You’ve had a flash of inspiration, and plan to start a business in Kentucky. What now?
First, if you need money to fund your business, you’ll most likely need a written plan for it. Your business plan outlines your proposed business, the market or audience it will serve, and how it will profitably serve that market or audience. This plan will be the key component of the documentation you’ll submit to secure financing for your venture.
Of course, you can also start your own business with your own money. Many small businesses, particularly those operated out of someone’s home, are started without a written business plan. But you still have to set your business up under the law.
To do that, you’ll need to determine what licensing, permitting and registration requirements apply to your business. Be sure to research all federal, state and local regulations.
Then, you’ll need to decide which business structure is best for your company from both a liability and tax standpoint. Your choices include:
- Sole Proprietorship: The simplest structure (commonly used by small business start-ups) in which the owner is personally responsible for all business liabilities.
- Partnership: A legal relationship established among two or more partners who engage in trade and share in the profits or losses of that trade.
- Corporation: The most complex business structure which establishes the business as a separate legal entity from its owners.
- Limited Liability Corporation (LLC): A structure that combines the liability limitations of a corporation with tax flexibility.
You’ll also need to name your business, and file that name with either the Kentucky Secretary of State (for partnerships, corporations and LLCs) or your local County Clerk (for sole proprietorships). Make sure the name you choose is available before you register.
You must obtain an Employer Identification Number (EIN) from the Internal Revenue Service. You should also consult with an accountant to thoroughly understand all your federal, state and local tax obligations. You will certainly need to register your small business with the Kentucky Department of Revenue and review your state tax obligations.
If you plan to hire employees, be sure to familiarize yourself with the wide range of issues employers face, including employment eligibility verification, new hire reporting, federal and state tax withholding, unemployment insurance and worker’s compensation. Obviously, it’s a complicated issue that requires a lot of time and effort.
Congratulations on starting a business.
You’ve had the inspiration. Now comes the perspiration.
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