Registering your own business seems intimidating to many, but in actuality it is a simple straightforward process. You don't have to own or even want to own a business to do this either. Any individual can register a family name or such, to reap the tremendous benefits that registering a legal entity can have. Especially for people who want to have their own business, have side hustles & projects, do freelance work, and create a platform that will generate money.
Here is the process and benefits for you when you register your own business
How To Start:
Choose a name
Choose a business structure
Form your business with your state
Register with IRS
Create business bank account (additional)
This is basically it! Your state will require you to pay $100-$800 dependent on what state you're in. From there it will take a matter of days to process and you will be all set. You will receive a letter of certification in the mail as the owner of your new formed business.
The Benefits
Tax Benefits
Protect your personal assets
Legitimacy & brand awareness
Perpetual existence
Increased retirement contributions
Tax Benefits
When you have a business you are not taxed the same as an employee of a company. Employees earn money, are taxed, then spend money. Business entities earn money, spend money, and are taxed what is left. This is a terrific way to rapidly grow your business. The reason being is that all your profits can be spent (re-invested) back into growing your business. Whatever is left from that is what the government receives in taxes. In many rapidly growing enterprises is close to zero. When you as the owner, re-invest your profits back into the business it is called a business expense (which is for the growth of the company). As an employee you have no choice but to eat the average 22% tax rate on the money you earn. Instead of being able to delegate it to the point where there isn't any money to be taxed.
Protect Your Personal Assets
When you are considering what type of business structure you want to have this is one of the best benefits to know about. By incorporating your business as a Limited Liability Company (LLC) or a C or S Corporation you are protecting your personal assets from any business debts. This will allow you to keep both separate from one another regardless of what happens.
Legitimacy & Brand Awareness
Incorporating your own business gives you credibility in the eyes of others. It allows customer's and potential investors to feel more secure when doing business with you. This may give you an edge over the people doing the same thing in your space!
Perpetual Existence
This means that your business now legally registered can exist forever. Your business can still be sold or closed, but if neither of these happen then it will stay in existence because it is its own entity.
Increased Retirement Contributions
Increased retirement contributions is something not a lot of people may know. When you register a retirement account you are now able to setup what is called a self employed retirement account (SEP). In a traditional retirement account that is given to regular employees the maximum contribution per year is around $19,500. For an SEP retirement account the maximum contribution per year is $58,000. These two figures are a worlds apart when you start to add up the years.
Conclusion
As your business, side hustles & projects, freelance work, and platform grows you will be able to continue to reap the benefits of being a registered entity. The benefits to registering a business are infinite. Now you have the tools to go and take full advantage of them!