A business entity is the type of business structure you choose for your junk removal business. Common business entities include sole proprietorship, partnership, LLC, corporation, and S-corporation. The type of business entity you choose will determine how you file your taxes and how you will be legally responsible for the business as written on the United States Small Business Administration website.
According to Junk Trash Removal, the most common structure for a junk removal business starting out is an LLC, sole proprietorship or a partnership.
|Type of Structure||Ownership||Liability||Taxes|
|Limited liability company (LLC)||One or more people||Owners are not personally liable||Self-employment tax. Personal tax or corporate tax|
|Sole proprietorship||One person||Owner is personally liable for everything||Self-employment tax. Personal tax|
|Partnership||Two or more people||Partners are personally liable for everything||Self-employment tax (except for limited partners). Personal tax|
Get a business entity
Here are some websites that you can use to get a business entity:
Business name and registration
Next you will need to give your business a name and register it according to your state to make your entity legal. Here is the United States Small Business Administration website where you can find out if you need to register your business and according to your specific state.
After you register your business, you will need to apply for an Employer Identification Number (EIN) which is your federal tax ID. This is a unique identifier assigned to you and your business by the Internal Revenue Service (IRS). It is used for filing taxes, opening bank accounts, hiring employees and applying for business loans.
Here is a short video explaining the process with the IRS
Five Things to Know about the Employer Identification Number
You’ve now mastered the basics of business entities and how to obtain an EIN, so now it’s time to learn about permits and trade licenses.