Top 5 Things to Consider with Regards to Disregarded Entity
Starting a business requires careful research and the understanding of various legal regulations2 min read
Starting a business requires careful research and the understanding of various legal regulations. For business owners in the Dallas area, one of the important concerns is the establishment of a disregarded entity. This term refers to a business structure that is recognized for taxation separation, and it can include a single-owner LLC, LLP or other type of company. Here are the top 5 things to consider when setting up a disregarded entity in the Dallas area.
1. Understand State Requirements
Many disregarded entities rely on the formation of an LLC for taxation protection and legal business structuring. But the state of Texas requires specific articles of organization and other elements for forming a Limited Liability Company. Learning the correct regulations and filing requirements is critical for establishing and managing an LLC. An experienced lawyer can help you make sure your LLC is meeting the conditions of the Texas Secretary of State.
2. Setting Up an Employer Identification Number
If your disregarded entity is going to have employees, you are required by the IRS to set up an Employer Identification Number or EIN. An EIN is a federal tax ID number, and it must be included in payroll tax returns and other important documents. Taxation requirements can also differ between states, so it is important to check with the Texas Franchise Tax Board to make sure you are meeting all the requirements.
3. Choosing the Right Legal Structure
LLCs, LP and LLP structures can all serve different purposes depending on the business needs. A business lawyer can help you understand the various legal structures and how they can best be used to meet your legal and financial requirements. Choosing the wrong legal structure can result in additional taxation and report requirements later on.
4. Complying with Local Regulations
In order to maintain a disregarded entity status in the Dallas area, you must understand and comply with local regulations. These can include zoning requirements and other licensing rules that are specific to the local area. At the federal level, employment laws and other kinds of regulations can also come into play. An experienced lawyer can help you make sure you are legally compliant and managing your disregarded entity correctly.
5. Securing Appropriate Insurance
Employer liability and other commercial insurance policies are necessary for operating any type of business. When setting up a disregarded entity, you need to make sure you're obtaining the appropriate policies to meet any state or federal requirements. It is important to find reliable insurance providers who can provide coverage that meets the specific needs of your business.
Understanding and establishing a disregarded entity in the Dallas area requires an understanding of local regulations and legal practices. By considering these top 5 items, you can ensure that your business is running legally and get it off to a promising start.