What Type of Business are You?

 

  The writing process taps into the creative side of one’s personality. However, it is the practices and skills of being a business owner that builds a foundation to measuring the overall success. The first step of building a means of measurement is establishing yourself as a business entity.  There are two common ways.  One is a sole-proprietorship and the second is a Limited Liability Company (LLC). Each has their own advantages and disadvantages.

     A sole-proprietorship does not require filing papers with state agencies, obtaining a Federal EIN (Employee Identification Number) or initial start-up capital to form. The use of your social security number is the only required information.  There is not any need to establish  officers or filing articles of incorporation.   

   One disadvantage to being a sole-proprietor is the amount of liability, which is one-hundred percent on you. You assume all liability for any incurred debts and legal liability. Your personal property can be considered as assets to the business.

     A Limited Liability Company limits this amount of personal liability. It creates a “barrier” between your personal assets and your business. Like a sole-proprietorship, taxes are filed through your individual tax returns. This eliminates the need to file corporate taxes.   
    
     A disadvantage to establishing a LLC is the initial start-up cost.  A LLC can be formed through the use of an attorney or on-line legal service. Filing fees and annual renewal fees are often required by your state. 

While both sole-proprietorship and a LLC allows you to be a single owner entity, forming a LLC provides a legitimacy to your business.   Vendors, financial institutions, and other business entities tend to see a LLC as having more credibility. Having established a LLC will provided the basic required documentation by banks to establish a business account. 

     As it is important to define your antagonist/protagonist and plot points, it is the same for defining yourself as a business. 

    
                                                                                   

  

"In order to succeed, we must first believe that we can."

-- Nikos Kazantzakis 

 Sole Proprietorship v/s LLC

	Sole Proprietorship	LLC
Single Owner	X	X
Include with Individual Taxes	X	X
Requires EIN number	Optional/SSN can be used	X
Requires filing with Sate Agency		X
Limits Personal Liability		X
Meets Basic Requirements for Business Checking Accts		X
Provides Credibility as a Business		X

 Useful Resources:

How to obtain an EIN - 

        Individual/Sole Proprietor:  https://federal-ein-online.com/apply/sole-proprietor

               (Highly recommend using instead of SSN)

        LLC - https://federal-ein-online.com/apply/limited-liability-company

To File or Register with your state:  visit your State's Website for the office that is responsible for establishing and regulating business ownership.  Some states place this responsibility under the Secretary of State's office.

Obtaining a business license - Local City and County government websites have a link that detail the requirements for purchasing a business license.  The type of business may determine if there is a requirement to have a business. 

 Obtaining a Sales Tax ID Number - sales tax is required to be collected on individual sales, including internet sales, by most states.  A visit to your state's website will provide the information and steps to obtain a Sales Tax ID number.  This is normal regulated through the state's department of revenue.