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REGISTER AN ASSUMED NAME. Sound like a spy novel? Actually, an Assumed Name registry is where you register your DBA ("Doing
Business As"), or business name. You are required to register any name in which you do business that is not your legal name. The registration must be renewed periodically. Check with your County Clerk's Office; they should be able to help.
SET UP SEPARATE BANK ACCOUNTS FOR YOUR BUSINESS.
Co-mingling personal and business funds makes it difficult to keep good business records and can also create problems with taxing authorities.
KEEP BUSINESS AND PERSONAL RECORDS SEPARATE. Depending on the size of your business and the volume of transactions, you can
set up your recordkeeping manually, or with a spreadsheet or database if you know how. For most folks though, the easiest
thing to do is get a small-business bookkeeping or accounting software package. There are a lot of them out there.
Intuit makes Quicken for Business, and a number of flavors of QuickBooks -- including QuickBooks Pro and Simple Start Editions. Sage
offers Peachtree Accounting. There are many others, including offerings by Microsoft, but
Intuit and Sage seem to have the
bulk of the small-business accounting software market. Make sure your software is scalable, that is, you can upgrade easily
within the same family of products as your business grows; you'll thank yourself the first time you don't have to face a huge
data conversion project just because you have to move to a different software package.
GET A STATE SALES
TAX CERTIFICATE. Contact your State Comptroller's Office. Look on the web for their home page and find the
contact information. They may have email, toll-free phone numbers, and local offices available. See if your particular
situation requires you to collect and remit sales tax (it probably will). If so, see if you can be set up as an "annual
filer" so you only have to file once each year. As your business grows, you may be required to file more often. Make sure you
know the rules for your state and collect and remit only as appropriate. An accounting software package such as
QuickBooks can help you with reporting requirements, particularly if you have a large number of transactions.
IMPORTANT: once you are
required to obtain a sales tax certificate and comply with applicable sales tax law, such compliance will probably extend to all
personal (non-business) sales as well. BE SURE TO CHECK WITH THE STATE COMPTROLLER'S OFFICE TO ENSURE PROPER COMPLIANCE WITH
ALL STATE SALES TAX LAW.
IF YOU DECIDE ON AN ORGANIZATIONAL STRUCTURE OTHER THAN SOLE PROPRIETORSHIP. There are a number of organizational forms
besides sole proprietorship -- partnership, Limited Liability Company (LLC), Limited Liability Partnership (LLP), S
Corporation, and C Corporation to name a few. Some of these require registration with the Secretary of State in the home state, and registration as a foreign entity if business is conducted outside the home state. They also may require separate,
formal Articles to be established and filed with the Secretary of State, they may require a
Charter and a Certificate from the Secretary of State, and they may require establishment of a Board of Directors, formal meeting minutes, etc. There are books to help you
set up particular forms of organization, but for most folks it's better to consult an attorney for help if you want a form
other than a sole proprietorship.
FEDERAL EIN. If you plan to pay anyone (part-time or full-time) as an employee, you must apply for a Federal Employee
Identification Number (EIN). You will use this number to report payroll information and submit payroll taxes due on salaries
and wages. You do not have to file payroll tax reports until you begin paying applicable salaries and wages.
There are
certain exceptions to the Federal EIN requirement and there are special rules that apply to hiring certain family members.
BUSINESS PLAN. You don't have to have a formal business plan, but creating one can certainly help you
focus on issues like
your business mission, model, and theme (Why am I in business; who will I serve; what goods or services will I provide;
how will I provide these goods or services; what makes my business unique?).
BUDGET. Again, you don't have to have a formal
budget, but creating one can certainly help you focus on issues like funding
and burn rate (Where do I get my initial money to operate; how fast will I use these funds until my business starts to
generate sufficient funds to operate without them; how can I keep costs in line with revenues?).
INCOME TAX. If you generate revenue, you have to report it, regardless of whether you make a profit or not -- and
you want
the IRS to consider your efforts a business, not a hobby. The method and forms used to file income tax for your business
depends on the form of organization. You may be able to use tax preparation software such as TurboTax or Tax Cut, or you may
find it necessary to consult a paid tax preparer. If you choose to consult a paid tax preparer, seriously consider choosing a
CPA, tax accountant, tax attorney, or enrolled agent, depending on your specific needs.
GOLDEN RULE: Report ALL income, then
pursue all deductions to which you are legally entitled.
ESTABLISH
A CREDIBLE PRESENCE. Sometimes you have to look
big in order to get bigger. Fortunately for small businesses, that's a
lot easier these days. You can order business cards online or from local
office supply stores for very little cost depending on the design and
source. You can also make
your own business cards using software you may already have and a
little ingenuity. Setting
up a web presence and email is easier than ever too. Try not
to use one of the free email providers, though. You want to look big --
get your own domain name. There are a lot of ways to set up your own
website and the cost can vary greatly. The "FREE WEB HOSTING"
link at the upper left of this page takes you to 1stHostWeb. For the
sake of full disclosure, I am a compensated affiliate of 1stHostWeb, but
I recommend it because I have used it for several years and I like it.
Click the link and you can read more, but as of this writing, you pay
$35 per year -- that's it -- for registration of the domain name, and
that's ALL you pay. They host your website for free, you get 25
megabytes of space, unlimited email addresses, and they have a lot of
tools to help you get up and running and manage your website. WIRELESS
NETWORKING. You may want to consider setting
up a wireless network if you have more than one computer, or if you
have a laptop and want to take advantage of its portability. It's a lot
easier than you may think, and new hardware keeps getting better. For
instance, Linksys recently produced hardware using Wireless-N
technology, such as the WRT300N router, which has a number of
enhancements over Wireless-G technology and appears to combine a lot of
the features of the WRT-54G
router and the NSLU2
NAS.
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