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#1 Lazy Lightning

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Posted 05 June 2012 - 12:19 PM

I'm looking at going to registering as a business in order to handle the freelance design/illustration work that I do outside of my regular gig.

Part of the reason for this is that my NoHo gig is only part-time. I actually NEED to build this as an income generating occupation. The other part is that I could use some write-offs for all the materials I have to buy for these projects. I'd eventually like to get myself at Cintiq, and being able to deduct that expense alone is a pretty big deal.

I started looking into this process and it's a little... Scary? It's much deeper than I thought it would be at any rate... I'll need to get a business bank account, register as a business, keep financial records, etc... Yeah, I'm a total n00b. Hell, I don't even know how to go about paying myself. :dunno:

I found a small business organization that I am going to apply to for a consultation since all of this is so new to me, hopefully they will be able to see me sooner rather than later b/c I'd like to get this rolling!

I don't think I'll need business insurance since I work at this from home right now, and my product can't really cause any damage/harm to anyone.

I'm having one of those cold-feet moments where some small part of me is telling me that I can't do this, so I just shouldn't bother, it's more trouble than it's worth, etc... etc... I CAN do this, but right now, I don't really feel like I can. Ugh, it feels awful! What am afraid of? It's just stuff I don't know yet, and there are people out there who can help me so.... Stupid self-doubt!!! :bang:

Any advice, words of encouragement, etc... would be most welcome - I may not be able to get back to this post until later on today, but I really would appreciate hearing from folks who have gone thru this process before. Maybe it's not as heavy as I seem to think it is.

#2 Tim the Beek

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Posted 05 June 2012 - 12:30 PM

The process sounds far more daunting than it is. :)

Couple/few filings to make. And some you'll probably need to do annually. You might want to find you a good accountant for a couple of years to talk you through stuff, guide you through paying estimated taxes, figure out whether you'll need to charge some sort of sales tax, etc.

You'll be fine. <3

#3 TEO

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Posted 05 June 2012 - 12:49 PM

The process sounds far more daunting than it is. :) Couple/few filings to make. And some you'll probably need to do annually. You might want to find you a good accountant for a couple of years to talk you through stuff, guide you through paying estimated taxes, figure out whether you'll need to charge some sort of sales tax, etc. You'll be fine. <3


This.

You can do this, no sweat!

#4 Mama Kel

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Posted 05 June 2012 - 01:02 PM

as with anything, one step at a time. It's totally doable <3 Good luck!! :)

#5 sums

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Posted 05 June 2012 - 01:02 PM

it's way less daunting than it seems! i have owned a few small businesses over the years. the FIRST thing you want to do is get yourself a good accountant because, even though there is initial cost, they can help you save money in the long run.

if your small business organization is anything like the one in my town, they are an incredible resource and will be able to help you a LOT. use them!

and good luck :)

#6 Dr. Lostreality

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Posted 05 June 2012 - 01:32 PM

Ooh I'm going to jump in on this thread too, my husband and I are thinking of starting up a festival vending/ETSY business making gem pendants (well he would make them) and selling the larger gems we find as is, from local gems that we can mine ourselves for dirt cheap here in North Carolina. We just had the idea last week and are saving up all the receipts on expenses paid so far...at what point do we register this as a real business? Can we write off expenses we have now when building up inventory, if we don't register the business and start selling that inventory until say, november or even next year or something? How do you even get started with this stuff? Once we are on esty, do we have to be registered as a business?

#7 sums

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Posted 05 June 2012 - 01:37 PM

it varies from state to state, i'm sure. here in oregon you just have to register your business name with the secretary of state. you can find a lot of this info online.

we have no state tax but you will have to have a re-sale/tax ID number, i'm sure.

save every scrap of paper associated with your business!! (2nd best advice next to "find a good accountant") ;)

#8 TEO

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Posted 05 June 2012 - 01:42 PM

Check your Secretary of State's website regarding registration requirements. Check your State's tax department website for other answers.

Note: remember to take an inventory valued at your cost on December 31 each year.

Of course the advice, "consult a good accountant" rings true. Much better/easier to get started correctly than do damage control down the line.

#9 Tim the Beek

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Posted 05 June 2012 - 01:51 PM

And in searching for a good accountant, I advise the following test...

Ask 'em what 2+2 equals.

If they answer, "whatever you want it to," hire 'em. :funny1:

#10 Dr. Lostreality

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Posted 05 June 2012 - 01:53 PM

what is an "inventory valued at your cost"? Like, a list of all the the stuff you haven't sold yet, and how much it cost to make them? In raw material costs? Do you take into account cost of labor if my husband is making our inventory from the raw materials?

