Most painting companies begin out as either one-person businesses, with only an owner hiring out to do a particular job, or as a corporation. Once a company becomes bigger, though, there may be a need for an official business, particularly for federal and state income tax purposes and personal self-employment tax laws. When the business becomes a corporation, there are several ways that people can use this new financial status. Here are a few of the top reasons why it’s necessary to use a corporation.
First, having a small business or a corporation doesn’t mean that a person doesn’t have responsibilities to his clients. A business owner must pay his bills on time, including those for professional services. This means that a person who has just started up a painting business is responsible for paying his clients their monthly fees. A business owner will be responsible for paying his employees and any expenses that come up in the course of doing business. He will also be responsible for paying taxes and may even be required by law to file personal taxes and personal self- employment taxes. To make the business much easier to manage, he must form a separate corporation, so that he can keep everything in order without being personally responsible for everything.
Second, a corporation is an extremely convenient way to run a painting business. In addition to having a separate bank account, a painting company can be held responsible for its own finances, and it’s up to the management of the company to pay the bills for its clients, if it hasn’t already done so. If a company fails to pay the bills for its clients, they may be forced to close.