Starting a business is a pretty daunting task. It comes with many fears, questions, and concerns. Chief among them should be how to legally set up your business. If you are good to go, come back later this week! If you are new and trying to wrap you head around state tax, federal tax, FEIN, bank accounts, etc… read on! Also this is County and State specific. Some things are specific to your particular state, others are more universal, and others are county specific. Try not to be intimidated by your City Hall or Courthouse. People may not be in the best mood, but they will answer your questions. Its their job! Also, all of these steps are just filling out info, its not a test.
*Disclaimer: I am not a legal or business expert, always defer to what your business professionals have advised.*
1. Decide how you want your business set up.
There are multiple options. Sole Prop, LLC, Corporation… Do research on each of these options and make the best decision for you and your family. Ask opinions of those you trust. Dont just do what youve heard other people do. You dont know their personal situations and you could really mess yourself if you dont make the best decision for you.
2. Get a Federal EIN
Next thing to do is get an FEIN. You can do this online and its very simple. Answer the questions to the best of your ability, and at the end you have a number. Little tip, only do this with a computer that is connected to a printer because you will need to print the final sheet and keep it for your records. They will not issue an email for you to print and you cannot log back on to print it.
3. Register your business name with the Circuit Court
If your business is Sole Prop. and your business name is literally JUST your name, this is not necessary. But, more often than not, this is not the case. Go to Google and type in “how to register business name in xxxx” and see where to do this in your area.
4. Get your Business Zoned
This might be Richmond specific, but because my business address is my home address, I have to get a permit to do so.
5. Get your Business License
Again, type into Google “business license requirements for xxxxxx” and find out what is required. Most of the time, its what I just listed above. If you have been in business for a bit, they might require that financial information. If these are the very first things you do, there is no financial information to give.
6. Set up a Business Checking Account
Now that you have everything listed above it should be easy peasy to get the business account set up. You can try to get a “business” savings account but they normally have lots of requirements like big average deposit amounts and big transactions. You can always get a personal savings account and use that as your business savings account, but always ask your CPA if this is acceptable with the way your business is set up.
7. Apply to start paying your State Sales Tax
Every month I log onto the tax website, enter in my sales for the month and what I owe is automatically deducted. Again, you might need to Google this for your area. You will enter in some information, and then you will get monthly emails reminding you to pay. This is a pretty easy step! Try not to get hung up on being taxed on what you sell and your services. This is VA law for photographers. If you want to start lobbying for a change, go for it! You might win, but otherwise just make peace with it.
8. Decide how you want to pay Federal Taxes
You have 2 options. Pay quarterly, or pay when you file Income Taxes. I pay quarterly. If you also decide to do this, know that you will not get a receipt from the Fed and also know that if you need to skip a payment, its okay. Paying quarterly is voluntary and therefore no one is going to come after you if you miss a quater or two. They will come after you if you dont pay your yearly Income Tax, so be prepared for that in April.
Phew! Lots of information!! Again, dont be intimidated. None of this has to be completed in 2 days. You can take your time somewhat. Just be sure to keep track of what you are taking in so that you can have a free conscious when you do start to make payments. There is a lot of good information if you search for it on Google. Truly! The good news? Thousands of people have done it, and so can you. Dont be afraid to ask for help, but also understand that you have the ability to figure things out if you do some work. Most photographers are willing to help as long as you have tried your best to figure it out yourself! Dont expect a free hand out, work hard for what you want.