Meet The Merchants Know how you’re going to bring in revenue. What you make, after all of your expenses and taxes have been paid, is your profit. It’s the ultimate measure of your business’ success. Before you decide to start a business, you need to project whether the revenues (sales of your product or services) will exceed your expenses. This will give you a clear idea of whether you should consider turning your hobby into a business. Set up your business structure. Contact an attorney who specializes in working with small businesses to get advice on the proper legal structure under which you should incorporate your business, or first visit FindLaw. com’s Do-It-Yourself Legal Forms to learn more about how to incorporate your business. Incorporating your business can help protect your personal assets from liabilities like creditors or lawsuits. Make it real. One of the advantages of starting a small business is that you can deduct losses such as your expenses and depreciation on assets you purchase - to offset taxable income. It’s best to consult an accountant who specializes in small business to obtain advice on preventative measures you can take to avoid being audited. Some basic steps to take to clearly demonstrate you’re in business, versus treating your efforts as a hobby, are to obtain federal and state tax identification numbers, print up business cards and letterhead, maintain a set of books to record sales and expenses, set up a separate bank account for your business and keep a logbook in your vehicle to record mileage. Get the proper licenses and permits. Depending upon the type of business you start, you may need to get a permit(s) or occupational license from your city or state. Many cities and counties require every business - even single-
owner, home-based operations - to get a business license (tax registration certificate). You also may have to get a sales tax permit from your state. Protect your idea. In the course of pursuing your hobby, you may create a new process for doing something, a product or a creative brand name. If you think it has any potential, run - don’t walk - to an attorney who specializes in intellectual property to seek a trademark or patent on your idea. Be very cautious about sharing your idea with anyone, who, in the future, could claim that he or she helped you with developing that idea and therefore deserves a cut of your revenues. Invest in a website. If you want people to know about your new business, you must have a website. Most people now immediately turn to the Internet to find products and services to meet their needs, as well as to find information such as directions and contact information. Nearly equally as important, invest time to set up a Facebook and LinkedIn page for your business, advertise your services online through Google, and consider banner ads on other websites. Create a workspace. What are the space needs for your new business? Do you require storage space? Industrial strength refrigeration? Extra power? Two sewing machines? A quiet place to make uninterrupted phone calls? According to the Small Business Administration, more than half of America’s small businesses are operated from a home, which offers important tax advantages. However, it’s important to carefully follow IRS rules and clearly designate space for your business from personal space. To learn more about how to start a new business, visit FindLaw.com.
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February 3, 2011
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Berkshire Penny Saver
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