Starting A Business

Starting a business comes with a lot of responsibility and a new family member, Uncle Sam.  One thing about family, we try to avoid any family disputes, to do this, you must follow the rules and regulations, which govern starting and running a business. There is no excuse for ignorance of the Law! There are 3 branches of Government you will have to answer to, Federal, State, and Local.

1. PLAN YOUR BUSINESS

The first mistake many people make is they start a business without a plan or vision for the business! When I hear someone talk about starting a my mind wanders to a scripture passage found in the bible Proverbs 29:18, which says where there is no vision, the people perish, the same rule applies to starting a business without a vision for your business, it is destined for failure.

A Business Plan is a document that clearly describes your vision, including all the details of your business operations. If you plan to seek financing for your business then a business plan is a must! The main purpose of a business plan is to guide the entrepreneur from where he should start and the business goals.

2. REGISTER A FICTITIOUS BUSINESS NAME

If your intention is to operate your business under a different name other than your own, you may be required to register your trade name with your state or local government. This form of registration is known as “doing business as” (dba) or fictitious name filing. Check with your state office for information on Business Name Registration.

3. DETERMINE IF YOU NEED A EMPLOYER ID?

Generally, if you are going into business for yourself and you are not starting a corporation or non-profit organization and do not employ anyone, you do not need an EIN. Your social security number is your EIN. You will only need an EIN if you answer “Yes” to any of the following questions.

4. CHOOSE A BUSINESS STRUCTURE
The legal structure you choose for your business will impact your business registration requirements, how much you pay in taxes, and your personal liability.

Sole Proprietorship – A sole proprietor is not only one of the common forms of business but it is also one of the easiest types of businesses to form. You are not required to do any kind of special incorporation filing. A sole proprietor is someone who owns an unincorporated business by himself or herself. A business, owned by one owner, makes no legal distinction between the individual owner and the business itself for tax purposes. The owner is fully liable for any legal actions brought against the company.

General Partnership – A business, owned by multiple owners, that makes no legal distinction between the individual owners and the business itself for tax purposes. Owners are fully liable for any legal actions brought against the company.

Limited Liability Partnership – A business, owned by general partners and limited partners, that makes no legal distinction between the General Partners and the business itself for tax purposes. General Partners are also fully liable for any legal actions brought against the company while Limited Partners have limited liability. A limited liability company (LLC) or corporation helps protect your personal assets in case a lawsuit is brought against your business for products sold or services rendered. But may require the help of a professional to start.

C-Corporation – A business, owned by owners and an unlimited number of shareholders, that is a separate legal entity from its owners and shareholders for tax purposes. Owners of a C-Corporation are taxed twice: once as owners and once as shareholders. Owners and shareholders are not legally liable for any legal actions brought against the company.

S-Corporation – A business, owned by one owner and a limited number of shareholders, that is a separate legal entity from the owner and the shareholders. The owner of an S-Corporation only gets taxed once, must be a U.S. citizen, and is not liable for any legal actions brought against the company. Shareholders are not liable for any legal actions brought against the company.

Limited Liability Corporation (LLC) – A business, owned by one owner and an unlimited number of shareholders, that is a separate legal entity from the owner and the shareholders. LLCs need at least two people to be created. The owner of an LLC only gets taxed once and is not legally liable for any legal actions brought against the company. Shareholders are not liable for any legal actions brought against the company.

5. LOCAL ZONING LAWS

Check with your local zoning laws, also referred to as  ordinances, ordinances establish what business activities can be carried out in a particular municipality. You need to have approval, and any required permits from zoning, before setting up a business in a particular location including your home. In some areas zoning and planning, agencies require all home-based businesses to get a Home Occupation Permit.

6.LOCAL BUSINESS LICENSE And PERMITS

General Business License

As a business owner, you are normally required to purchase a yearly general business license. Contact your county clerk’s office for more information and/ or any other licenses or certificates you may be required to carry based on the type of business you are starting. If you plan to run a home business from a property you are renting you may also be required to get permission from your landlord to acknowledge he/she is aware of the fact that you are starting a home business on his/her premises.

Sales Tax Permit

If you intend to sell taxable goods or services online or offline, you may be required to collect state and local sales taxes from your customers. It is your responsibility to apply for a sales tax permit if the state where your business will be located charges a sales tax or levies a gross receipt or excise tax on businesses. Check with your State Revenue office for more information on your state requirements for collecting and submitting sales tax.

7. STATE BUSINESS REGISTRATION

Most States if not all, require you to register your business with your State Revenue Agency. State Revenue offices issue a variety of business permits/ licenses depending on the type of business you are starting and the needs of the business.

8. Open A Business Checking Account
A business bank account helps you stay legally compliant, organized and protected.

9. BOOKKEEPING

Setting up a good Bookkeeping system is a must! Keeping track of your business income and expenses will help you in the long run, to be prepared in case of an IRS audit and it will keep you compliant with the law.

10. FILE AND PAY TAXES

As a business owner, you are required to file and pay small business taxes including State, Local, and Federal. Check with your state and local officials for more information on the self-employment taxes you are required to file.