You need to be legal when you’re doing your taxes so you can benefit from all the tax benefits. For example, you can write off the room in which you use as an office. If you have a workshop that makes two rooms you can write off. For example, say you have a 6-room house with a mortgage of $1200. If you use two rooms you’re entitled to write off $400 towards your taxes. But you have to be legal; see where I am going here?
- Go to your local township or city and get a business license. Tell them you want a reseller’s license or you can characterize yourself as a manufacture if you feel that applies. In almost every state you are required to have a resale certificate. Some states call it Sales and Use Tax certificate or Tax ID (see item #3) Business licenses are very cheap. Go make 20 copies of the license.
- Go to the bank and open a commercial checking account. Again this is easy, deposit some working capital.
- Go online and get yourself a Sales Tax ID Number. This allows you to buy your materials tax-free. It also gives you the authority to charge sales tax if your customer lives in the same state as you. Most states are getting it together and have their own web sites. Usually its www.yourstate.com, be sure to insert your state name after the three www (this is not a link).
- If you’re going to write letters, use Microsoft Word to create a simple letterhead. You don’t have to pay for expensive stationery. If you do most of your dealings online, you probably won’t use it much.
- Go to Ebay and sign up as a new user if you have not done so already. Register as a seller.
- Go to www.paypal.com and sign up for a new account (standard plan). This is free and gives you some great flexibility. (I highly recommend this.) Make sure you use the same user id as eBay. This greatly simplifies things. PayPal allows you to accept credit cards without going through thehassle of opening a merchant account. Paypal charges a small fee foreach transaction, believe me it’s worth it and very worthwhile.
- Register with Yahoo as a seller.
- Get a separate folder and write down all your passwords and user id’s to separate websites you will join and use. Having them all in one notebook will help you keep organized as well keep things secure
- You don’t need to incorporate your business unless you want to. You can simply operate as a DBA (doing business as) and use your social security number as your ID number. If you incorporate you should get aFederal ID tax number. All this information is available online.
That’s all there is to starting your business. If you’re a mover and a shaker you could do it all in one day. Now when you make contacts you have what you need to legitimize yourself. Don’t let the paperwork stop you. Make sure you check your state’s requirements, some are different.
Tax Time
If you’re like me, you don’t love tax time. There are some great services out there to help with your tax workload. I really love using Turbo-Tax Home and Business for my taxes. However there is another service out there that can be an invaluable service to your small business. The company is called the tax club and you can find them at www.thetaxclub.com. Their phone number is 877-829-2582. They are a small business that specializes in taxes for new and small businesses. They work with you one on one. They offer free evaluations to determine the correct strategies and deductions for you.
They are a serious professional service, they charge you a monthly fee to
manage the tax portion of your business.
If you can afford to start your business off right away by using a professional service, your mind will be relieved of one less headache thus allowing you to concentrate on products and ideas.
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