going into business

[transmothra]

i'm seriously thinking of going into business with the HTML thing. what do i need to do, legally, here in the US? i assume i need a business license (well, seems a no-brainer), but what else should i have in order to justify my claims of being legit? and how do i go about getting a business licene, anyway?

plus, what are the specific legal differences between "Inc.," "Ent.," "LLC," "Ltd.," "Corp.," etc? i need to know what i should put by my name :)

thanks in advance for the reams of practical advice i'm about to get ;)

[Jason]

Hi Transmothra,

To obtain a business license, you need to contact the township in which you will be practicing in, and inform them that you have "set up shop" (even if that shop is just inside your home). They will typically have a small quarterly or annual fee that you will need to pay for the "privilege of doing business" within their borders. I believe this is technically the only step that you need to do in order to legally do business (make sure you ask to confirm this). However it is a good idea to incorporate, because it limits your personal liability if their should be a suit against your company to the company's assets only.

In the past, I have seen "online forms" where you could incorporate cheaply, however over the past months, all of the services that I had known of seem to have disappeared. A lawyer will typically charge you from $500 - $1000 for filing your paperwork, however if you do it yourself, it can be done for as little as $200 (you will need to acquire the forms from the IRS to and then file the forms back with them if you do it yourself).

As far as the extensions go, I am only familiar with Inc and LLC myself. Between Inc and LLC, I believe that Inc is advantageous, as you are able to collect much of your salary as some thing called "S distribution" or "pass through income". This is good, because if it was all in your salary check, you would have to pay social security tax in it twice (once by you, and once matched by your employer "the company". Thus the "Inc" type of incorporation will save you 14% of whatever is paid above and beyond your decided salary. There are, however, two distinct versions of an Inc, one is an "S Corporation", and the other is a "C Corporation". The "S Corporation" is the one that you will want.

Hope this helps. :cheers:

[Jason]

I've come across one of those online incorporation forms that I had mentioned.

From:
http://smallbusiness.yahoo.com/start_a_new_business/business_incorporation.html

You can find out lots of info about the specifics of a corporation (including tax rates, obligations, benefits, etc.)

And from one of their sponsors, you can literally incorporate online:
http://www.bizfilings.com/

(Fees range from $100 - $400 depending on the state, and the number of filings you would like them to perform).

Hopefully you'll find this useful.

[SteveS235]

If it's going to be just you, you should list your business as a Sole Proprietorship.

As a sole proprietorship, you don't have to list anything after the business name (ie: Inc, LLC, etc...).

The first thing, after you decide on a business name, you need to contact the Ohio Department of Taxation. Get the proper forms, fill them out, send in the fee, and when you get your business license, you're all set. This will provide you with a Sales and Tax Use license. You will be able to sell almost anything with this license.

That's all I had to do in Massachusetts.

Since you are starting out, stick with the sole proprietorship. If your business grows substantially, then you could consider the other types of businesses.

Some links:

1. This will show you the differences in the different types of businesses. Use the menu on the left to check them all out.

http://www.mycorporation.com/Solprop.htm


2. These are all from the Ohio Department of Taxation.

http://www.state.oh.us/tax/Business/Business_Tax_Guide/btg_corpreg.html

http://www.state.oh.us/tax/Business/Business_Tax_Guide/btg_sales.html

http://www.state.oh.us/tax/Business/Business_Tax_Guide/btg_income.html

Good Luck!

[transmothra]

Originally posted by transmothra
thanks in advance for the reams of practical advice i'm about to get ;)
thanks!!

...you guys RAWK! :crying:

[kevin]

I can tell you what I did when I started my own buisness (not internet related).

First I decided on a name, I did not want to use just my real name, but you can. Then I went the the Dept of Records in my county and looked up the name to see if was already taken, it was not.

I got a ficticious buisness (sole proprietorship) license application and filed it with a small fee. In Calif, a ficticious buisness has to advertise in an acredited newspaper for so many weeks that so in so is doing buisness as blah blah blah at blah blah blah address. The newspaper sends in a form after the time period and the city/county sends you your buisness license.

You take that stuff to the bank and get a buisness banking account (you want one to keep your records separate and for easy accounting, plus you get to use the merchant line at the bank).

I would not worry about incorporating or limited liabilty corporations or any of that for now. Chances are very good your buisness will not succeed (nothing personal, but most do not for many reasons). Keep good records so you can take all the legal deductions you are entitled to at tax time.

You pay self employment tax which is a bummer, and you must pay your estimated taxes quarterly in advance, before you actually make the money, which is a real bummer.

Later if you start making profit and have assets worth anything (home, car, stocks, whatever) you should look into incorporating for the reasons Jason already stated. Last I checked, Nevada and Connecticut were the cheapest and easiest to incorporate. Its really a bit of a scam (out of state incorporating) but its still legal. If you ever get that far you will most likely allready have an accountant helping you with your books and they generally know about that stuff.

Use a tax preparer at the end of the year to do your buisness and personal taxes, they charge $100 and up but its worth it, just make sure to have all your records in order to make things easy.

And best of luck.
Kevin

[Android]

I think here in Canada, you only have to register a business if you want to take advantage of tax laws. Otherwise, you "work under the table" and hope (usually pretty safely) that Revenue Canada doesn't come after you for unpaid tax on income. Are you hoping on turning a profit? How much profit are you hoping for? If you're turning a decent profit, and want to take advantages of tax deductions, you should register. I'd like to see them come after me (I work for beer and smokes :angel: )