#11 TEO

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Posted 05 June 2012 - 01:53 PM

Start at the bottom line and work backwards.

#12 TEO

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Posted 05 June 2012 - 01:54 PM

what is an "inventory valued at your cost"? Like, a list of all the the stuff you haven't sold yet, and how much it cost to make them? In raw material costs? Do you take into account cost of labor if my husband is making our inventory from the raw materials?


Raw materials no labor, unless you have him on the payroll. However in what you have described, yes material costs.

#13 Lostsailr

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Posted 05 June 2012 - 02:02 PM

There are ranges of businesses too. My wife started a consultant business, and contracted independently for school districts. As a sole propriator of her business, (which is not buying inventory and making sales...much more tax involvement there I'd think) she can just pay herself with all income and keep track of expenenses. those are used in self employment for income tax calculations. If you are selling individual works, that might work the same and no LLC is really needed. So that is the low end of starting up. Sounds like you have visions of making this into a bigger business, so more formal route might be better in the long run. Another sourse for business help is local colleges and universities. Often students need intern projects and can help set you up with accounting systems and the like. It seems that the amount you spend on YOUR business supports depends on how much $$ you think you will be generating.

We DO, however, have to look at insurance, as some families she serves could theoretically bring legal action aginst her (thoguh over 20 years history shows it unlikely). I'd agree that you are probably at minimal risk there.

good luck. :boardie: :bear: <3

#14 Lazy Lightning

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Posted 05 June 2012 - 09:05 PM

Thanks for all the information and votes of confidence! I will indeed be working with an accountant, and there is a small business consultancy that takes place right here in NoHo that I am going to book an appointment with to see how I should proceed with this.

Lostsailr, I definitely would prefer to start small. I was a freelancer in Toronto years and years ago and therefore had write-offs but didn't have to really run it as a business other than submitting taxes at the end of the year instead of on every paycheque, but I'm not clear on how things work down here... I definitely want to bridge the gap of what makes things the most easy/brings the best tax advantages. I don't really have a "product" as most artworks are delivered as digital files, altho I aim to start painting again this summer. Being able to simply pay myself and write off expenses would be ideal.

Thanks again for all the advice folks - I'll report back when I have met with the consultants.

#15 TEO

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Posted 05 June 2012 - 09:25 PM

You can go sole-proprietorship here and not necessarily have a separate set of books. If you start as sole-prop and it becomes prudent down the line you can incorporate at that point.

#16 Lazy Lightning

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Posted 05 June 2012 - 09:29 PM

Ah, that would be ideal.

It is a solely-owned business. I can't ever seen hiring anyone to help me with illustrations.

Can I still market under my business name? I'm guessing that payments would need to be made in my legal name since my bank account is in that name, but I could still use my business name for marketing.

#17 TEO

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Posted 05 June 2012 - 09:33 PM

Generally a business name other than the individual's name would need to be registered with the State as a trade-name, and yes payments would still be made under your legal name.

#18 Lazy Lightning

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Posted 05 June 2012 - 09:36 PM

Ah thanks!

It would be a good idea to register the name so that it can truly represent my work.

I think I really *can* do this! :)

#19 Tabbooma

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Posted 05 June 2012 - 10:02 PM

Piece of cake.. Tabbooma had his own business for years. Sure is nice being the boss ;)

#20 halfstar

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Posted 06 June 2012 - 01:11 AM

You'll want a business checking account. Run all of the business through that account. Don't mix your regular checking/income/expenses with your business. it makes things messy. In most states you will need a business license to get a business checking account. You get that from your state. I get mine from the department of revenue but it could be different where you are.

You can run it as a sole proprietorship if you want to. If you are starting small and won't have any employees you can do that. Then you just file a Schedule C on your tax return and pay taxes on any profits. All of those profits you can keep. Any profits you take out before the end of the year, set aside % in a money market or some other account and use that to pay taxes at the end of the year.

When you ge to the point that you can't keep up with the billling and everything else, it is probably time to hire an accountant and think about forming and LLC. Otherwise, if you keep good records whoever does your personal taxes at the end of the year should have no problem doing your Schedule C as well.

When you register your business to get your license, you can choose your business name then. It won't be copyrighted or anything, but you can have a license. It can be Your Name DBA Business name. Then you can open the business account in both names and any checks can be made out to either name.

Good luck.

#21 Eco

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Posted 06 June 2012 - 02:37 AM

I found a small business organization that I am going to apply to for a consultation since all of this is so new to me, hopefully they will be able to see me sooner rather than later b/c I'd like to get this rolling!


