I field questions all day on a number topics. I have compiled a list of resources to help my clients find things that normally elude them.
- Creating a Business Entity
- Creating a Non-Profit Entity
- Starting a Small Business
- Tax Planning & Estimates
- Setting up a Website, and Email Accounts
- Investing in Real Estate
- Recommended Reading
Many businesses are a simple sole-proprietorships, and all you have to do is get a business license and an EIN. However, if you plan to form a seperate entity (partnership, corp, or LLC) it is important to do it right the first time. Bowen Accounting offers a reasonbly priced service to setup a business entity on your behalf and act as your agent of service. We will help you put together your 'articles of incorporation', and/or 'operating agreement', and file all of the required documents with the Secretary of State, and maintain your corporate records for you.
Operating as a sole-proprietor or as a seperate entity both have important tax implications. Even if you decide to create the entity on your own, you should still speak with a financial and tax advisor about the tax implications of your new business.
If you want to learn more about how to create a business entity please take a look at the Secretary of State's Business Entity page. You can check to see if names are available, download forms, and see the process involved in starting a business entity.
Many people want to start a Not for Profit entity, which is essentially an organization that collects money through fundraising and donations, rather than business activities. These organization may pay those who administer it, and any money contributed to it are tax deductible as long as it is structured properly. A nonprofit is a seperate entity and is essentially a corporation with a special designation. Most nonprofits are designated a 501c3 corporation, and also have a state designation under code 23701d. These designations allow the corporation to avoid paying minimum taxes, or in most cases, any taxes at all on gift/donation income.
Nonprofit entities fall into three basic categories; Religious (churches, Public benefit (misc charity), and Mutual Benefit (associations). The paperwork and general outline for how to become a nonprofit is located on the Secretary of States 'Business Entities Forms' page. There are several different options for encorporting as a non profit.
To become a nonprofit you must create 'Articles of Incorporation' (using the packet above), and then file the specific forms needed to get the federal and state nonprofit designation to avoid taxation.
Get an Employer Identification Number (EIN) from the IRS
File online to get an employer identification number (EIN) with the IRS This service is only available from 6:30am to midnight on most days. Note: When filling out the application, even if you are using a fictitious name you are still considered a 'Sole Proprietor' unless you have formed a corp or an LLC. Fill out the application using your personal information. You should be given an option later in the process to put in your fictitious name.
Get a Fictitious Business Name from the County Clerk
File to get a fictitious business name (FBN) in Bakersfield, CA at the County of Kern, County Clerk's Office. Here is the link to the County Clerk's FBN page with information on fees, forms, and links to search the database for which names are currently in use. Note: There are additional requirements to do get a FBN, namely publishing the name in a paper. There will be information at the clerks office as to how and where to do this. Also, you want to get your FBN before you get your business license if you want it to be under the fictitious name.
Get a Business License from the City of Bakersfield
Click here to see the City of Bakersfield PDF for filing for a Business Tax Certificate, also known as a business license. If you plan to operate as a sole proprietor with no fictitious name then this is very easy to get.
Getting a bank account
Getting a separate bank account for your business is very helpful for tax purposes. If you intend to accept checks written in the name of your business then you must a get a business account. Most banks will require this to be a separate account. You will need to present all of the documents above to the bank to open the account. The bank may also require additional documentation. The best way to setup an account is to simply walk in and speak with a new account representative. They will guide you through the process.
The IRS and FTB are pretty lenient with business owners in their first year regarding estimated tax payments. However, you do not want to end your first year of business owing income tax to either organization.
Tax planning and estimated payments are crucial in any business plan. Please take the time to setup income and expense projections for your business (budgetting), and sit down with an accountant or financial advisor so that you can calculate and plan for estimated tax payments.
Estimated tax payments are due quarterly (4/15, 6/15, 9/15, 1/15) to both the IRS and the FTB. You need to find out if the amount of money you are going to make will require you to make estimated payments, calculate what those payments will be (with the help of an accountant), and then at about the mid-point of the year check your actual figures against the original forecast to see if your payments are on track.
If you have not been responsible for paying in your own taxes in the past this is a VERY important step in becoming a business person. Bowen Accounting & Tax offers this basic service to it's tax clients at no charge. If you need help please contact Richard Bowen, CPA.
Whether you are starting a new business or taking your current business to the next level, it is really easy to go to the web and get a free gmail or hotmail account. However, most business owners would like an email account like Name@CompanyName.com. It is not hard to get this.
Purchase Domain - First you must purchase a domain through a registrar. I use NameSecure.com to purchase domains because their prices are reasonable, but almost any registrar will do. On a registrar's site you will search for the domain name you want (example: BowenAccounting.com), and if it is available, purchase the domain for a certain period of time.
Setup Hosting - After you have purchased the domain you must get web hosting, which is a service that holds the files that make up your website and routes emails directed to your domain to the proper place. I recommend HostGator.com. After you sign up with them you will tell them what domain you have purchased and they will route that domain to their servers.
Setup Email Accounts - Next login to your cPanel through HostGator.com's website and start setting up your email accounts.
Create Your Website - Creating a website is never easy, but there are lots of sites out there that will teach you how to do it. If you would rather have a professional create your website and upload it for you then Bowen Programming can help you with that. If you prefer to do it yourself, you will need an html editor, and a means to upload or FTP the site you create to your host.
Owning real estate is an very important part of any long-term investment strategy. Whether it is buying a personal home, which you intend to sell or rent later, to purchasing an apartment complex to generate cash flow, real estate investments are more complicated than many would have you believe.
I have done an analysis of real estate investments using cash vs. financing to help relatively new investors understand the advantages and drawbacks of both. If you are interested in long-term real estate investing please take the time to read the analysis and view the attached spreadsheets.
I have always thought that it is important in life to continue to learn even when you are done with school. All of the following books have had a major impact on my life and financial viewpoints.
There are of course many more books that I would like to recommend to anyone that cares, but these are specifically personal finance and viewpoint related.
- Freakonomic & SuperFreakonomic by Steven D. Levitt & Stephen J. Dubner
- Good to Great, by Jim Collins
- Rich Dad, Poor Dad by Robert Kiyosaki
- The Millionaire Next Door by Thomas J. Stanley
- The Millionaire Mind by Thomas J. Stanley
- Outliers by Malcolm Gladwell
- The Tipping Point by Malcolm Gladwell
- Total Money Makeover by Dave Ramsey
- Fooled by Randomness by Nassim Nicholas Taleb
There is much more to come on this page shortly. If there is a specific topic you would like me to address here please email me Richard Bowen, CPA