You can help others see your favorite parts of your hometown or popular vacation spots, and make good money in the process! Of course, there is very specific paperwork to form a business (like an llc), register it with the state, and work for this kind of tourism outfit. Here’s how to get started:
Forming Your Cycling Tour Company
If you want to start your cycling business without any mistake, the first step to form a cycling tour company is to form an LLC or corporation. The form of doing business you choose will help determine tax status and other legal issues later on.
Most businesses start as sole proprietorships while they are being formed and then transition into an llc or corporation after the company is formed and running successfully.
1) Working as a Sole Proprietor
If you form a sole proprietorship, the business is just an extension of you, like your own personal bank account. There aren’t any extra formalities to form this type of company. You can simply start doing business as if it’s already been established by using your name as the assumed “doing-business-as” (dba) name for your cycling tour company.
Starting as a sole proprietor will mean that you’ll file tax information on form 1040 (eZ), which isn’t too complicated and allows you to keep much of your personal life separate from the work life of running a cycling tour company. However, there are some downsides to this form of doing business.
For example, the business will appear on your personal credit report as well as any business reports. When applying for a loan or other form of financing, you may have trouble opening a separate account for the cycling tour company unless it’s been established as an LLC or corporation. If something goes wrong, creditors could go after both your assets and those of the cycling tour company to repay any debt each one incurs!
2) Working as a Partnership
If working with others, using a form of partnership is another good way to form a new cycling tour company. Partnerships are different from sole proprietorships in that there are at least two owners who share responsibility and liability for its debts and actions.
A form of partnership known as a general partnership is also one of the easiest dealings to form. All that needs to happen is for each person involved in the cycling tour company to agree that they are partners and start working together.
Like with sole proprietorship, you’ll file form 1040 eZ rather than form 1065 or form 1120 if you form a business as a general partnership. However, once again, there are some downsides to this form of doing business.
Partnerships show up on credit reports twice-once under your personal credit rating and once under the cycling tour company’s profile. And just like with sole proprietorships, creditors can come after both your personal assets and those belonging to the cycling tour company if things go wrong!
3) Working as a Limited Liability Company (LLC)
If you form an llc, the business’s debts are not your personal responsibility for things that go wrong. You may still be held personally liable if you have guaranteed some form of debt or agreed to give something of significant value to the cycling tour company at its start, but otherwise it will be treated separately from your personal affairs. Here’s how to form an llc:
- Choose a name for the business
- File form 8832 with the IRS
- Once approved by the IRS, file form 8832 electronically with your state tax agency
- Create LLC operating agreement which states limited liability status and other rules for running this type of cycling tour company
Think this form of doing business sounds like the best option thus far? Well there are some downsides to llcs as well. If you form an llc, it will show up on your personal credit report twice-once under your name and once under the cycling tour company’s name.
And just like with partnerships or sole proprietorships, creditors can come after both your personal assets and those belonging to the cycling tour company if things go wrong!
It can be a bit overwhelming to start your own business, but you don’t need an MBA from Harvard or decades worth of experience in order do it. If all this talk about LLCs has been giving off some confusing signals and making decision-making difficult for ya’ll then take solace knowing there are plenty reputable best llc services reviewed by experts on MoneyAisle available out their who’ve helped countless others make theirs as well!
4) Working as a Corporation
If you form a corporation, it is considered completely separate from yourself so none of its actions or decisions reflect upon you personally unless you’ve guaranteed debt or given something of significant value to the business for free (e.g., land). Here’s how to form a corporation:
- Choose an appropriate name for the business
- File form 2553 with the IRS
- Once approved, file form 2553 electronically with your state tax agency
- Create corporate bylaws which states how this form of cycling tour company operates
There are some downsides to corporations as well. You typically can’t form one on your own; you must work with an attorney who knows the process and only forms businesses that meet all requirements.
Also, once set up, it will show up on your personal credit report twice-once under your name and once under the cycling tour company’s name. And like llcs or partnerships, creditors can come after both your personal assets and those belonging to the cycling tour company if things go wrong!
Form an LLC or Corporation? What’s Your Best Option?
Maybe you could form your cycling tour company as a Partnership, but the downsides-like how it would appear on your credit report twice and give creditors access to both your personal assets and those belonging to the business if something goes wrong-just aren’t worth it.
Plus, who wants to manage another person in their business endeavor? So that leaves you with either forming an llc or corporation. Which form of doing business is best for you?
Because they do not require much in the form of paperwork, filing fees, or ongoing requirements, which saves you money. Plus, if you form an llc and go out of business within your first few years, you may be able to avoid paying taxes on any profits by passing them through to shareholders.