Good idea and spend some time on small business forums.....just make sure what is said applies to your state. Over the next several months you should get some real headaches from needing insurance policies, taxes, audits, workers comp stuff, needing a degree in accounting (hire a good one) and such.....but if you make it a year or the 10 year milestone you will have a giant smile :-)

#22 cdrhead

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Posted 06 June 2012 - 11:00 AM

Here in Ct....I registered for a state tax number as a DBA . It's real simple if you don't need to take credit cards....

#23 Lazy Lightning

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Posted 06 June 2012 - 11:56 AM

Thanks for all the input - the consultants are from the Massachusetts Small Business Development Center, so they are pros in the state laws and requirements - I am going to make them my resource for getting this thing rolling, and with all of your advice I have a good footing in what I need to ask about to make this happen.

Thanks again, everyone! :)

#24 Lazy Lightning

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Posted 06 June 2012 - 01:25 PM

So I got a consultation booked with the small business development people for July 25th. I'm going to prepare all of my questions ahead of that date so that I can get the most out of my meeting with them. I think the idea of running this as a real business with it's own bank account, etc... is starting to warm up to me - I'd like to make this as legit as possible and actually LEARN how to do this proper as it's own entity. I'm sure it will be a lot of work and a steep learning curve, but I am feel like it is something I can actually do now, unlike the past few days where I just felt nervous and defeated about the whole thing. Wish I didn't have to wait until the end of July for my meeting, but the way time has been passing, i am sure it'll be here quicker than I imagine!

Owards and upwards!

#25 nancykind

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Posted 06 June 2012 - 01:35 PM

the only thing worse than doing the red tape b.s. you have to go through is READING about the red tape b.s. you have to go through. :tongue1: you can do anything. :) :heart:

#26 Lazy Lightning

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Posted 06 June 2012 - 01:37 PM

:lol:

To be sure - all the reading I've done so far is what gave me the cold feet and made it all seem so daunting!!! :eek:

I'm going to make this happen, even if I just start out all small-peanuts! :mrgreen:

#27 CTMuleman

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Posted 06 June 2012 - 11:09 PM

What better than to have a small business consultation two days after Vibes. Your mind will be clear to absorb all the new info!

Good Luck Lola, You'll have no problem with all this.

If I'd only knew last weekend, we could have had a chat over a beer and band on the mountain side and both written off the weekend :lol:

#28 Lazy Lightning

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Posted 06 June 2012 - 11:37 PM

No doubt! I figured the timing was very auspicious!

And dang - I would have loved to have spoken with you about this... As it is, I can't complain about even one minute that was shared! :mrgreen:

#29 Lazy Lightning

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Posted 18 June 2012 - 06:38 PM

Today I had a good reminder of why it sucks to work for someone else... :fierce: Really, can we just allow non-issues to remain as non-issues? :rolleyes:

As much as I dig my gig, this was a good reminder to actually get my own things going on... Of course, then the only crap I'll have to take will be from my clients. :funny1: Sigh.

Will the circle be unbroken... :circle:

Blargh. This having to work for a living kinda sucks sometimes. :plain:

#30 KrisNYG

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Posted 18 June 2012 - 07:20 PM

You've got this! I've been registered as a dba/sole proprietor for my business for 14+ years now. It is a business checking acct but the name is "KrisNYG :lol: dba/ company name". Keep your business money separate from personal money as best you can. With a dba you do not need to have a "salary" you can pay yourself as you go/can afford to. Registering with the town was easy. I think it was about $20 to register the name. Out here the town requires you to fill out an inventory list every Oct/Nov so they can tax you on your equipment and supplies as well as having a depreciation value applied to items like computer, work tables, etc.. I'm not telling you to *lie* but as a dba you can claim a lot of those items are "personal" and keep them off the list yet still claim them your Fed return.

I own a custom frame shop/art gallery and run it out of my home which I own (hah, bank owns most of the building, I think I own a few windows and the staircase at this point). If you are having clients come to your home office I would STRONGLY advise looking into business insurance. Homeowners/renter's ins will put up a fight over business related accidents and suits (someone falls, etc.). It's usually pretty cheap (~$400-$500/yr, more if you own the property). I was told I had no need at this point to form a LLC as my product is not considered dangerous and I don't own enough crap to make it worthwhile from a legal standpoint. Perhaps CtMuleman or TEO can better explain that one to you.

