Bloomfield Hills Small Business Insurance: Small Business Planning
Making the decision to let your entrepreneurial spirit shine can be a big step. There is so much risk but quite often a great deal of reward in starting your own company. Small businesses, freelance workers and consultants play an increasingly vital role in the nation’s economy, contributing 40% of the U.S. gross national product. According to the U.S. Department of Commerce there are over 20 million operational small businesses, and those numbers are continually increasing. The parameters set for qualification as a small business vary by industry based on number of employees or amount of profit made in a fiscal year and are not restricted by type of legal entity.
This means that you can establish your business entity as a corporation or as a sole proprietorship and still be considered a small business. While many people think of a large scale business when they hear the term corporation, the term does not denote size or financial might of a business but rather the legal parameters of operation. There are many options to consider when establishing your small business, the first of which should be the type of legal and tax structure would you like to abide by. This includes how much liability you personally would like to assume for the business.
Freelancers and consultants often establish themselves as a sole proprietorship entity where-in they are personally responsible for reporting all business profit and loss. This requires you, as the sole employee and owner, to pay self-employment taxes and assume all liability for the business operations.
Contrarily, creating a corporation establishes the business as a legal and taxable entity separate from you as the owner. Corporations are formed by drafting Articles of Incorporation which ensures that your business is in accordance with all state and local government policies. Creating a corporation limits the liability of the individual participants, generates credibility and helps establish a brand.
Another option is establishing a LLC or Limited Liability Company which provides the participants with the liability protection of a corporation but integrates the tax structure of sloe-proprietorship or business partnership.
Choosing the right business model for your budding company is an important decision, and making sure whatever type of entity you choose has the best Bloomfield Hills small business insurance is crucial. At Capital Insurance Group we work with a broad spectrum of businesses providing all types of commercial insurance. Our Risk Management specialists will help you take an objective look at your company and the exposures it may face to find the best business coverage to fit your needs. Call us today at 888-296-0418 to get your business started off right.