If you plan on making any money with your new business, you know the IRS is gonna want to know about it. Check your state's rules about income reporting and at what point you need to file a Schedule C, but it would be a good idea to plan ahead and anticipate you will be turning in that Schedule C next year! To prepare, you need to get your business legal. Here are some tips to help you make that process as smooth and simple as possible.
1. Name your business - It can be as simple as using your last name, such as “John Smith Productions" or “Robert Travis Enterprises. " Or you can get more creative and use a DBA (Doing Business As) or ABN (Assumed Business Name). If you decide on a business name that is anything but your true and legal name (i. e. , John Smith), you must register your DBA for a fee. This may vary from state-to-state, but the average fee is about $50 and you must renew it every 2 years. You can find details on this at the website Business. gov.
2. Decide on your business entity - Before filing your first Schedule C, you need to know if you're labeling your business as a Sole Proprietorship, LLC, or a Corporation. There are pros and cons to each option. Before you decide, it might be helpful to create a business plan. You can learn about business plans, business entities, and find plenty of other small business tips at the Small Business Administration at sba. gov. You may also want to discuss these options with your accountant or tax adviser.
3. Register your business name and entity with your state. You can also find instructions to do this at the above websites.
4. Check licenses - Look up your zip code at Business. gov to see what additional taxes you may need to report for your business and/or licenses you may need to acquire.
5. Learn your tax responsibilities - Owning your own business also means following a different set of rules; and while there are many incredible benefits to being self-employed, you will be at a greater advantage if you are proactive in learning the ins and outs of the Schedule C, and what deductions are available to you. Go see the Small Business Resources at IRS. gov to learn everything you need to know.
It's easy to just start a home business without thinking of how the government might want to be involved; however, it's extremely important to remember that tax-time will come, and it's better to prepare for this before you even start your business. Do it right the first time, and it will save you a LOT of hassle down the road.
Juanima Hiatt is the creator or Fearless Online Success, a comprehensive website teaching anyone, from any background or level of experience, how to build a successful online business from the ground up. Get started today for free at http://www.fearlessonlinesuccess.com