After registering you'll most likely be required to pay sales tax out quarterly as in CT. Here are the instructions for Mass. https://wfb.dor.stat...ogin/Login.aspx Keep track of your sales and get copies of tax id numbers from clients if they are exempt ie; art galleries purchasing your artwork for resale. I highly recommend a good accountant for the duration that you own your business plus a couple years. There are a shit ton of deductions that you may miss (portion of rent, electric, car mileage, full internet bill, etc.) and it's nice to have someone else's signature on the return especially if you have to deal with the evil IRS. Save your receipts for everything business related (even wine can be written off sometimes, ya know for business meetings and swooning clients ;) ).

I use a paper ledger (yes, still) so I can keep track of expenses and income monthly. You'll probably want to step into the 1980's and do it on your computer but definitely do it. Nice to be able to look back to compare months from year to year.

That's all I've got right now, I'll add more if I think of anything helpful. It's really fairly easy so don't get freaked out, your accountant will be doing most of the paperwork for you. Keep it organized and you'll be all set. :) YAY YOU!!! :clapping:

#31 Lostsailr

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Posted 18 June 2012 - 07:49 PM

if you go "low and slow" in NY you have to submit estimatred tax every quarter to avoid any penalty, but that would probably require a substantial income from the business (sole proprieter). We found that doing taxes with software if estimates were not the same each quarter, they couldn't submit an efile.... so that was just a "let them figure our penalty (which was 0 becase we front loaded the payments and no income over summer). all this is just detail junk, but you seem to be on a good path toward getting things rolling. Good luck and don't the the (paperwork) bastards wear you down!

#32 TEO

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Posted 18 June 2012 - 09:59 PM

(((Lame software)))

#33 Lazy Lightning

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Posted 18 June 2012 - 10:09 PM

Wow, KrisNYG thanks so much, that is a wealth of information!!!

What is a DBA? I saw that on one of our members' cheques today, but have never heard of it before.

I am very much looking forward to getting this thing going!!! :jump:

#34 KrisNYG

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Posted 18 June 2012 - 10:13 PM

Wow, KrisNYG thanks so much, that is a wealth of information!!!

What is a DBA? I saw that on one of our members' cheques today, but have never heard of it before.

I am very much looking forward to getting this thing going!!! :jump:


No problemo, I almost wrote tl,dr after it. :lol:

DBA is short for "doing business as". Another legal term for sole proprietor. :)

#35 TEO

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Posted 18 June 2012 - 10:14 PM

DBA = Doing Business As a term used for trade-name when other than the sole-prop's name is used for the business name.

#36 KrisNYG

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Posted 18 June 2012 - 10:18 PM

Also, I believe you can have up to three employees (inc yourself) with a sole proprietor status. I could be wrong on that, especially for Mass. Check into that if you plan to do any hiring. :)

#37 TEO

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Posted 18 June 2012 - 10:21 PM

Note: other business entities can also have DBAs.

#38 CTMuleman

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Posted 18 June 2012 - 10:26 PM

Also, I believe you can have up to three employees (inc yourself) with a sole proprietor status. I could be wrong on that, especially for Mass. Check into that if you plan to do any hiring. :)


The number of employees you have does not affect your sole proprietor status.

#39 KrisNYG

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Posted 18 June 2012 - 10:28 PM

Thanks Steve, I don't know why I thought it could? hmmm

#40 TEO

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Posted 18 June 2012 - 10:30 PM

Either you are blonde, dismissed the info as not applicable, or your accountant is not as good as CTMuleman.

#41 KrisNYG

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Posted 18 June 2012 - 10:31 PM

:rotf:

#42 KrisNYG

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Posted 18 June 2012 - 10:32 PM

It's the home/office thing for my town that I got confused. :blush:

#43 TEO

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Posted 18 June 2012 - 10:34 PM

Yeah, I had to get a variance for my home office in order to meet with clients there.

#44 TEO

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Posted 18 June 2012 - 10:36 PM

:kiss:

#45 CTMuleman

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Posted 18 June 2012 - 10:37 PM

Either you are blonde, dismissed the info as not applicable, or your accountant is not as good as CTMuleman.


TEO FTW!

:lol:

#46 KrisNYG

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Posted 18 June 2012 - 10:38 PM

Shut it Steve! :lol:

#47 CTMuleman

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Posted 18 June 2012 - 10:41 PM

:kiss:

#48 TEO

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Posted 18 June 2012 - 10:49 PM

:rotf:

#49 Lazy Lightning

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Posted 18 June 2012 - 11:02 PM

:funny1:

Thanks for all the info and support folks. It feels good to look forward to all of this rather than being ascared of it. :)

#50 Tim the Beek

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Posted 18 June 2012 - 11:43 PM

I may be a little skittish, but if I were going to be hiring anyone to work for me, I would set things up as an LLC.

Yer gonna do just fine, Loller!