To
begin, 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.
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.
If
you want to grow your home business, you'll need national name
protection. You will then want to register your name as a trademark. To
do this you should contact the U.S. Patent and Trademark Offices in
Washington, DC.
Licensing
- It 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.
Taxes
- Because 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. You can access the IRS online for
information and documents at: http://www.irs.ustreas.gov
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.
A
home business 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.
Contact
your state treasury office for information on obtaining a sales tax
certificate for goods sold. 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.
Insurance
- Most homeowners
insurance will not cover a home business. Talk with your insurance rep.
Your needs will vary depending on the nature of your business and
whether you will have clients in your home.
Helpful resources:
Small Business Administration
http://www.sba.gov
800-827-5722
Service Corps of Retired Executives (SCORE)
http://www.score.org
800-827-5722
The SBA's Online Women's Business Center
http://www.onlinewbc.org
