texas incorporation – Direct Incorporation Blog

3 Small Steps to Help Your Business in a BIG Way

There are countless ways you can improve your business, and even more articles on how to do so. Tips range from “Be patient” to “Leverage 1099 subcontractors,” and range from incredibly vague to incredibly expensive. However, there are three low- or no-cost, backed-by-science ways for you to improve your business in a big way. Not only will they make your business more financially successful, but will make it more attractive to consumers and potential employees in ways that other businesses don’t.

1. Office diversity

Diversity in the workplace can come in many forms: gender, age, race, ethnicity, and more. While many workplaces suffer from a lack of diversity (for example, there are fewer female CEOs than there are CEOs named John, and only 1% of Google’s tech staff are black), there is research-backed evidence that diversity in the workplace leads to innovation, economic growth, employee satisfaction, and lower turnover rates. Input from people of different backgrounds is a recipe for a product or service that will best serve the ever-diversifying American population; the opposite is best demonstrated by a quote from
MIT economist Sara Ellison: “A baseball team entirely composed of catchers could have high esprit de corps, but it would not perform very well on the field.”

Homogeneity in the workplace leads to homogeneity of both business ideas and future hiring choices (people tend to hire those who are similar to them), but companies within the top quartile of racial and ethnic diversity exceed industry standards by a whopping 35%. Taking initiative to increase the diversity of your workplace is a win-win situation for everyone.

2. Sustainability

Thinking green when you incorporate your business is another great step you can take in increasing the success of your business. Not only does using energy-efficient appliances save you money, but fulfilling certain environmental standards can bring your company government funding.

Also, research has shown that 66% of people will pay more for a product or service that is sourced from a business that is committed to “positive social or environmental impact.” This means that people will choose your business over others that don’t have sustainable practices, even if your product or service costs more. Also, according to a study by the University of Massachusetts Dartmouth, employees derive more job satisfaction from working for green companies than working for financially successful ones.

3. Workplace Happiness

While there are many ways to improve office productivity, the underlying theme for most strategies is this: make your employees happy. Companies with happy employees outperform competition by 20%, and have 11x lower turnover rates. This can be done by many small things, such as maximizing natural lighting in the office, encouraging breaks, and treating employees as the complete humans they are: in other words, understanding that they, too, have lives outside of the office, and if they need to step out to pick their kid up from soccer practice, or come in late after a doctor’s appointment, they should be able to do so without fear of retribution.

While advice for improving your business abounds on the internet (varying from accounting advice to tips on improving SEO), if you aren’t addressing these three things, it may not make the difference you’re hoping for. You can’t run a successful company without happy employees and happy customers—but when the two line up, it will make it much easier for everything else to fall into place.

The Down Low on DBAs: Everything You Need to Know

The term DBA stands for “Doing Business As,” and filing a DBA for a business or sole proprietorship allows you to use your DBA name, also known as the “fictitious business name,” “trade name,” or “assumed name,” when conducting business (instead of your legal business name). Most states require that you file a DBA statement before operating under the DBA name, as to not confuse or mislead customers who might otherwise be unaware that the DBA name is operated by the same company.

Why file a DBA?

The most common cause of DBA filings are sole proprietors who are looking to operate their business under a different name. If you’re a sole proprietor, your legal name is your business’ legal name (for instance, if Liz O’Connor does environmental consulting as a sole proprietor, her legal business name is “Liz O’Connor”). If you file a DBA, you are able to operate under a name that better represents your mission or purpose. Also, some banks may require that sole proprietors file a DBA in order to open a bank account for their business, and some corporations may require you to file a DBA in order to hire you for freelancing services.

However, DBAs are not limited to sole proprietors. Any corporation or LLC can file a DBA as well. This might be because you want to operate your business under a more creative or memorable name without changing the legal name of the business. It might also happen because you want to add on an additional product or service to what you already provide, and want to have a business name that accurately represents it. For example, if Liz owns an environmental consulting corporation, but decides she also wants to provide solar panel installation, she could file a DBA for “Liz’s Environmental Consulting and Solar Installation,” to make clear all the services she offers. Similarly, if Liz’s environmental consulting corporation also wants to offer financial consulting, she could file a DBA for the financial half of her business, and operate her financial consulting service under the DBA name (and her environmental consulting service under the legal business name).

