How To Incorporate Your Business Franchise
One of the most common questions people have when they franchise a business is: how do I incorporate? This is a good question because you are technically opening up a business under an already established business name. However, you will need to incorporate somehow, or else you won’t be able to open a business account and you won’t be able to pay taxes. If you don’t stay on top of your taxes, you will most likely get in trouble. Indeed, some states may have different requirements for incorporation, but it is essential that you incorporate. The last thing you want is for your business’s liability to affect your personal finances. With a franchise incorporation structure, your business will take the hit – not you. The last thing you want is to lose your home or your vehicle. Here is how to incorporate your business franchise.
- Incorporate before you purchase a franchise – this may seem backwards, but it makes perfect sense. If you are visiting Franchise EXPO and you see a franchise that you would like to buy, you will want to have an incorporation structure already set up. Most franchisors won’t want to sell to someone that isn’t incorporated because it may hurt the parent company.
- Make sure that you have the same incorporated structure set up for all of your locations – if you don’t mark down all of your locations, you may not be protecting yourself. For instance, if you have multiple locations, you want to include all the addresses and other pertinent information into your incorporation documents. When it comes down to it, you can have your lawyer fill out the paperwork – just to make sure you aren’t missing anything. If you let loopholes stay exposed, it could hurt you in the end.
- Open a bank account – when you visit Franchise EXPO and decide on a franchise to invest in, you will want to show that you have a business account. If you don’t have a business account, it will be more and more difficult to get approved for your franchise. If you were to franchise your business, wouldn’t you hope that the buyer has a business account all set up? When you open a business account, you may also want to open a line of credit. This will show that you have good credit and that you are interested in building your credit history.
- Speak with your lawyer about the best incorporation entity – you may want to go for a simple LLC, but there may be another entity that is better fitting. Ideally, you want to speak with a professional about your options so that you don’t wind up with the wrong entity. For instance, some states may have entities for different tax protections according to the type of business you are opening.
- Don’t do it alone – when you incorporate your franchise, you want to be sure that you have help. There are many websites that you can use for help – these websites have people on staff that can guide you through the process. You may also want to speak with your accountant. In the end, you want to be sure the incorporation process goes as smoothly as possible.
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