Here’s the deal, there’s tons of paperwork that goes into running a business. Whether the business is big or small.
One of the hardest concepts of running a business- especially a small one, where lawyers and other consultants may not be readily available- is figuring out what forms and papers are necessary.
And what packets of paperwork are able to wait for another day of business.
Luckily, you came to the right place if you want to find out the most important legal forms for running a small business.
Ready? Then let’s dive in!
Know Your Business
Before you start worrying about the legal forms you need to fill out for your business. What kind of business you operate has to be taken into account.
There are many types of small business classifications. Including, but not limited to…
- Sole proprietorship
- General partnership
- Limited liability corporation (LLC)
Of course, no matter what type of business you run, there are a few commonalities that most, if not all, business types have in common.
These similarities are…
- And buying and selling
Learn More about Small Business Legal Forms!
If you want to go into specifics about the paperwork associated with your business type, check out Nolo’s Legal Forms for Starting & Running a Small Business
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Know Your Employees
Most small businesses have at least one employee… the owner!
If you’re trying to run a small business, you need to make sure that you’re able to hire employees and pay them legally.
So, what paperwork does that entail?
Form #1: SS-4 Application for Employer Identification Number
A Form SS-4 allows business owners to apply for an Employer Identification Number (EIN). An Employer Identification Number is necessary: “when you pay employer and employee income taxes, Social Security taxes, and Medicare taxes.”
An EIN acts as a sort of social security number for your business. You also need an EIN to:
open a business bank account – file tax returns – and legally pay employees.
Needless to say, acquiring an EIN is pretty essential. And so is filling out a Form SS-4.
Remember: Depending on the type of business you run, you are an employee to your business. Even if you’ve “hired” yourself, you still need to file paperwork for an Employer Identification Number.
Want to take a break? Check out some of hilarious legal memes.
Form #2: 940 Employer’s Annual Federal Unemployment (FUTA) Tax Return
If you run a small business that hires employees, you have to fill out an Employer’s Annual Federal Unemployment (FUTA) Tax Return each year.
Well, in the case that hard times hit and there are personnel cuts. Or an employee loses their job for some unforeseen reason. FUTA is able to cover former employees so they can qualify for unemployment.
Form #3: I-9 Employment Eligibility Verification
A Form I-9 is a legal form that prospective employees will have to fill out in order to possibly work for your business.
This form grants you permission to ensure with the government that you’re hiring legitimate individuals to come work for you.
Just because you, as an employer, don’t have to fill it out, doesn’t make it any less important for running your business.
Form #4: W-4 Federal Withholding
A Form W-4 is another one of those legal forms that a business owner gives to a potential employee to fill out. Rather than having to fill it out themselves.
Simply put, this paperwork aids in helping you, as an employer, determine how many tax deductions your employees qualify for. And how much tax money is withheld from each of their paychecks.
No matter what kind of small business you run, you may have to file legal forms for your taxes.
So… What are these oh-so-important legal tax forms that you need to file?
Form #5: 8829 Expenses for Business Use of Your Home
Here’s the deal, if you run a small business. Whether it’s in the start-up stages, or it’s been running for awhile. Chances are, you’re going to work from home at some point.
Form 8829 can help you get compensation for the space in your home that you dedicate to your work. This works by deducting a percentage of your home expenses
Pro-tip! The IRS has very specific guidelines about what is counted as deductible in your expenses. So be sure to research the specifics if you’re trying to use this form for tax deductions.
Form #6: 4562 Depreciation and Amortization
If you buy equipment for your business, you can get tax deductions for the amount of money that your purchases depreciate, or “age”, overtime.
This equipment can include many things from phones and computers to tractors and cars.
An obligation to fill out a Form 4562 depends on how much your business spent on the equipment you want to get compensated for. Some items can be “written off” as soon as you buy them. But more expensive investments have to depreciate and be deducted over time.
Buying and Selling Your Business
Here’s the deal, your business may reach a point where you, as the owner, may need to sell it off.
This can happen for a number of reasons:
*Failing business – Lack of funds – Old age – Changing priorities – Etc.
If you are thinking of buying or selling a business. You may want to hire a good lawyer, and be sure to do things right.
Form #7: 8594 Asset Acquisition Statement
Form 8594 covers the buying and selling of businesses.
The IRS defines the purpose of a Form 8594 as follows:
“Both the seller and purchaser of a group of assets that makes up a trade or business must use Form 8594 to report such a sale if:
– goodwill or going concern value attaches, or could attach, to such assets and
– the purchaser’s basis in the assets is determined only by the amount paid for the assets.”
Now, this “official definition” can be a little hard to follow.
In simpler terms: both the buyer and seller of a business have to fill out a Form 8594. Then attach it with their income tax returns.
This form only applies if the majority of a business, or trade, is being sold, not if only a small part is exchanging hands.
This form may not be a vital part to starting a business, but if there ever comes a time where new priorities take precedence in your life. And your business is no longer viable to you, this form is essential.
You Know The 7 Forms… Now What?
Now that you know the 7 most important legal forms for running a small business, you’re at least a bit more prepared to take on the business world.
Don’t be afraid to educate yourself further by checking out an online course for running a business.
Some colleges even have one-on-one online counseling for small business owners!
Check out the NOLO’s book Legal Forms for Starting & Running a Small Business. Use Coupon Code “BOW” For 20% off!
Find that book and more in our bookshop.
That is all for now! Until next time, thanks for visiting!
Book of the Week Series
BOOK TITLE: Legal Forms for Starting & Running a Small Business.
WEEK OF: June 14th, 2020 to June 20th, 2020.
If you’re interested in learning more, check out Nolo’s Legal Forms for Starting & Running a Small Business!