Before getting started, stamp this in your mind “Legal matters matter.” They may be boring, but if you fail to learn the rules and accidentally break one, it could cost you everything you’ve worked for. If you want to be an entrepreneur, you need to follow the rules. Before you register your business, you will need to determine what type of company you plan to start. Here are some choices, in order of popularity:
1) Sole Proprietorship: A sole proprietor is someone who owns an unincorporated business by him or herself.
2) Partnership: Here there will be two or more people who contribute money, labor or skill and expects a share in the profits and losses of the business.
3) Limited Liability Company: It is a business structure allowed by state statute. Banks and Insurance Companies cannot be LLCs.
i) Type C: A C corporation is recognized as a separate taxpaying entity which indeed acts same as a partnership, only for the capital stock. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders. Google more about ‘Double Taxation.’
ii) Type S: Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on their corporate income.
The final consideration for your business and perhaps the most important is trademarking. It is the only word that allows the seller to protect his product. Make it unique. I recommend starting off with a trademark search. Once you’re done don’t forget to register it.