Starting your own business can be exciting and very rewarding! Today more then ever it is easy to start a home business, online or offline. People who create businesses are called entrepreneurs. Entrepreneurship is the process of designing, launching, and running a new business, which is often initially a small business.
An important step in your entrepreneurial journey is to evaluate who you are, and how to bring the best of yourself into your new business venture.
Begin by reading the Story of An Aspiring Entrepreneur
Question: If you were profiling Finn the Pin, to determine if he would be an ideal candidate for starting a handmade wooden toy business, what qualities do you see in Finn the Pin which would lead you to believe he is making the right decision?
Is It A Hobby Or A Business?
According to the IRS.. if you are selling goods including online, or offering any type of service to the general public with the intention of making a profit, then you are in Business!
Starting a business of your own can be exciting and financially rewarding! It also comes with a lot of responsibility, and a new family member, and his name is Uncle Sam. One thing about family, is 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, local State and Federal.
1. BUSINESS PLANNING….
The first mistake many people make is they start a business without a plan! The very first step to starting a business begins with planning and vision! I can appreciate the scripture in Proverbs 29:18 which says where there is no vision, the people perish, the same rule applies to start a business without a vision your business 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 are planning to seek financing for your business then a business plan is a must! And even if you are not planning on applying for a loan, the main purpose of a business plan is to guide the entrepreneur from where he should start and it should focus on the business goals. SBA offers a free in-depth guide on how to write your business plan.
2. THE FICTITIOUS BUSINESS NAME
If you plan 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. DO YOU NEED A EMPLOYER ID?
Determine whether or not you need an Employer Identification Number (or EIN)- generally, if you are going into business for yourself and you are not starting a corporation or non-profit organization etc., 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. CHOOSING A BUSINESS STRUCTURE
When beginning a business, you must decide what form of business entity to establish. Your form of business determines which income tax return form you have to file. The most common forms of business are sole proprietorship, partnership, corporation, and S corporation.
A sole proprietor is not only one of the common forms of business structure, 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 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. Learn more about the different types of business structures.
5. LOCAL ZONING LAWS
Local zoning laws, also called ordinances, establish what business activities can be carried out in a particular municipality. You need to get approval, and any required permits from zoning, before setting up a business in a particular location including your home. Many cities county zoning and planning agencies require all home-based businesses to get a Home Occupation Permit.
6. BUSINESS LICENSE /PERMITS
General Business License
As a business owner, you are normally required to purchase a yearly general business license. Contact your county clerks 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 acknowledging he is aware of the fact that you are starting a home business on his 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, on behalf of your State revenue office. You are responsible for applying 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
Health and Safety Permits
If you plan to sell food to the general public or to other businesses, a Health Department permit is needed. Permits are normally issued by your county government, an inspection of the business premises may be required. Additional permits you may need are a food handlers permit or certification for food service or food preparation businesses depending on your state. You may also be required to apply for a permit and inspection from the local fire department.
If you plan to make any construction changes to accommodate your new business venture, check your local government’s building and planning department, to see if you need to apply for a construction permit.
Some Local community ordinances restrict the type, size, or location of signs placed on your property. Check with local city or town zoning board or other local authority.
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.
TAXES AND YOUR SMALL BUSINESS
1. PAYING ESTIMATED TAXES
2. ANNUAL BUSINESS TAX RETURN FILINGS
Every business owner is responsible for paying business taxes. If you have net self-employment earnings of $400 or more, normally you will have to pay a self-employment tax.
a. Federal Business Tax Return(s)
Every business owner is responsible for filing and paying business taxes due.. Your profit and loss from business are reported on the Schedule C Profit and Loss statement and attached to your personal tax return. Schedule C is the tax form filed by most sole proprietors.
b. State Business Tax Return(s)
You are also required to file annual state tax returns with the State Revenue Office.
c. Local Business Tax Return(s)
Depending on your business location and local city requirements, a local city tax return and a business privilege tax may apply. Check with your local city clerks office for full details on their tax requirements for small businesses doing business in the city where your business will reside.