Starting a business is like deep-dish pizza—it’s multi-layered, there’s a lot to consume, and at the end of the day, it’s all about the cheese. Of course, profit is every entrepreneur’s favorite topping, but first, you have to add in the passion and persistence to make your dream a reality.
Perhaps the collective fire in the belly amongst residents makes Illinois home to the best place to launch a startup in the Midwest, Chicago. Also, Champaign, Bloomington, Peoria, Springfield, and Rockford all ranked in the top 59 cities. So for your startup, read on to avoid the pitfalls common to many novice business owners, and soon you’ll be slicing up your serving of success in the Prairie State. Check more with the help of best business insurance companies
1) Think about the type of business you want to start
Entrepreneurs who wish to create a name for themselves in business must first decide what kind of company they want to run. While certain aspects may be obvious, such as operating an online or physical location, others may be more difficult to decide. Therefore, it’s a good idea to conduct some research and look at other local small companies in your sector to see how you can learn from their successes while avoiding their failures.
Aside from the mechanics of your daily operations, it’s also essential to determine whether being a business owner is right for you. Some business structures take a long time to start, and when something inevitably goes wrong, can you manage the stress, hassle, and headaches that go with your industry?
If you’re still enthusiastic about your business idea and nothing seems more satisfying than the startup grind, it’s time to jump into the process. While you may divide each step into smaller, actionable tasks, it is critical to finish the process in time to sell to your future customer base.
2) Set up your legal structure
The legal structure is sometimes called the business entity, business structure, or legal entity, but they all refer to how your venture is legally organized. Every Illinois business must choose an owner or employee to be a registered agent, which is the person who receives all communication from the state. Here are the different ways you can set up your new business:
Sole proprietorship: Choosing to run as a sole proprietor is one of the simplest methods to structure your new company. Profits from your labor are paid to you as the company owner, but any business debt becomes your personal responsibility. Sole proprietorships require the least amount of paperwork because they’re not incorporated. These businesses hire no employees, and you may use your Social Security Number to file all income on your personal tax return.
Partnership: A general partnership may be perfect for building a company with another person. Like sole proprietorships, small business owners in a partnership are responsible for business debt and have no liability protection for their personal assets.
C Corporation: A C corporation is owned by its shareholders and is often a more appealing choice for startups looking to attract investors. C corporations are separate legal entities from the people that work for them and are generally large organizations. This structure requires a board of directors, annual reports, and Articles of Incorporation, filed with the Illinois Secretary of State (SOS). In addition, shareholder-employees must pay their state income taxes on their personal state tax returns, and the company must pay Illinois corporation taxes.
Corporation: To take advantage of particular Internal Revenue Service (IRS) rules and avoid federal corporate taxes, businesses with 100 or fewer shareholders may opt to organize their operations as an S company, often known as a small business corporation. You may need to fill out added documentation, such as IRS Form 2553.
Limited Liability Company (LLC): Many Illinois businesses choose to form LLCs. This structure combines the simplicity of a sole proprietorship or partnership with the financial protections of a corporation.
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