity is required to pay tax at the corporate level. An S Corporation is considered a pass-through entity for tax purposes. This means that the company’s profits and loss are passed through to the individual shareholder’s tax return (and each shareholder is typically taxed on the company’s profits based on their share of stock ownership).

Q: What are the benefits to forming a C Corporation compared with an S Corporation?

A: A C Corporation can offer greater tax flexibility. In addition, if you’ll be keeping the profits within company (as opposed to distributing dividends to shareholders), then the C Corporation can shield shareholders from direct tax liability.

Q: Can I form a Corporation with just one person?

A: Yes. A Corporation can have just one shareholder. Keep in mind that even if you’re the sole shareholder, you will still need to comply with corporate formalities such as director and shareholder meetings, and keeping meeting minutes.

Q: If I have multiple businesses, what’s the best way to legally structure them?

A: There are three different ways to structure multiple businesses. There are advantages and disadvantages for each approach – and the best structure will depend on your personal situation.

  • You can file an LLC or corporation for each of your businesses. This approach isolates the risk to each individual business, but involves maintenance fees and paperwork for each of the LLCs/corporations.
  • You can file one LLC or corporation, and then set up multiple DBAs (Doing Business As) for each of the other businesses. With this approach, you just need to pay your annual LLC/corporation maintenance fees for the LLC/corporation (and not each individual DBA). However, each DBA isn’t protected from the other DBAs. So if one DBA is sued, all the other DBAs under the main LLC/corporation are liable.
  • In the third approach, you can create individual Corporations/LLCs for each of your businesses and put them under one main holding Corporation/LLC.

Q: What is your Express Filing Service?

A: It’s a way to reduce your formation filing timeframe and get your corporation set up faster – sometimes as fast as 24 hours or even the same day! To understand the express filing timeline, it’s important to understand there are two different processing times: CorpNet and the state.

With the Express Filing Service, we’ll process your documents the same day (if submitted, Monday through Friday, before 4 pm PST). Depending on your state, we’ll hand deliver, fax, or send your documents via courier – whatever your particular state/county allows as the fastest option.

Then, the state office is instructed to process your filing as an expedited filing. State processing time estimates vary by state, and not all states support expedited filings. When you fill out your incorporation package online, you will see if the expedited service is available in your state and what the state’s estimated processing times are.

Do you need help registering a corporation or have a questions regarding the process? Call the CorpNet.com team today for a free business consultation at: 888.449.2638

                               

Applying for an EIN – FAQ

We are excited to bring you another post in our monthly FAQ series!

This month, we are discussing an integral part of business formations – EINs. An EIN (Employee Identification Number) is also known as a Federal Tax ID Number or FEIN. Whether a corporation or LLC, obtaining an EIN is an important part of starting a business!

Check out our CEO Nellie Akalp‘s answers to your burning questions below:

Q: What is an EIN?

A: An EIN (Employer Identification Number) is like a social security number for businesses It’s how the IRS identifies your company and tracks its activities.

Q: Who needs to get an EIN?

A: Your business is required to get an EIN if any of the following apply:

  • Your business is structured as a corporation or partnership
  • You have employees
  • You have a Keough plan
  • You file any of the following tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms
  • You’re involved with certain organizations as defined by the IRS

In addition, you’ll most likely need an EIN in open to open a business bank account and credit card.

Q: I’m a sole proprietor without any employees, can I get an EIN?

A: Yes, if you don’t fall into any of categories listed above, you’re not required by law to have an EIN for your business, but you still can get one. The main advantage in filing for an EIN as a sole proprietor is that you won’t need to give out your personal social security number to clients, vendors, and other business contacts.

 

Do you need help applying for an EIN or have a questions regarding the process? Call the CorpNet.com team today for a free business consultation at: 888.449.2638

                               

By | October 6th, 2016|Business Banking, Business Filings, FAQ, Starting a Business|0 Comments

Is Fear of Failure Holding Your Business Back?

Ghosts, ghouls and goblins—oh my! While children clad in Halloween costumes may fear witches and zombies, many entrepreneurs are equally terrified of failure. But since failure is an inevitable part of launching and growing a small business, fear of failure could be holding you and your business back from success. Whether your business is already underway or just getting started, here are six ways to overcome your fear of failure:

  1. Go step by step. When we’re scared, it’s easy for fear of failure to paralyze us and we end up doing nothing. Instead of taking an all-or-nothing approach, break down what scares you into small, manageable parts. For example, if you’re afraid to approach potential investors for financing because they might say no, break it down into smaller tasks: researching potential investors, making a list of the most promising possibilities, finding connections on social media to introduce you, developing your pitch and so on. Going step-by-step, you’re more likely to succeed, and each success will build your confidence.
  2. Do things right. Failure often occurs when we’re in a hurry and take shortcuts. In your excitement to launch your business or your next big idea, it’s tempting to skip the boring stuff and jump straight to the fun part. However, paying attention to foundational elements such as writing a business plan, choosing the right legal structure for your business, trademarking your business name and getting a business license can greatly increase your odds for success.
  3. Get help. You’re less likely to fail if you get advice from more experienced business people, professionals and mentors who have “been there, done that.” They can help you foresee possible problems and figure out how to surmount potential hurdles. Perhaps even more importantly, they can build your confidence by providing encouragement and support. SCORE and your local Small Business Development Center (SBDC) are two great, free sources of business advice and expertise.
  4. Celebrate your successes. It’s human nature to be critical of ourselves and focus on everything we’ve done wrong. Unfortunately, this can lead to a crippling fear of failure. Instead, focus on all the things you do right. Take some time to write down risks that you’ve taken—not just in business, but also in your personal life—and the successes you’ve enjoyed as a result. Giving yourself credit for all the good things you’ve done will build your ability to take on challenges with less fear.
  5. Do what scares you. Did you notice I said “less fear” in the prior paragraph, rather than “fearlessly”? No one is fearless, no matter how they may look on the outside. True courage means doing what scares us in spite of our fear. Really, the only way to overcome fear of failure is to try new things, knowing full well that you might fail—and that’s OK.
  6. Learn from your failures. No matter how hard we try, we’re bound to experience failure, especially when undertaking something as challenging as starting and growing a business. Make failure your friend by learning from it. Step back and assess exactly what happened, why it happened, and what you can do differently next time to prevent it from happening again. The more you learn from your failures, the less likely you are to repeat them.