Generating a business idea is an excellent starting point, but an idea doesn’t transform into a business without proper effort. As a budding entrepreneur, you need to understand the importance of every stage of business. Apart from the initial capital and business idea, you also need to focus on other crucial factors such as planning, registration, tax management, accounting, and so on. In this regard, a professional business formation consultancy can assist the owner in forming and running the business profitably. Such a consultancy will also help you to make informed decisions, establish the correct business entity, frame strategies, and meet all the compliance requirements.
So here, let’s understand the detailed stages included in the business formation services:
- Registration and Licensing: Incorporation or registration is the most important stage in the formation of a company. A company is properly incorporated only when it is duly registered under the Act and ‘Registration Certificate’ has been obtained from the Registrar of Companies. However, it’s important to note that the registration process for different businesses differs depending on the nature and type of Ownership:
- Limited Liability Corporation (LLC): Any foreign entity or individual can own an LLC after proper compliance with the law and requirements of respective states. This type of company involves a simple registration process, and less documentation fees. Also, an Individual Taxpayer Identification Number (ITIN) is issued to the LLC owner/s – that helps the company to stay compliant with tax laws.
- C-Corporation: A C-corporation needs to enrol its name in the public register of the specific state. Also, the owner/s are not eligible to receive SSN but they can apply for IRS from like W-7. However, the business owner should also get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) to legally hire people, file taxes, open a bank account, and get required permits.
- S-Corporation: The method of registering this type of organization is the same as C-corporation. Moreover, this type of business is exempted from the Federal taxes and it is taxed as per Sub-Chapter S of IRS.
In all, proper registration of your organization is essential for a successful commencement of the business. Additionally, it makes your business eligible for loans, tax deductions, rebates and exemptions, and saves a lot of money.
Pro tip: In the USA, an entrepreneur needs to fulfill several legal formalities and therefore, it’s always better to hire a professional service provider.
- Bookkeeping and Accounting: Bookkeeping and accountancy services are an important element for running any business efficiently and profitably. Therefore, an experienced company formation services provider is recommended, who offers an integrated accounting solution – that can determine, manage, and control the entire procedure. Effective bookkeeping and accounting not just help you reduce the administrative costs but also improve the overall performance of the company. It will also help you to analyze the financial stability, credit management structure, and budget of the firm. To understand it better, here are some basic services that are a part of accounting solutions:
- Recording financial transactions in the books and classifying them meaningfully.
- Preserving important documents and automatically generating useful reports.
- Forecasting and projecting budgets, investments, and expansion.
- Preparing and mapping the accounts, statements, and balance sheet.
- Accurately verifying and evaluating the cost of inventory along with the compilation of Fixed Assets.
- Tax Planning: Strategic tax planning from the first month of the financial year will help your business to survive and meet its long-term goals. It will also help your business to stay compliant with taxation reforms and build good credibility in the market. Since the US government offers a lot of tax-benefits to start-ups, Tax planning will prepare your business for appropriate deductions, credits, and rebates in advance. Some service provider offers assistance to the business for preparing and filing taxes in the initial years. Remember, fulfilling statutory and regulatory taxation reforms can help you to identify opportunities within the boundaries of tax compliance and add more value to your business.
- Audits and Assurance: Under the US Companies Act, every business must undergo an external audit conducted by the IRS annually. In case any discrepancy is detected during such external audits, the company has to face serious and legal consequences. Therefore, successful entrepreneurs tend to outsource professional auditors – who can conduct an internal audit and verify the financial records of the company. Internal Audit can provide a comprehensive picture of your organization’s adherence to regulatory and statutory obligations. It also helps the business to evaluate the strength of compliance preparations, frame security policies, and improve the risk management procedures. The clean records of the company will help the business to gain a competitive edge, promote consistency, and attract more investors.
Right from its inception to its expansion, a professional business formation provider will assist you in every stage of development. Consultants providing Business Formation services in USA can handle all aspects of documentation, bureaucracy, asset protection, accounting, taxation, and audits.