Because of the ease and affordability of filing a DBA, it is possible to have a corporation or LLC that serves as the umbrella under which separate services are offered under different DBAs. This will eliminate the extra paperwork and expenses of creating new or subsidiary companies.

What are the rules?

If you file a DBA, you are still required to provide the legal name of your business on all government forms and applications, including applications for employer tax IDs, licenses and permits. For sole proprietors, it may not be necessary to file a DBA (it’s always good to double check) if your business name follows the format of “First Name, Last Name, Service” (for instance, “Liz O’Connor’s Environmental Consulting”); however, if Liz the sole proprietor wanted her business to just be “Liz’s Environmental Consulting,” this would require a DBA. It is also important to keep in mind that establishing a DBA does not establish a trademark on that name, and you should be careful to not infringe on any business name that is already taken or trademarked. There are also some limitations on the words used in your DBA name: for instance, it would not be acceptable for a trade name to include the words “Corporation,” “Incorporation,” “Inc.,” “LLC,” or “Corp.” if it is not in fact a registered corporation or LLC.

Once you’ve completed your DBA registration, your business is free to use the DBA name to open bank accounts, write checks, and use in promotional material. Neglecting to file a DBA before doing business under a different name could not only lead to penalties and fines, but potential lawsuits. It’s common for businesses to (either by will or by mandate) publish an announcement in a local newspaper about their DBA before doing business under that name, in order to provide transparency to the community.

If you have questions about filing a DBA, feel free to contact Direct Incorporation at 1-877-281-6496.

What’s an EIN? Everything You Need to Know

Here is everything you need to know about your business’ federal tax ID, or EIN:

What is an EIN?

An Employer Identification Number, or more simply, a federal tax ID, is essential for starting a business. An EIN is a nine-digit number appointed to a business or organization by the IRS—kind of like a Social Security Number for your company.

The purpose of an EIN is to establish your business as a separate entity outside of yourself while filing tax returns for your business.

Why do I need an EIN?

It’s required for corporations and partnerships, businesses selling alcohol, firearms, or tobacco, for most LLCs and in some cases, sole proprietorships. In most cases it is also required for trusts, nonprofits, real estate investment entities, and cooperatives. If your business will be hiring employees—whether temporary or permanent—it is required that you obtain an EIN. However, even if it’s not required for your business, an EIN can provide specific benefits or opportunities. For example, it is a great extra step in order to protect against identity theft, and it will make opening a bank account for your business much easier.

If you’re a sole proprietor (even operating under a DBA) you are not required to obtain an EIN, and you will merely use your Social Security Number when filing taxes; however, if you would like to use an EIN, this will only help you in differentiating your business and personal finances. It should also be kept in mind that some banks require an EIN in order to open a separate business bank account.

How do I get an EIN?

Fortunately, obtaining an EIN is a short and simple process. If your business is located in the U.S., you can apply online through the IRS—but you must have a valid Taxpayer Identification Number (such as a Social Security Number or Individual Taxpayer Identification Number). If you apply online, you will be able to obtain your EIN immediately; via fax the process will take about a week, and by mail, up to four or five weeks.

When should I get a new EIN or cancel one that I have?

According to the IRS website, “Generally, businesses need a new EIN when their ownership or structure has changed.” This does not include changing the name of your business (but it does include forming subsidiary companies).

Regarding the cancellation of an EIN, there is no way to fully eliminate an EIN once it has been established. The EIN will remain the identification number for that business, regardless of whether the business ever started or if federal tax returns were filed under it; it’s never officially “destroyed” (or re-assigned, for that matter). This means that even years later, you can come back to your unstarted business and use the original EIN obtained from the IRS. However, if you decide you no longer want to use your assigned EIN number, you are able to close your business account linked to that EIN.