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Message
Please help direct me on business set up
Posted on 7/11/13 at 8:34 am
Posted on 7/11/13 at 8:34 am
I have been doing some computer repair work on the side for a little while now. This is done is my shed at home. I'm not making enough to quit my day job, but it helps with my hobbies and stuff like that. That being said, how would I go about setting this up as a real business? Here are some of my questions:
Do I start with getting a tax id, if so where do I apply?
Do I need a wholesale license to purchase products, if so where do I apply.
What kind of liability insurance would I need, if any at all and how much.
Anything else I would need to get started that I'm missing?
I would appreciate any advise the money talk folks could offer!
Do I start with getting a tax id, if so where do I apply?
Do I need a wholesale license to purchase products, if so where do I apply.
What kind of liability insurance would I need, if any at all and how much.
Anything else I would need to get started that I'm missing?
I would appreciate any advise the money talk folks could offer!
4
Posted on 7/11/13 at 8:51 am to hugo
First I would look at organizing versus staying sole proprietor. For liability purposes most people will organize/incorporate. If you organize/incorporate you will then have to decide how the org/biz will be taxed. That's a CPA question. The answer to that Q will determine whether you need a Tax ID.
I would say you need some liability insurance. If you fix Mr. Smith's computer and somehow erase some proprietary data he may want to sue you.
Read up on business plans and get at least a very scaled down simple one in place.
I would say you need some liability insurance. If you fix Mr. Smith's computer and somehow erase some proprietary data he may want to sue you.
Read up on business plans and get at least a very scaled down simple one in place.
Posted on 7/12/13 at 3:43 pm to rmc
Thanks, I will definitely look into that.
Posted on 7/12/13 at 5:39 pm to hugo
That is how I started. Setup LLc then get tax id on that LLC. Do you resell a bunch of stuff or just as needed. If as needed, just pass the tax to the client. You need general liability. It is cheep. Like 300 bucks.
Posted on 7/13/13 at 12:40 am to ColdDuck
Call Poodlebrain, who posts on this site. CPA, straight shooter.
Posted on 7/13/13 at 1:03 am to hugo
It would be advantageous for you to set up a formal entity to shield yourself personally from liability.
From what you've offered so far, an LLC may be a good option for you.
The other posters are correct; the taxation aspect and the shielding liability aspect are two distinct conversations you need to have with your CPA and attorney, respectively.
The good news is your situation is one that is very common and it should not be much trouble to set you up in a good position.
From what you've offered so far, an LLC may be a good option for you.
The other posters are correct; the taxation aspect and the shielding liability aspect are two distinct conversations you need to have with your CPA and attorney, respectively.
The good news is your situation is one that is very common and it should not be much trouble to set you up in a good position.
Posted on 7/13/13 at 10:58 am to hugo
quote:
Do I start with getting a tax id, if so where do I apply?
You will need a federal and state one. In this case, I would hold off until you form an LLC. I would make that your very first step - form an LLC, then operate everything else under that entity - get your banking, employer identification number, state and federal, insurance coverage, etc., everything under that name.
You'll thank me later.
quote:
What kind of liability insurance would I need, if any at all and how much.
The problem is going to be that you'll be in the place of a manufacturer, which can expose you to some liability. I would contact Zurich first, as they seem to do a lot of that business.
quote:
Anything else I would need to get started that I'm missing?
Doing the LLC from the beginning will simply this process, but you need to keep everything separate for tax purposes. Keep separate accounts, reimburse youself for business expenses you incur out of personal funds, etc., even if you're operating as a sole proprietorship (which I highly discourage), you'll need to keep your business separate for tax time.
I would plan to operate at a loss for 3 years. Get your tax advisor to help make that happen. That will subsidize your operating expenses by reducing your day job tax liability and defer profits until you have to declare them. That likely won't be a problem with a small startup. However, just like everything else in life - EVERYTHING comes with a cost.
However, as long as you don't go overboard, good legal and tax advice up front, will more than repay those expenses, with interest, down the line.
See if there are small business startup resources in your area, like an incubator, or whatnot. Some of them have inexpensive or free business plan help, and staffing assistance while you get going. I strongly recommend writing a business plan yourself, or having someone competent draft one for you. It's shocking to compare the success rates of those startups that follow/don't follow this step.
Good luck. Lots of people on government assistance are depending on your success.
This post was edited on 7/13/13 at 11:01 am
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