Hi All,

I'm seriously considering taking the plunge into turning my hobby into a small business.

Can someone help me with what I'll need regarding tax and licensing.

So far I have to get:

state sales tax application
federal sportfishing tax info

not sure about the rest. EIN? local merchant license?

Can anyone offer me some advice?

Thanks,
Justin

Get in touch with your local city hall and/or town planner. Requirements are different depending where you are. They will be able to walk you through it and usually will even have a complete package of paperwork.

Hey Mick,

I did contact the locals and they said I needed nothing from them. They're not as helpful as they should be unfortunately, which is why I'm posting here.

Justin

Try this out Justin. [www.maine.gov]

As Mick said things are different in different areas.

Some things you might check into are:
Business Liscence
Ficticious Name Permit(If you dont use you name in the business title)
Some liscense and permits require a Posting in the local newspaper of intent to do business.
Resale permit for state taxes (if you state has taxes)
Dont forget the requirements on the 720 Federal excise tax there is a ton of info on this site about that.

Also look into your cities requirements and restrictions about in home businesses.

That is about all I can think of off the top of my head.

Justin,
Most states have a Small Business Administration or something similar. Check your states website and usually there are tabs for business development. In my state, once you register as a business and receive a tax ID number, you receive monthly mailings to fill out and return to take care of local and state tax obligations. Aside from that there is the quarterly Fed Excise Tax. Every state and local govt is different, so advise on this topic here will be very general in nature. Dont take detailed advice from me or anyone else without checking on it yourself to make sure it applies to your states regulations. Ultimately YOU are the one responsible for understanding specific reg's.

I would recommend talking to a CPA. I met with mine before anything else. He was versed in EVERYTHING I needed to do. Also, keep your receipts for everything. If your going to deliver a rod, pick up supplies, shipping costs, it's all important in your favor at tax time. Account for ALL of your expenses as a small business. Then give the whole pile to your CPA..(he'll love you for it) when you file your income tax...The worst thing you could run into is an audit five years after starting a small business such as this. It could be a mess if you dont keep it fairly straight.

thanks all, i appreciate the advice so far!

Justin

Justin,
As a former practicing CPA I highly recommend you find you a good one even before you start. There are so many things to consider when sitting up any business that the couple of hours spent will be worth every cent. Everything from selecting a business type (corporation, individual etc) to keeping all the necessary records (books) and tax requirements. Many have these services available and might be worth looking at to get you up and running. Setting everything up correctly from the start will save you much time and possible headache in the long run and should you ever decide to sell or quit the business there are even tax considerations to getting out! And since every State and local area has their own rules (Maine has plenty!) I suggest you look for someone in your area.

thanks bill. excellent advice!! you're right, maine stinks for state and local taxes. if the fishing weren't so good, i might... well, i don't want to think about that.

justin

Everyone here has sound advice, but I am surprised that they did not mention contacting the IRS. Granted, this does sound like the advice of a madman, but when I called them, the gentlemen was very helpful. Also they distibute The Small Business Resource Guide 2006, which is helpful.

I started a "small business" about 30 years ago and used a local CPA to help me be in compliance with the various items relating to federal, state and local tax issues currently in effect. It was money well spent. Tax things can get very convoluted for those of us not knowledgable of such things.

It would be prudent to get the opinion of a good CPA in your area when starting up a small business - will save you unforseen grief down the line, IMO

Stan



Edited 1 time(s). Last edit at 05/11/2006 11:28PM by Stan Gregory.