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For example, a W-4 form flows from an employee to a small business owner or employer within their first couple of weeks on the job, while a W-2 is filed by an employer to document a worker At the end of the tax year, you’ll submit two copies of form W-2 for each employee, one that goes to the IRS (usually by Jan. 31), and one that goes to the employee for their own use. Importantly, though the W-2 conveys the total income tax deductions for an individual, employees are able to further reduce their tax liability by filing for additional deductions or tax credits. A higher tax allowance means a higher paycheck, or fewer withholdings from the employer; a lower means more income tax is withheld each pay period, and a lower paycheck as a result.

Under a general partnership, co-owners play an active role in managing the affairs and finances of a company; collective profits, assets, and liabilities of a company are a shared responsibility of the partners, and business taxes are issued on personal tax returns rather than company statements. Both Partners Are Held Accountable for Each Other’s Actions Related to the shared personal responsibility aspect of a partnership is the fact that all co-partners are held accountable for any co-partner’s behavior. Because there is no liability protection for general partnerships, and because personal finances are linked with business finances, your personal assets may be at risk if one of your co-owners engages in, for example, overspending or mismanagement of employees. Once you’ve established a general partnership, limited partnership, or limited liability partnership, you may want to consider how your operations will be funded.

SEO, or search engine optimization, is the backbone of online marketing and the key to putting a brand or service in front of consumer eyes, and is a concept that all business owners ought to embrace when taking their services or marketing efforts virtual. If you’d prefer to retain ownership of your artistic skills or are turned off by the fluctuating nature of graphic design work, you may be able to take your work to the online marketplace. Where marketing consultants typically use a knack for digital outreach and brand strategy to boost a business’s advertising and sales, affiliate firms use their existing platform and consumer base to generate interest in a client’s product or service, taking a cut of whatever sales they put in play for the contracting company. If you have sufficient understanding of the online marketing game and a solid vision, you might be able to take on multiple clients as a consultant on digital marketing efforts.

When applying for a business loan or other form of financing from a bank or creditor, you’ll likely be asked to provide certain key information about your small business’s history and future outlook. Basically, your firm’s DSCR weighs your company’s net operating income, or your annual income once certain business expenses are brought into consideration, versus the sum of your business’s debt obligations over the next year. You may be familiar with the commonplace lending metric known as DTI, or Debt-to-Income ratio, which describes an individual’s creditworthiness as a measure of their debt obligations and total income; an individual’s DTI holds similar implications to a firm’s DSCR, though the former applies mostly to personal financing and lending, versus commercial. While banks and lenders will typically calculate a business’s DSCR using materials such as financial statements and rosters of outstanding debt obligations, it is important to have an understanding of the metric, and your own DSCR, in order to predetermine which loans and financing options may be available to your firm.