Sole Prop, S Corp - Is this Greek or What?

Today I want to begin delving into some of the questions a lot of mamapreneurs have when beginning their own business. The one I get most often is : How do I get started?

When I started Charisma Communications I had no idea what I was doing. I just began going to networking groups, created business cards on the Office Max business perforated cards ( I know, I know... you should be wincing over this) and threw up a website. If I had it all to do over again knowing then what I know now, my first step would have been this:

1) Determine your business entity.

Depending on the needs of your company, you can be a sole proprietor, S Corp, LLC etc. This post will focus on Sole Proprietor and what that means.

The good news is, it's simplest for those of you who will be working on your own and not hiring anyone right out of the gate. That puts you in the Sole Proprietor category.

A sole proprietor, in a nut shell, means you don't have to create any paperwork on the legal side for your business entity. Any and all money you make is considered your own personal money and can go into your own checking account, if you want. You are required to pay self-employment taxes, but because the money you make is based on you as an individual, you add all of the revenue you made for the year on your personal tax return. It is, by far, the easiest form of company to start and maintain.

But here's the catch, if you plan on having any employees or shareholders, you have to go on to either an LLC, S Corp or other type of corporation. While I am in no way, shape or form anywhere near an accountant - I can send you to a great article to get you started:

http://www.bankrate.com/brm/news/biz/Biz_ops/20000831.asp

Once you've figured out your entity, it's time to get legal. My next post will discuss some of the different forms etc needed to get started, with tips on where and how to find them. Stay tuned...