Making Your Business Legal

Brett Krkosska It's important that your business be on the "up-and-up"
right from the start. Taking care of the legal issues
associated with starting a new business will keep you
out of hot water in the future.

Here are the first steps you need to take:

1. Register Your Business Name

Your business name must be registered if it is something
other than your full legal name. This is a way of informing
the public that you will be doing business as (DBA) an
assumed, or "fictitious" name. Generally, a search is
done to ensure your name is not already in use, and an
application is submitted to make it official. Some states
require a notice be published in the local newspaper. The
details of registering varies from state to state, so check
with your state office or county clerk for specifics.

2. License Your Business

Licensing of your business depends on the type of business
you plan to start. Licensing occurs on the state and/or
local level. Federal licensing is only necessary for
businesses who engage in specific, controlled activities
(things such as making firearms, alcohol, tobacco, etc.).
Many cities, but not all, require a general business
license, plus there may be a license required for your
particular business type. You should contact your state
and city clerk offices to find out what licenses you need.

3. Report Income Tax

You are responsible for filing and paying income taxes
on your business. Assuming your business is a sole
proprietorship, you will pay income tax on your net
profits. You report your income tax using Form 1040 at tax
time, with the additional requirement of filing Schedule C
or C-EZ: Profit or Loss From Business. You can get IRS
Publication 334 (Tax Guide for Small Business) for more
information. Visit the IRS online at www.irs.ustreas.gov/
for publications and detailed filing requirements.

4. Pay Estimated Taxes

If you expect to owe more than $1,000 in federal taxes,
you need to make estimated payments quarterly. This may
seem like a burden at first, but it actually protects you
from having a big payment due at tax time. You can learn
more about this from IRS Publication 505: Estimated Tax
Payments.

5. Pay Self-Employment Tax

You must pay self-employment tax on income over $400 using
Schedule SE. Why? Because you are required to pay your fair
share into Social Security and Medicare. Oh joy!

6. Get a State Sales Tax Certificate

Contact your state treasury office for information on
obtaining a sales tax certificate. This certificate
obligates you to pay applicable sales tax on goods you
sell. If your product is to be sold wholesale, or if you
are buying materials wholesale, inquire about a resale
certificate to avoid paying taxes twice.

7. Obey Zoning Regulations

Be sure to check with your city and county offices about
zoning regulations for your business location. You don't
want to be in the position of having to shut down later
because of zoning violations.

8. Get Free Advice

Your local Small Business Administration office is a good
place to learn more about the nuts and bolts of legally
operating a small business in your area. This office can
answer many, if not all of your questions about doing
business locally. Another important resource is the Service
Corps of Retired Executives (SCORE) at www.score.org/.
This organization provides personalized and free counseling
to assist you in making the right decisions for your business.

Attending to the above steps will put your business on a
firm footing. For the average home business, doing these
things is enough to let you charge full speed ahead.
However, no two businesses are alike, and it's not a bad
idea to consult with a lawyer and accountant for additional
information pertaining to your type of business. Doing so
may prove valuable for you, both before startup and later
on as your business becomes more complex.

ABOUT THE AUTHOR
Brett Krkosska provides 'how-to' advice on family and
home-based work issues. Get start-up guidance, business
ideas and inspiration at: http://homebiztools.com Free
ezine subscription: mailto:enews@homebiztools.com