PromoTix University Class

William Royall (00:00)
In this video, we're going to cover the foundational steps for structuring your event business. We'll explore different business structures, how to register your business, obtain licensing, and navigate local regulations.

William Royall (00:12)
The first big decision you'll have to make is choosing your business structure. This impacts your liability, taxes, and even how people perceive your business. The three main types we'll look at are sole proprietorships, limited liability companies, and corporations.

First, we have the sole proprietorship. This is often the most simple option and it's perfect if you're just getting started. You're the sole owner, there's minimal paperwork, however, the drawback is that you're personally liable for the business's debts.

which could be very risky.

William Royall (00:42)
Next is the Limited Liability Company or LLC. An LLC offers you liability protection, meaning your personal assets are generally safe if the business faces legal issues, unless you've signed some sort of personal guarantee. Plus, LLCs are very easy to set up and offer tax flexibility, making them a very popular choice amongst small business owners.

Now let's look

the different types of LLCs. Each type

offers liability protection, but they vary based on ownership and tax benefits. A single-member LLC is owned by one person. It's straightforward to manage, and profits are typically reported on the owner's personal tax return, which keeps taxes very simple. The business's tax identification number is usually the owner's Social Security number.

A multi-member LLC or partnership LLC has two or more owners. Profits and losses are divided amongst the partners who each report their share on their personal taxes. This structure is ideal if you have co-founders. Then there is an LLC taxed as an S corporation with this option, profits and losses passed through to the owners, similar to a partnership.

but it can offer tax savings on self-employment taxes. So this is a very popular choice for LLCs aiming to balance simplicity with tax efficiency. You should definitely talk to your tax advisor for more information on LLCs.

Finally, there's a corporation. This structure is more complex and

is reserved for larger corporations or for those seeking investors.

Corporations provide the strongest protection against personal liability, but they also come with higher regulatory requirements and potential double taxation in the case of C corporations. Corporations can be beneficial if you plan to grow significantly or eventually sell the business.

William Royall (02:46)
Now, there are two basic categories of corporations. I mentioned the C corporation, so let's quickly cover the difference between C corporations and S corporations. Both provide liability protection, but they differ in taxation and ownership structure, as well as how share classes can be issued to partners. A C corporation is taxed separately from its owners, meaning profits are taxed at the corporate level

and again on dividends when distributed to the owners, a process known as double taxation. However, it allows unlimited shareholders and different types of stock such as common or preferred shares, which is useful and sometimes necessary if you're seeking outside investors and raising capital. With an S corporation, similar to an S election on an LLC, the profits and losses pass through directly to the shareholders personal income.

and it avoids double taxation. But it does have restrictions on the number of shareholders and who can be a shareholder. Also, distributions of profits are going to be equal to the percentage of ownership, which in some cases you may not want. Choosing between an S-Corp and a C-Corp depends on your growth plans and your tax preferences. Again, you should consult with your legal counsel or tax advisor.

To recap, sole proprietorship is straightforward but comes with personal liability. LLCs offer liability protection and some tax flexibility. And finally, a corporation provides strong liability protection but can be more complex and costly. Remember, a C corporation is usually best if you plan to raise capital from outside investors,

and an S corporation is usually best if it's just you and a few other active partners to avoid the double taxation.

Now before you go and do anything else, although it's not required, again, I highly suggest you talk to your accountant and attorney to decide which structure is going to be best for your business.

Now, once you've chosen a structure, it's time to make it official by registering your business. Let's break down the steps to registering your business.

Step 1. Choose a business name. This should reflect your brand, be memorable, and ideally contain keywords related to event planning and help with online searchability.

Make sure to check if your desired name is actually available in your state, and it isn't already trademarked.

Step 2 is to register with the state.

This process varies by state, but usually involves filling out forms and paying a fee. You can register online in most places through your Secretary of State's website. If you're forming an LLC or corporation, you'll file specific forms like articles of organization or incorporation.

Step 3. You're going to apply for an Employment Identification Number, or EIN, through the IRS website. Sometimes this is also referred to as a TIN or Tax Identification Number. An EIN is like a Social Security Number for your business, and it's required for tax purposes. It's also free to obtain. You'll need it if you plan to hire employees or open a business bank account.

The only time you may not need a separate EIN is if you have a single-member LLC, which may use your Social Security number.

Once your business is registered, you'll need to obtain any necessary licenses or permits. The exact requirements do depend on your location and the types of events you plan to run, so make sure you do the research for your specific area.

Let's start by looking at local licenses. Some states, counties, and cities require event planners to hold a general business license, which you can typically apply for at your local city hall or county office.

You may also need specialty permits based on your services. For example, if you serve alcohol at events, you'll need an alcohol permit. Or if your event involves live music, you may need a noise permit or pay music licensing fees to organizations like BMI, ASCAP, and CSAC. Every event type is going to have different types of specialty permits that may be required. So be sure to do your research here.

Finally, be mindful of zoning regulations, especially for outdoor events. Some areas restrict where you can hold events or have strict safety rules as to events of certain sizes or sound ordinances. So check with your local zoning board or city planning office before planning your event.

So to sum it up, setting up your event business involves selecting a structure that aligns with your goals, registering it with your state and local municipalities, obtaining an EIN, and securing the appropriate licenses and permits from your local government.

Now you have the foundational steps to structure your event business confidently. In the next video, we'll dive into branding your business, so stay tuned. And as always, check with legal and tax advisors to ensure this setup is right for you.