Following is a checklist of most of the important things to consider when starting up a business and structuring it properly. Keep in mind that the primary intent and benefit of setting up a business is to make a profit. A secondary benefit is the tax savings incurred by being able to deduct expenses for the purpose of building the business. Note: This list may not be comprehensive because each state has its own requirements. Information provided is not legal or tax advice, they are statements of experience, seek legal and tax help from a licensed professional.
Checklist for Properly Structuring and Launching a Business
Certificate of Occupancy: If you are planning on occupying a building, you may have to apply to get this from your local city or county zoning department, especially if the building is new or you will conduct substantial improvements to the premises.
Business License: Many local authorities require licensing of a business. Sometimes the license must be obtained from the state, and other times it will be issued by the city or county. Many home-based businesses and network marketing ventures do not ordinarily need a license. Check with your state or city government.
Business Name: If you use a name for your business or sole proprietorship other than that of your own name, we recommend you register the company name with the controlling authority.
Trade Name and Trademark Protection: If you want to protect your trade name and any special trademarks that you want developed to brand your business, you will need to file a “Registration of Trademark or Service Mark” with the U.S. Department of Commerce. For further information or to reach the Commissioner of Trademark and Patents, call (800) 786-9199.
Copyrights and Patents: If you have developed some special invention or have some written material that you don’t want people to copy, you must file for a patent for invention or a copyright for written materials. This can be done by contacting the Commissioner of Trademarks, and the Patent and Copyright Applications office. Patent registration forms and questions: (800) 786-9199. To obtain copyright forms call (202) 707-9100. If you have a copyright question, call (202) 707-3000.
Business Insurance: All businesses should have some form of insurance to cover them for theft of equipment and for liability issues. Most homeowner policies exempt business equipment form their coverage. Check with your property and casualty agent to see how extensively you are covered and what insurance you may need to obtain.
Sales Tax Number: In many states, you may be required to collect and remit sales tax. Thus, you should get a sales tax number in the states in which you will be conducting business, especially your home state. Many network marketing companies take care of this for you with the state in which you will be working. If you are joining a multi-level marketing company, check with them about this number.
Unemployment Insurance: If you have any employees or if you incorporate (incorporation assumes you are the “employee”), you will be required to pay both federal and state unemployment insurance. Contact your state unemployment insurance office for the forms and instructions. Also, you will need to get a federal ID number from the IRS by filing form SS-4 with the IRS. This will set up withholding and federal unemployment tax for any employees.
Immigration Act: If you have employees, you will need to verify employment eligibility by filing form I-9 for each new employee other than yourself or immediate family. Failure to do so could result in sizable penalties. For additional information, call (800) 755-0777.
Health and Safety: Be aware that there are many health and safety laws which apply to employees. The federal Occupational Safety and Health Administration (OSHA) has some standard brochures of which you should be aware. Call them for information. If you plan to open a restaurant or a manufacturing facility and you will employ people, you will need to comply with OSHA’s standards. In many cases, complying means posting some rules somewhere in your facility.
Workers’ Compensation: If your business employs three or more people, Workers’ Compensation Insurance must be carried to cover injured employees. The owner may usually exempt himself or herself from this if they wish.
Minimum Wage Laws: Be aware that there are minimum wage requirements for employees that must be honored. If you have employees, find out what these requirements are and stay abreast of any changes.
Form W-4 for Each Employee: Each employee must fill out IRS Form W-4 for withholding and for claiming exemptions. If withholding or exemptions change within a year, a new form must be filed for each year a change takes place. See IRS publication 505. Generally, for every $2,800 in new deductions that you expect such as housing interest, expected losses from business, or for each dependent, you may claim an exemption.
Note: This list may not be comprehensive because each state has its own requirements. Information provided is not legal or tax advice, they are statements of experience, seek legal and tax help from a licensed professional.
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