I am private chef seeking to write up a business plan to teach cooking for couples in a creative and fun atmosphere.

Workshops will be one half day to a full day. They will take place in hotel conference rooms, cooking shops, private homes or anyplace where I will receive permission from the owner to use their space.

I may hire independent chef instructors to teach so I can focus on operating the business.

I’d like to keep my personal & business finance separate and prevent double taxation. Which form of business entity is best suitable for my business interest?
Answer: An S corporation would be very suitable to your purposes

However, make sure about properly classifying the instructors you mentioned as employees or independent contractors. You should discuss this with your business attorney.

Over the past several years, this has become a huge issue and I have defended so many employers who misclassified their employees as contractors.

In addition, do not rely on the advice of a non-professionals in the field or internet services about incorporation. Make sure that your business is incorporated by a business attorney and be sure comply with all corporate laws including maintaining your corporate formalities at least once a year at a minimum.

Be sure to draw up all contracts in the name of the corporation. Pay yourself a reasonable amount of salary. Do not commingle your personal money with the bank account for the corporation. Start with a reasonable amount of capital in the bank to pay creditors. Record the capital raised with the Commissioner of Corporations. Do not forget to issue stock and record it in your share ledger.

This is a question from a small business owner regarding her corporate finances.

We had a telephone call from one of our micro business owners regarding finances with her business. She is enrolled in our Attorney on Call Program. As the questions come up fairly often, I thought I would do a short blog piece to provide the answers for others who may have the same questions.

If she has to put money back onto the corporate account to pay bills, how should she go about that?

Think of yourself as acting as the bank to your corporation. You are going to make a loan to the company. You want to keep an accurate record of what was lent and what was paid back. You want to make sure that you make a notation in your personal check register that you are making a loan to the corporation. You should pay the loan back as soon as practicable.

If the corporation is unable to repay the loan, please make sure that you let us know so that we can update your corporate records and keep track of it on the paperwork. If you ever get audited by the IRS, they are going to ask for the paperwork related to the corporate approval of the loan.

Also, if she pays corporate bills with her personal checking account, how does that work?

Ideally, you will not pay any corporate bills with your personal checking account except during the time when you are getting your business entity established. So, dude only so long as absolutely necessary.

Keep track of what you’ve paid to the corporation and reimburse yourself with a check from the corporate bank account.