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…
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.
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.
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.
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!