Starting a Business – The Nitty Gritty

If you missed my previous posts on Starting A Buiness, My Story and In the (Very) Beginning, make sure you check those out before you read this post.

Before we get going, I want you to understand that this post is only a guide.  The process is going to be different for every state and every business, so make sure you do some of your own research as well.  Ok?  This is also just a “fly over.”  We’ll go over some of these topics in more detail and feel free to ask any questions along the way.  Here we go with all of the Federal, State and Local stuff you need to take care of…

Register Your Fictitious Name (State)

What is a Fictitious Name?  It’s the name of your business.  I am the sole proprietor of my business, so my
“Enterprise Name” is my full legal name, but Mustard Seed Creations is my “Fictitious Name” and the one I conduct business under.

I liked the name Mustard Seed Creations, but I had to make sure that no one else in the Commonwealth of Pennsylvania was using it first.  I called the PA State Department and they said it was available and directed me to a printable online form to complete.  I think it cost $50 to register a fictitious name in my state and now the name belongs to me as long as I’m in business.

EIN (Federal)

One of the first things you need when your business is born is a Social Security Number for it.  It’s called an Employer Identification Number or EIN.  You can apply online for one at the IRS Website.  It is important to get one for paying your taxes (ugh) and you are required to have one for things like opening a business checking or merchant account with your bank.

Tax License Number 
(Mostly a State thing, but maybe Federal or Local, depending on your business and town.)

If you’re going to be selling things (which most business do), you need to apply for a Sales Tax License number.  You use this number for collecting sales tax from your customers and for paying your quarterly, semi-annual, or annual sales tax.  You need a number if you’re going to sell online, at a fair or market, open a shop, sell services and the supplies you use…anything.  Make sure you get one.

In Pennsylvania, the form you complete to get one is the PA-100, which you can complete online.

Aside from the unpleasant part of using it to collect and pay taxes, there is a benefit.  You can use it when you are purchasing items you are going to resell to buy them tax free.  So, if I see a really cool dresser I want to buy at an antique store, I can show the shop my Tax ID Number and they will sell it to me tax free.  Then, I fix it up, paint it, and sell it to a customer for the amount of the dresser plus tax.  If I buy the dresser and pay tax, then I sell it and collect tax to pay, I am paying tax on the dresser twice.  Now, not all places will take the tax off, but it’s always worth asking.  You can even buy your paint and crafts supplies tax free, as long as it’s going to make something that will be sold.

I’m going to do an entire post on Accounting and Taxes, so we’ll move along for now.  Just a warning: this form can be a little confusing, but most states (if not all) are going to have phone numbers you can call for help.  I must’ve spent hours on the phone asking questions, making sure I was filling things out properly, and ensuring that I was not missing anything.  It just takes a little bit of patience and persistence.

Do you need a license? (State and Local)

When I first registered my business, Pennsylvania did not require a license for a decorative painting and mural businesses.  About a year ago, that changed and I needed to pay around $50 and get a PA Contractor’s License.  You most likely do not need a license if you’re making and selling something online from your home but you just want to check with your state.

Please remember that this is not comprehensive and every business and state is different, so call the people in charge to make sure you’re squared away.  This is just to get you facing in the right direction.  Here are some additional places to look for help:

  • See if your state has a Small Business Development Center (SBDC) that can help you.  For PA, it’s http://www.pasbdc.org/.
  • Is there a site about starting a business in your state?  For PA it’s http://www.paopen4business.state.pa.us/.
  • Call your State Department of Revenue to find out if your business in taxable.
  • Does your state have a Bureau of Minority and Women Business Opportunities?  They may offer workshops, classes, counseling and resources on helping you start your business.

Just remember, your state wants to help you start a business in their state.  More businesses + more sales = more tax revenue for them.  Call and ask for help if you’re confused!

**WATCH OUT…for websites that are charging you for this information or for forms you can get for free on State and Federal Sites.  Look carefully at the web address to make sure you’re on a goverment site.  You can do all of this on your own and you don’t need to pay fees to a third party.

Are you a business owner?  Do you have something else to add?  Please send me an e-mail or leave a comment and I’ll share it with my readers!

Now, go register that business you’ve been dreaming about.  It’s a crucial first step that is easy, inexpensive, and will give you motivation to get the ball rolling.  Good luck, ladies!


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Comments

  1. Ashley Ann says:

    Such a wealth of information that is incredibly helpful. Thanks so much for sharing! I was wondering about alot of that stuff, such as the taxes. Looking forward to your next post.

  2. These guides are so helpful, thank you for taking the time to put them together. I dream of having my own creative business and your posts help us realize that the dream can be a reality.

  3. These guides are so helpful, thank you for taking the time to put them together. I dream of having my own creative business and your posts help us realize that the dream can be a reality.

  4. great advice. I just checked in on your gallery and was lovin' everything I saw. i don't know how you part with your furniture! I'm finding it so hard lately! -D

  5. Gosh I remember all this well! Some things I've learned: pay your taxes quarterly so you're not stuck with a huge tax bill come April.

    Also, file your business as a disregarded entity on your tax return so it goes on your schedule C. Remember, you have to pay social security twice too – 16 percent b/c you'll be an owner and an employee.

    I formed an LLC to protect my personal assets i.e. house, savings account. Oh and beware of small business loans because you have to put your personal assets on there. So if the business fails, your personal assets can be affected.

    Get a good accountant!

    Jeanine

  6. Great advise. Even though I started my comapny a year ago (and incorporated here in NY) – it's always good to hear someone else's story – and tips. Love this series (and all of your posts). Can't wait for the next one!

