Choosing Your Business 8
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What should I do first?
Once you've chosen a business, there are a number of organizational and legal tasks to perform before you get started. Among them:
- prepare a business plan (explained in chapter 7)
- choose and register a business name
- check zoning laws
- determine what special permits or licenses might be needed and apply for them
- apply for an employer identification number
- apply for a sales tax number (resale number) if needed
- open a business checking account
Some specific steps will vary according to your local laws and the type of business you run.
How long will it take me to get started?
It could take a month or more to complete all the tasks that need to be done. If your local laws require you to place a public notice in a newspaper stating your intent to do business under a fictitious name (or even your own name), you may have to run the notice for several weeks before you can start the business officially. An employer identification number and sales tax number, if you need them, may also take a little time to be assigned. Other tasks usually can be accomplished fairly quickly unless you have to take and pass any tests, as you might need to do in order to get a license or get special insurance.
Will I have to collect sales taxes? And if I do, will I have to incorporate?
You will have to find out what products and services have a sales tax in your state and collect taxes if you sell any of them. You don't have to incorporate to collect sales taxes. Your state tax department should be able to give you information about taxable items. Don't be surprised if the regulations seem confusing and arbitrary or if they change from county to county and city to city within your state. You may have several different tax rates if you sell in more than one area of the state. Each sale is subject to the tax rates and regulations that apply to the customer's location.
Do I have to collect sales tax on out-of-state sales?
At the time of this writing, mail order and Internet businesses collect sales tax only on purchases made by residents of their own state and any state in which they have nexus. (Nexus means having a physical presence, that is, having a sales agent or other company that services your customers.) This could change, since the impact of the Internet is making some state governments concerned that they may be losing sales tax revenue. To be sure you are operating within the law on this issue check with your tax adviser.
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