CREATING YOUR BUSINESS ENTITY

You should never bid in your personal name. There are just too many issues that could arise that could bring you some discomfort. It’s inexpensive to establish an entity and the protection will be invaluable.

Be sure to bid under an entity (corporation or LLC) that has very little in the way of assets. In a perfect world, you would file for a new and separate entity each time you win a property.  Did you know that a lien on one property can attach to everything you own in the county! I’m just sayin’ ……………………I mean writtin’

Seek professional tax advice for proper entity type

Each type of entity (corporation, LLC, partnership, etc) has benefits and drawbacks. It’s important that you understand the differences in order to determine the best entity type for your business. Spend $500.00 for a two-hour appointment with your tax professional.

Register your entity in your state of choice

Just as each entity type has its pros and cons, so do each State. Spend a few minutes discussing this with your tax professional. In my CPA’s opinion unless I’m going to generate extremely huge sales numbers with 100’s of employees, a Florida entity will serve you just fine.

Obtain an EIN number from the IRS

You can do this online so it’s fairly easy. I personally don’t like contacting the IRS for anything. But you need the number……..Follow the prompts at IRS.gov.

Open a bank account in the name of the new entity

In order to keep your books straight you’ll need to open a bank account in your new entity name in order to start making deposits into your bidding accounts. DO NOT write personal checks or use personal credit cards to fund your bidding account. If you must, please ask your tax adviser about the proper way to do this.

Obtain your banks wiring instructions for future reference

Wiring is the most acceptable way to transfer funds nowadays. Keep both your incoming and outgoing wire instructions handy, and when I say “handy” I mean printed on a separate sheet of paper with both your incoming and outgoing wire information stated thereon.

NOTE: Some larger and most private banks now have programs which allow you to wire funds from your personal computer. It does require certain criteria such as type of account, minimum balance etc. Since you’ll be wiring a lot, it makes sense to see if this fits your budget.

Order checks and a debit card

Immediately order checks from anyone other than your bank; unless of course you have money to burn. You’ll need the debit card to keep your expenses straight. Remember to run every business expense through your business checking.