Ryonet | #PoweringThePrint
You have found your niche. Now you can set or reset your screen printing business around that niche.
There are many ways to set up a successful company for screen printing, but going back to your niche and referring to what you are the BEST at and accentuating that will be your best path to success. Some of the largest screen printing companies don’t even print, and some of the others don’t even sell. You don’t have to do it all to be successful, but how you set up your company should cater to the kind of business you decide to create.
Your structure will ultimately be driven by your process. You will need people in order to run your shop, and/or to manage others doing it for you. Before we jump into those exact roles and the processes behind running a successful screen printing business, lets first lay down the details of how to create the business part of your screen printing business.
Which Kind Of Business Should I Choose For My Screen Printing Business?
As you are starting your screen printing business, you must realize that this IS a business and the more you treat it like a business, the more successful you will be in the long run. To treat something like a business means you have to BE in business. It always amazes me the amount of people who try to start a business without spending the little bit of time and money it takes to officially become a business. There are many advantages to “officially” becoming a business, but all of them ultimately save you money and protect your interests.
There are several different business structure options you can choose from:
1. No Business Structure
This, of course, is NOT recommended. Without officially starting a business you don’t have any tax incentives. Nothing you own is protected, and you run the risk of serious repercussions from the state and the federal government. If you are serious about this long term, it is best you start at the beginning!
2. Sole Proprietorship
A sole proprietorship is a one-person business that is not registered with the state, like a limited liability company (LLC) or corporation. Legally, a sole proprietorship is inseparable from its owner — the business and the owner are one and the same. This means the owner of the business reports business income and losses on his or her personal tax return and is personally liable for any business-related obligations, such as debts or court judgments.
Similarly, a partnership is simply a business owned by two or more people that haven’t filed papers (with the Federal Government) to become a corporation or a limited liability company (LLC). You don’t have to file any paperwork to form a partnership — the arrangement begins as soon as you start a business with another person. As in a sole proprietorship, the each of the partnership’s owners pays taxes on their shares of the business’s income on their personal tax returns, and they are each personally liable for the entire amount of any business debts and claims.
4. LLC (Limited Liability Company)
A Limited Liability Company (LLC) is a business structure allowed by state statute. LLCs are popular because similar to a corporation; owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation. Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit “single member” LLCs, those having only one owner.
A few types of businesses generally cannot be LLCs, such as banks and insurance companies. Check your state’s requirements and the federal tax regulations for further information. There are special rules for foreign LLCs.
5. C Corporation
In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation’s capital stock. A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. A corporation can also take special deductions. For federal income tax purposes, a C corporation is recognized as a separate taxpaying entity. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders.
The profit of a corporation is taxed to the corporation when earned and then is taxed to the shareholders when distributed as dividends. This creates a double tax. The corporation does not get a tax deduction when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation.
6. S Corporation
S corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income.
To qualify for S corporation status, the corporation must meet the following requirements:
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