Incorporate?

"Doing Business As" vs Corporation

You can start "most" home-based businesses as a personal business - "doing business as", as it is often referred.

However, you are also personally liable as a personal business. BEWARE of this as you proceed. If you are sued, you would NOT have protection against losing your home and private property. In the class that I took, the liability issue was the main reason some entrepreneurs wanted to incorporate.

Where can you Learn How to Start Up and Manage your New Business?

Right here is a place to begin. The section on Business Management may become quite valuable when you are ready for it.

I opened my first S-Corporation in Illinois in 1997. There are rules, forms, taxes, obligations, and responsibilities that you must understand.

So far, all the Internet Income, "be your own boss" materials I've found on the Internet haven't said a lick about setting up your new business and what to do from there. See, first you have to start somewhere, then when the money comes in, you make the business decisions.

This basically means that you go see the CPA and/or the lawyer with all your freshly earned income and every receipt you remembered to print. My CPA was thrilled to only spend an hour with me after my first year because I had a handle on "the books". You can save yourself some cash if you plan ahead and "do your paperwork". Ok, enough said.

Business Law Basics

First of all, I can only address the issues for U.S. businesses. I have no idea what is required for starting a business in other countries.

You can start "most" home-based businesses as a personal business - "doing business as", as it is often referred. You would use Form 1040 Schedule C for reporting business expenses on your social security number at tax time. Schedule C provides for the use of office space in your home and profit and expense reporting. You will have state and local requirements too.

As mentioned though, you are also personally liable as a personal business, or private enterprise. BEWARE of this as you proceed. If you are sued, you would NOT have protection against losing your home and private property. In the class that I took, the liability issue was the main reason some entrepreneurs wanted to incorporate.

Business laws are state-driven. County and local government laws might also affect you. You should check out your local and state websites, or make a few phone calls if you need more information as it applies to your business start-up.

Other business structures in Illinois are Partnerships, Limited Liability Corporations, S-Corporations, and Corporations. Most states have the equivalent.

The Small Business Administration - SBA is helpful in Illinois and elsewhere to provide entrepreneurs information on starting a small business, or private enterprise. I found a host of information on their website. Plus they have local offices and classroom programs to help ensure you know what you are doing. (I took one.)

When it becomes clear your business will require employees or you have to get a business loan, you will probably want to create a separate business structure. In your state, a form such as Illinois's "Articles of Incorporation", is available on-line, along with instructions for filing. You would also need to obtain a Federal Tax ID (FEIN) and be responsible for employment taxes, filing forms, and making deposits on a regular basis.

I have found that obtaining a "resale license" which is usually required to acquire inventory is another reason to have a separate business entity. Generally, if you do NOT manufacture products or hire employees, you are safe to begin as a private business using Schedule C for your business expenses.

At this time, the state sales tax issue is under review. Many states are beginning to study Internet sales as a "missing" revenue source. If you provide taxable products to your customers, it will impact you. Learn the laws in your state and your responsibilities. I know that if I sell products in Illinois, I have to pay Illinois state taxes on those items, even if the product is actually sent from another state. If I purchase inventory from most other states, I don't have to pay taxes to obtain my goods, but this is what is changing. You will know if you get charged sales tax on your purchases outside your state.

I found another reason to incorporate. If you decide to provide consulting services for a company that wants to pay you as a contractor (on a 1099), you would need a business structure to pay yourself as an employee, at least in my state. I opened my first S-Corporation in Illinois for that purpose in 1997. There are rules, forms, taxes, and responsibilities to handle. If you find yourself in this situation, seek the information for your situation.

Now you can get incorporated online the easy way using a name you can trust - Intuit. Intuit produces the best selling Quicken and Quickbooks bookkeeping software, and now so much more. Use the link below to save a bundle! Save $30 on a Corporation, LLC, DBA or Trademark with Intuit MyCorporation.

There is a more information here about starting a personal home-based business. Continue in this section with Credit/Cash/Loans/Money if you want some ideas on funding your business startup.

Or, move onto the section Manage your Business for more useful information.