Start-up thoughts to consider

When you're ready to start a business, it's typical to wonder just where to begin. There are, of course, lots of things you try to figure out. First, decide what form of business you'll run. The easiest to organize is the sole proprietorship. Others include partnership, corporation (S-corp, C-Corp) Limited Partnership or Not-for-profit. These all have various tax implications and advantages and more complicated steps to get started. These can be addressed at another time. Starting a business can be done simply by using your name. In Pennsylvania, if you choose to give your business a name, you will have to register the name as a "fictitious name" with the state. Once this is decided, open a separate bank account that will handle your business activity. The first question I see coming to mind is "How do I get my money out of the business to use for personal, day-to-day expenses like buying my groceries, etc.?". The ideal method is to write yourself a check from the business account to deposit into your personal account. In the recordkeeping for the business, this gets recorded into a ""Owner's drawing" account. You might take money out by using a debit card or check card. That will work the same way. This simplifies things for tax purposes and for being able to keep your accounting records easier to understand and to work with.

If you expect to have employees right away, apply for a Federal Identification Number. This is done with a form SS-4 which can be found be searching http://www.irs.gov/ . Complete this form and submit it to the address indicated in the instructions. You will get a response from the federal government telling you what number you've been assigned. The number is known by FID, FEIN, EIN, Tax Number and others. This number is not the same as your state's Sales Tax number. This is handled with a form from your state. It will probably come from your state's department of revenue.

Once you have these things in the works, plan on the ways you want to keep track of your expenses. I'll discuss these in more detail in another post. To begin, though, you'll use categories based on items directly related to how you'll actually be making money. These are called "operating expenses". The rest of your expenses will be related to "administrative costs". These are things like bank charges, office supplies, postage and others. Leave a reply and I will answer questions you might have about how to group expenses.

If you will be buying things to re-sell or that will become part of something you will be manufacturing, you will need to get a Sales & Use Tax license (in Pennsylvania) from the department of revenue. This is a subject for another post. Yup, I expect to be writing a lot!

That's all for today. Let me know if this is useful. I'll post as I come up with relevant topics and as I get questions coming in. Have a great venture!!!!