Last week we looked at forming a business entity. When a business is formed that business owes various duties and obligations to its employees, the public and the government. Some things to watch out for are:
1. Make sure that you pay all the State registration fees. If you do not, your entity may be dissolved by the State.
2. If you are a corporation, be sure to pay all federal taxes, including social security taxes.
3. If you form a “pass through” entity, be sure to obtain good tax advice. Even though you “pass through” the earnings to your personal income taxes, you may still have to pay extra federal and state taxes beyond what an individual pays. Businesses do have special taxes.
4. Be sure the insurance you have is the correct insurance. It is too late after an event takes place to find out that you insured things incorrectly. Insurance companies do not pay out of the goodness of their hearts. If you goofed, they can simply refund the premium you paid.
It is better to get help with the issues before the problem arises. The insurance company and the government are not always your friends. It is cheaper to pay an advisor now, than losing your business or insurance claim due to not knowing what questions to ask when forming a business.