Mistakes In Forming A Corporation
photo credit: b3nscott
Most people make the mistake of thinking that forming a corporation or incorporation is extremely costly and only for large business’. This is not true, forming a corporation is cheaper then ever right now and small business’ are urged to form one as well as large business’. But there are a few key points to stay away from when forming a corporation as talked about on Entrepreneur.com.
●Incorporating before you seek the advice of a reputable CPA.
●Setting up your incorporation, but failing to get the proper licenses before you start doing business.
●Making the mistake of thinking that the corporate veil gives you unlimited liability coverage.
●Setting up your incorporation without having the proper sufficient capital to back it.
●Failing to file periodic taxes required by your state and federal laws while operating under an incorporation.
Generally, incorporation is the best form of business for the small-business owner–including startups. The advantages in terms of personal asset protection, credibility, taxes, ability to finance operations and the enduring nature of the corporate entity far outweigh the disadvantages–but only if you plan properly.
What suggestions do you have to offer for forming a corporation/incorporation?
Monica on May 2nd, 2009 2:44 pm
Even for tax wise, it is easy once you have done it once.. [ not a tax advice - talk to your accountant]
1. 940/941 [each qtr]
2. 1120s [15th March]
3. 1080 [15 April]
4. State Employment Taxes [every qtr]
5. Franchise Tax [15th of May]
Did I miss anything?
Sharon
http://aafter.com
Sandy Lenner on May 6th, 2009 6:25 am
Beside the legal considerations when forming a corporation, it’s also important to consider the type of accounting software to be purchased and to have a plan to properly account of all business transaction no later than the date of incorporation of your business. I have seen many startups neglect to record their transactions until months after the formation of the business. This results in a mess, for lack of a better word, and also may result in unrecorded transactions, missed taxed deductions, etc. Also, another common issue when incorporating is too consider the accounting for the owners start-up capital, namely , should it be recorded as capital or a loan.
Sandor Lenner CPA,MBA and a Certified QuickBooks ProAdvisor who works as a part-time consultant with Susan Missal Lenner, P.A. and has a blog for small business owners on the subject on Online Accounting .
The blog’s URL is http://sandylenneronlineaccountingfinancial.blogspot.com/
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