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A Sole Proprietor? (Update)

If you are serious about going into business don't be the fool who operates as a sole proprietor. Take the time to establish a solid business foundation from a legal and financial standpoint. Do not unwittingly expose yourself to liability!

Setting up a business in Utah is a relatively quick process. Filing Articles, obtaining a tax ID number from the IRS, and acquiring a business license can literally be done in a few minutes. Opening a business account, finding proper insurance, developing a biz plan, all take a little more time but there are plenty of helpful resources. With the right idea you can be up and running in short order.

Consider the benefits and requirements of different business entities, such as, a limited liability company, a partnership, or an "S" or "C" corporation. Do some research and talk to an accountant and a lawyer who can analyze your needs and recommend the most appropriate structure. For instance, if it is a high priority for you to file as few tax reports as possible and to keep tax and legal requirements simple, an LLC might be the best fit. Same holds true if you are creating a lifestyle business or if the business is holding real estate. However, if you plan to grow your company to a point where you will be offering equity, a corporation is likely a better choice. If you want to take advantage of payroll tax law, an S-Corp may provide a nice benefit. If you have a storefront and own the land it sits on, you might be wise to explore having two separate entities, one for the store and one for the real estate.

Doing your "homework" up front before you start selling is as important as anything you will do once the doors open. The right entity can offer liability protection, tax advantages, and many other benefits that a sole proprietor does not get.

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