Friday, March 22, 2013

Tax Questions for the Small Buisness Owner

Since I am quitting my job soon, I want make sure I successfully transition my sewing hobby into the small business world. This, unfortunately, means tackling the big, nasty, yucky, and confusing tax question.
Before you can even DO your taxes, there is a TON of red tape functions you must complete. (Yay, government). The steps I'm going to discuss are relevant for Virginia--they might differ for your state or country. Also, this is 2013. Since the government is extremely fickle--if you are reading this, in, say, 2015--I'm sure the rules and regulations have changed.

Steps to Receive a Small Business License 

  • Check with the zone rules of where your business is located. Mine is a sewing business, and this is an acceptable type to run from your home.
  • Apply for a EIN number at the IRS web site. An EIN number is kinda like a social security number, except for a business, not a person. You also need an EIN number to hire workers or have interns and stuff I won't be doing. 
  • Register your business name. Sometimes called a Fictitious Business Name (FBN), a registered business name is required if you are doing business under any name other than your own. It allows you to accept checks and make other transactions in the name of the business. Once you have registered your business name, it cannot be used by anyone else. Contact the Virginia State Corporation Commission at (804) 371-9733 (outside Richmond 1-866-772-2551) for details and the county office where you need to apply for an FBN
  • Get a Sales and Use Tax number from the Virginia Department of Taxation You can contact them at (804) 367-8037

After completing the above steps you can THEN apply for a business license. The license that I am applying for the sole proprietor small business license. You can read more about it here or here

I'll let you guys know what other steps I have to take, as well as walk you though my first year of paying taxes! If you have any questions about starting a small business, don't hesitate to e-mail me


noone said...

ahh thanks for sharing, I always wondered about the process, but been too lazy to do research on it! Have a great weekend!

Paul S.V.II said...

This is interesting--I wonder if I'll need this if the art business I'm doing with some friends ever takes off in a big way. :O

Rachel said...

The whole tax thing is the main reason Angel never wants to own a small business!

Paulina @ Color Me Brave said...

I feel your pain. I have to do this with my jewelry this year and still in the process of getting it done.