Welcome back to another great week. This week my class focused on legal structures, licenses, and taxes. For legal structure the class focused on what type of business you should be. For example, do you want to be a sole proprietor, partnership, Limited Liability Company (LLC), or a corporation. For me it depended on how big your business is. For me I am starting off as a small business so I am going to be a sole proprietorship and then as I get bigger I might move to being an LLC.
It was interesting to learn about all the different types of structures of businesses. I learned that LLC companies are companies are owned by members while Corporations are owned by shareholders. I did a little more research to understand the difference and I found shareholders are people who invest money into the business and expect to get paid back. Members are people who invest in a business but they care more about customer and employee satisfaction and improving business. That is why when my company gets bigger I would want to move to an LLC structure. I want the people who invest in the company to focus on making it the best company through having good company policies and practices because I believe that is part of what make customers love a business and makes them want to come back and spend more money. I think that is why Chick-fil-a is the favorite fast food restaurant to consumers.
Along with learning about the structures I also had to look at taxes and licenses I would need. Now this depends a lot on where you are located. When doing a discussion board I saw that a bunch of people found that sales taxes or service taxing depends on where you operate your business. For me, I live in Washington so I had to look at what I would need to be a sole proprietor in Washington state. The best thing about being a sole proprietor is that you have to register your business with the State, I have to get a home business license, and an Employer Identification Number (EIN) for tax purposes. That is it for me.
I would definitely look at what your state or city even requires. And yes, cities have certain requirements. The home business license I need is because of the city I live in not because the state requires it. I would also look at taxing. For example, being a sole proprietor I would have to pay for social security meaning that tax comes out of my personal bank account and that can be really expensive. The same thing goes for Medicare taxes. When having LLC or a corporation it is a little different as everyone who is an owner in the LLC or corporation company get taxed and it would come from company funds because with an LLC or Corporation company assets are separated unlike a sole proprietorship.
Researching the structures and taxes has helped me decide what plan I wanted to do for my business. So I would recommend everyone to do the same. Good luck finding which structure is best for you.
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