I recently re-branded my catering business which prompted me to write this post. I’ve been seeing so many social media post lately about starting a business and how everyone should apply for an “LLC”.
Through my partnership with various banks, I’m often called upon to help business owners and entrepreneurs register for their business entity because they though they only needed an EIN # to open up a bank account.
Let me be clear, YOU CANNOT OPEN UP A BUSINESS BANK ACCOUNT WITHOUT A BUSINESS ENTITY
What is a business entity? Well for starters, a business entity and a business license are two completely different things. Which is another misunderstanding a lot of first timers have.
A business entity is an organization that is formed to conduct business. The type of business entity you have will determine how your business is taxed and you as its owner.
Choosing a business entity should be one of the first steps you take when it comes to starting a business. How your business is structured can offer protection for your personal assets, even though your business assets could be at risk, your personal assets might not be.
Different types of business entities.
Sole proprietorship: A sole proprietorship is owned and operated by a single owner.
Limited Liability Company: LLC aka Limited Liability Cooperatives takes positive features from other business entities. LLCs combine the flexibility and tax advantages of a partnership but give you the personal liability protection of a corporation.
C Corporations: A C corporation or C-corp for short, most big businesses and some small businesses choose c-corp primarily because of the liability protection it offers. With C-corp, owners, or shareholders are taxed separately from the corporation.
S-Corporations: (S Subchapter) : S Corporations aka S subchapter is for small businesses that need liability protection but do not need multiple shareholders.
Don’t just rush into starting a business, do your research, talk to a professional, ask questions, and take a free online course to educate yourself on the ins and outs of starting and operating a business. Education yourself because there’s no shame in not knowing.
Have a question about registering your business entity in Philadelphia? Or just a general business inquiry, feel free to reach out via email or comment on this post.
