Starting a business? 5 Surefire Tips for Growing Your Business & Protecting It
So you’ve just started your business huh? You have a feeling of excitement, and then that dreaded feeling of overwhelm comes when you actually start working on it. Although, I can’t help with the overwhelm (therapy and meditation helps, I promise!), I can give you some pointers on where you need to start. When you are growing your business, there are steps you will need to take to protect yourself and your business from liability. The tips below are some steps are just the tip of the iceberg on steps that you should be taking.
1. Form an LLC or corporation.
There are 4 types of business entities: sole proprietorship, partnership, limited liability company, and a corporation. When you are forming your business, you may start as a sole proprietorship or partnership. As you grow, you’ll want to create an LLC or corporation depending on the type of business you have and how you want to be taxed. If you form an LLC or corporation, this entity shields your personal assets if someone sues you. Depending on your election with the IRS, you may be able to save money on self-employment taxes. In addition, if your business is a start up or you plan on having investors, forming a corporation makes you look professional and it is easier to raise capital because of the sale of stocks. Also, investors are more likely to work with a corporation as they are most familiar with this type of entity.
2. Choose your tax designation.
LLCs and S- Corporations are pass through entities which means that the entities are not subject to federal income tax. The IRS will taxe the owner individually on their income. The IRS taxes LLCs as one of a sole proprietorship or partnership, depending on the number of owners. Basically, the owner will report all of the income from the LLC on their personal income tax return and pay personal income tax on the company’s profits. A C-Corporation is subject to double taxation. The IRS taxes a C-Corporation’s profits, as well as the shareholders dividends if the corporation distributes the profits as dividends.
If you elect an S-Corportation, you can bypass double taxation and possibly paying personal income tax on all of the company’s profits. The LLC or corporation must meet certain requirements, but instead of reporting all of the income of the company on a personal income tax, the owner(s) must pay themselves a reasonable salary, which will be subject to Social Security, Medicare, federal, and state income tax (if applicable). If there are remaining profits after you pay yourself a reasonable salary, that profit will not be subject to self employment tax, and you can take it as a dividend (bonus).
3. Trademark your name or logo.
As you are growing your business, your business will start getting brand recognition. A consumer can recognize your brand by words, a design (logo), or a sound (like the NBC chimes). By trademarking your name or design, no one else can use your name or logo to profit off of the brand you created. If you want to register your trademark, you will have to register the word, logo, or sound with the United States Patent and Trademark Office (USPTO). Once you register, the USPTO checks your trademark against the their database. The USPTO has to confirm that the mark was not previously registered or a likelihood of confusion. If everything checks out with the USPTO, they will register your trademark and no one else can use it without your permission.
4. Copyright your content.
As an influencer, blogger, or business, you have worked too hard for someone to just swoop in and copy your ideas. While growing your business, you want to make sure that you copyright your creations. A copyright can be a book, website, photography, music, plays, and the list goes on. To register for a copyright you have to go through the Copyright Office. There are different categories to copyright your content, such as literary works, visual arts, performing arts, sound recordings, and single serial issues. Once the Copyright Office approves your registration, you will receive a certificate of registration.
Have you implemented these tips in your business already? If you haven’t, Wilson Murphy Law can help you with these needs so you can get that business off the ground and growing!