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From Sole Proprietorship to Employer: 4 Tips for Making the Move

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Business is booming: It's time to shift from sole proprietorship to employer. Here are four tips to help the process.

1. Choose Wisely

S Corporations typically don't pay corporate taxes but instead pay out on dividend earnings, while Limited Liability Companies (LLCs) offer personal protection against lawsuit or debt.

2. Create Your Corporation

This means starting from scratch — creating a corporate name, "selling" your sole proprietorship to the new company and transferring ownership of any company vehicles or capital property. Get legal assistance so you don't miss anything.

3. File Documents

You need to file the Articles of Incorporation document with your state government office, register with the IRS, and obtain new business licenses and
operating permits.

4. Hire Employees

Finally, start hiring. Prepare for costs: Entrepreneur says the average cost of recruiting, training and hiring an employee is $4,000. Also, draft a company code of conduct and comply with U.S. Department of Labor regulations such as the Family Medical Leave Act and Title VII of the Civil Rights Act.