All of the steps necessary to startup a new business can be confusing to first-time entrepreneurs. This message posted to Google Answers puts everything in order:
First decide what business format you will use - sole proprietor (just you), partnership, LLC, corporation, trust, etc.It wouldn’t hurt to hire a good tax professional at this point to help you with the decisions, and other start-up arrangements.
Once you know the business entity, you can get a tax identification number.
With that tax ID number you can open a bank account.
With that bank account, you can deposit money - either as a loan or a capital contribution. Your Tax Pro can help you decide which it should be.
Be aware, once you’ve started the company, you may have some annual filing requirements, but they won’t be complicated if you don’t have a full-fledged business yet. Often, as with a sales tax ID number, you’ll just be filing tax returns with zeroes until you start selling.
Most of your expenditures, at this stage, won’t be deductible. They are considered start-up expenses, until your business is ready to open.
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