The passage of the Tax Cuts and Jobs Act (TCJA) brought renewed focus upon pass-through entities (PTEs). In spite of their widespread popularity, PTEs are commonly misunderstood. While thought of primarily as small businesses with few employees that generate a fraction of overall business profits, the truth about PTEs tells a very different story.
As it turns out, pass-through entities are the most popular structure in the US, employing millions of workers and churning out billions of dollars in annual revenues.
This article will demystify many of the misconceptions about PTEs and explain how the TCJA will affect these companies—and the US economy—in the future. Continue reading
The process to change a business structure (for example, change from a sole proprietorship to a corporation) is the same as starting a new business.
Use the Business Licensing Wizard to get information and links that will help you do the following:
- Create your business structure with the Washington Secretary of State. (Skip this step if you are changing to a sole proprietor or general partnership.)
- Submit a new Business License Application to apply for a new Business License. You will be given a new Unified Business Identifier (UBI) number to be used on tax returns and other documents.
- Reapply for any applicable specialty, and/or city endorsements (for example, Nursery endorsements).
Note: You will probably need to re-apply for all of the licenses you currently have. For example, if you are a building contractor, you will need to reapply for your contractor’s license with the Department of Labor and Industries.
This information has been borrowed from the Washington State Business Licensing Service website. (link)
Although the simplicity and affordability of running a business as a sole proprietorship may have attractive perks, there are reasons why you might benefit from forming an LLC (limited liability company) or corporation instead.
How can you recognize that a change may be in order? Continue reading
Nearly every professional freelancer eventually faces the question of whether to remain a sole proprietor or form an LLC. The question becomes more taxing as business grows and the potential for liability increases.
As a freelancer, you may have heard that forming an LLC provides liability protection. While this is true, it is not an impenetrable shield.
Understanding how liability works is crucial for protecting you and your freelance business.
The most important difference between a sole proprietorship and an LLC is that the limited liability company is a legal entity separate from you, the freelancer. If your LLC is sued while pursuing its business, the company’s assets are at risk, but your personal assets are not. Continue reading
Kitsap County does not require business licenses but the cities of Port Orchard, Poulsbo, Bainbridge Island and Bremerton each have business license requirements.
NOTE: Businesses NOT physically located in the city, but still doing work there, are required to obtain a license for the city. Business should check to make sure their use is compliant with land use and zoning.
All business must apply for a Master Business License from the Washington State Department of Licensing, which registers the business with the state departments of Revenue, Licensing, Labor and Industries, Employment Security, Secretary of State, and the Washington State Department of Commerce.
A new corporation locating in the State of Washington must file for Articles of Incorporation with the Secretary of State‘s office, which will issue a UBI (Unified Business Identifier) number.
To make sense of it all, we suggest that you visit our state’s Business Licensing Wizard. It asks a few questions that gives you a personalized list of licensing agencies based on your type of business.
This will help. It’s the WASHINGTON NONPROFIT HANDBOOK: How to Form and Maintain a Nonprofit Corporation in Washington State, published by the Washington Attorneys Assisting Community Organizations and the King County Bar Association Young Lawyers Division.
Click the image to download a PDF copy of the handbook.
There are many forms of legal structure you may choose for your business. Each legal structure offers organizational options with different tax and liability issues. We suggest you research each legal structure thoroughly and consult a tax accountant and/or attorney prior to making your decision.
The most common organizational structures are sole proprietorships, general and limited partnerships and limited liability companies.
Each structure offers unique tax and liability benefits. If you’re uncertain which business format is right for you, you may want to discuss options with a business counselor or attorney. Continue reading