Do you Need a Business License?

Most cities and towns require you to have a business license to work at home, but not all do.  To see if you need one where you live, call your city or county clerk's office.  This number is usually listed in the phone book under City Clerk or County Clerk in the government section.  They can tell you over the phone if you need one or not and what you need to do to get one.

Please also note that some towns regulate the type of business you can do in your home.  For example, if you see more than a certain number of clients a week in your home some cities won't allow you to conduct your business from your home because it can interfere with the residential aspect of your neighborhood.  So please check to make sure the type of business you are starting is allowed to be home-based in your town. 

You do NOT need to form a corporation to do business unless you want to.  Not sure if you should form a corporation or not?  Click here for more info.

A Business Bank Account

Even though your business may just be you sitting at your kitchen table making door wreaths if you want to accept checks or payments made out to your business name, you need to have a business bank account to cash them.  In order to open a business bank account you will need to present proof of your business name.

How do you get the proof?

By providing a copy of your incorporation papers or by showing proof of your d/b/a. 

The most common way for people just starting out is to file what's called a d/b/a with your city, county or state.  It will depend on your location's rules where you need to file it. 

D/b/a stands for doing business as.  You file this notice to let the governing body and the rest of the community know you are now conducting business under your new business name. 

What do you need to do?

All that is usually involved in this is to fill out a sheet of paper with the business name you want and then take out an ad in a local newspaper for a few weeks that says you are now doing business as your new business name.  The government official will then issue you a d/b/a license. 

The best thing to do is to call your city or county clerk and they will have information about how to file this.  They usually will also have the name of a few businesses that will do everything for you for a small fee (usually less than $75.)  If they don't know of a business that does this you may want to consider starting one.  

Taxes

You will need to include your business earnings in your personal tax return if you have a d/b/a.  If you have a corporation the corporation will file the tax return but you need to include all earnings the corporation distributed to you on your personal return. 

If you have a corporation get an accountant.  There are too many ways you can get into trouble if you don't have one.  Also, MAKE SURE to keep your corporation money completely separate from your own personal earnings.  Do NOT at any time write checks for personal items on the corporate account or use the corporation money for anything other than corporation business.  If you do, the IRS will say that it is a sham corporation and they won't allow you the deductions a corporation gets. 

Regardless of whether you have a d/b/a or corporation, it is VERY important that you track your expenses and revenue.  Make sure to save all your receipts.  Every single one.  If the receipt doesn't say what it's for, write on the back what it was for so when you are getting everything together to do your taxes you will know what it is for.

I keep all of my receipts in one place (a folder) then about once a month I put everything from the month into a 3 ring notebook.  It's a lot easier to keep your receipts all in one place than to try to look for them all spread around at tax time.

Accounting and Keeping Your Books

As I mentioned in the taxes section above, it's super important that you keep good records or you can get in trouble with the IRS. 

If you have a small business and you are good about keeping your records, you can keep your books yourself.  This basically just means that you keep a record of everything you spend (and keep the receipts!) and you keep a record of what you earn. 

If you aren't good with books or you have a lot of expenses to keep track of, it's probably best to go ahead and get an accounting software.  The most well known is Quicken.  It's accounting software for non-accountants.

• Quicken Premier Home & Business is great to get if you want something that's easy that will keep track of expenses and earnings.  It costs about $90.00.
• QuickBooks Pro is a lot more robust.  It's best to get if you need to not only track expenses but also send out invoices to clients, track those invoices, track a budget, track a timeline, etc.  It costs about $250.

Okay, enough with the boring government required stuff, let's talk about something more fun.  Click here to find out how to build a website for your business.