  7. Oh, great advice. I'm in the process of starting my business and have been working with SCORE. It's a non-profit with tons of volunteers who are retired executives or have owned small businesses or something and have great advice on all aspects of starting a business…and they're free. Just last week I went to a day long workshop on how to start and run a small business with presentations from marketers, lenders, and insurance people from my area. I would highly recommend looking into finding and using your local SCORE office. (score.org I believe)

    • I had never heard of SCORE until reading this old post and your comment. What a great resource! Thank you for posting this comment (four years ago :), you’ve really helped this newbie.

  8. This series is great and so perfectly timed for me. I am in the process of starting my own business in SC. Home Decor from reclaimed/salvaged wood and other thrifty finds along with refurbished furniture. I have my first show on July 4th at a juried craft fair here in town and am trying to get all my ducks in a row. This series has been incredibly helpful. Both from a practical standpoint as well as plain ole' encouraging.

    I relate to you in many ways. My husband and I are in ministry, he is lead pastor of a church plant, I haved three small boys, and I really enjoy creating a warm and inspiring home on a budget!

    Thanks so much for sharing your knowledge. Looking forward to the next installment already!

  9. Thanks for the tips. Taxes can be so overwhelming but I find that they (government agencies) really do want you to succeed and are very helpful.

    I also think SCORE is a good source.

    And our town has incredible women that share what they have learned by owning their own business.

  10. Thank you for the tips and the sweet comment about the mirror from my blog! I really appreciate it! ;-)
    ~Terrell @ FrouFrouDecor~

  11. Thanks for the awesome tips. I must say I'm a still a bit overwhelmed by all the details, but I'm looking into it all…

    Kacey

  12. All great stuff…I too am just starting out and have been arguing with my spouse about getting a tax id number. He feels that my business in not yet profitable enough to dictate obtaining this and then having to pay taxes..your thoughts?

  13. Thanks for the info. Friday I'm meeting with a V.P. of Marketing of a local company and may have to use this info. if things pan out!

    Lisa

  14. I'm right on track with your posts! Love it, and thanks for all you do!

  15. Thanks so much for all of the information and inspiration! I am linking back to your site from my FB page and from another that I'm a part of…I love your blog! You are doing what I would love to do…I'm an artist, but I love the finds and making them beautiful…glad I found your site!

  16. I'm official!

  17. Very good information. Thanks for sharing! I am going to bookmark this. So far, I have my EIN number. Now I have to get the rest;-)

  18. Thanks for sharing this info. I've been dreaming for a while, I have everything but the EIN and tax number.. I have a mental block going on and I have been procrastinating about making it official.

  19. I want you to know that I have never followed a blog before, and then I found yours. You are so open and helpful. I have always wanted to do a blog and have a way to make a living at home. I am looking at having a website, and most of the companies want to start you out with a basic cost of $200 and then they want to sell you “options” that cost from $3,000 to $9,000. If I get the basics at $200 do you think I could drive traffic to my site on my own? I just am not sure which way to go when it comes to going on line. Thank you so much for all the information you put in your blogs. Dawn

    • Dawn,

      There are a lot of things you can do for free online to promote your business. You can have a Facebook page and a Blogger blog. Both are free, a great way to engaged customers and readers and then you can grow from there. I used free services for my blog for almost 2 years before I started paying for hosting, design work, etc.

  20. Yesterday I traveled to Franklin Tennessee to a high end Goodwill. I buy clothes and furniture and resale them after I fix them up. I made a big mistake that I will never do again. I went straight to the furniture area where I found a beautiful antique oak chair that was solid, but needed a good coat of paint. The design was different and I thought it was a good investment for $19.95. I didn’t want to put it in my cart before I shopped for clothes, so I decided I would comeback for it later. Big mistake! Guess what was gone when I went back for it. Lesson learned the hard way. Someone else got the deal of the day. Why do I always have to learn things the hard way? Oh well, lesson learned.

  21. Hello! dceeacf interesting dceeacf site! I’m really like it! Very, very dceeacf good!

  22. So did you ever do the post about the accounting? I couldn’t find it.
    I am just now starting my furniture business and yep, I’ve got a tight budget having just graduated from art school with only a part-time job at the moment. I am trying to navigate setting up my tax accounts and wow, I don’t know if it’s just me or what, but it seems really complicated! I’m even nervous to sell anything over the internet yet because I hope I don’t do anything wrong tax-wise! Is it worth it to hire an accountant right from the beginning to help figure it all out? I’ve got a friend who is an accountant that was the county commissioner and has lots of experience with small businesses that I am thinking of hiring. What do you think? Is that overkill?

  23. Oh my word. You can erase that first post I wrote. It links to someone else’s website! Maybe I should change the name of my business since it is similar to that guy’s blog! How embarrasing!

  24. I similar to the helpful info you give you inside of your articles.I will bookmark your blog and investigate once more the following continually.I’m pretty absolutely sure I will understand a whole lot of new things most suitable the following! Good luck to the up coming!

  25. Lisa Sraders says:

    Marian, why did you pick sole proprietorship instead of an LLC? Do you have a moment to answer that? I am planning on slowly starting a staging/design/selling a few products business…bless you…

    • I’m actually an LLC now. Honestly, I just wanted to start a business the cheapest and easiest way and I didn’t really understand how to set up an LLC and the tax implications, etc. I was a sole proprietor for the first two years and then my accountant helped me set up the new LLC, so it was all properly done.

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