In almost every form of business you need to adhere to some guidelines, rules and regulations from the government as well as the community. Here is a checklist that you should look into to ensure that you and your business are in compliance. Do not make the mistake of thinking that your kind of business setup is exempt whether it is large or on a small scale.
It is best to consult a business accountant or a business attorney for a sounder knowledge of the rules your business setup needs to follow. These professionals can also get it all done for you. The possible exception to some of these requirements could be if you are selling online. But even then you might be subject to regulations like sales tax etc.
Some states require a business to function only after it has received a licence from the respective state or county authority. There are other states that might not require you to get a licence for your kind of a business. A business license can be procured for a small that will probably be renewable every year. The amount that you have to pay will also likely be dependent on your business revenue. You are often required to keep your business license mounted in plain view at the sight of your business.
Just like a business license you may need zoning permission. Small craft industry is subject to some exemptions in many places. Even if not, if your business activity is not something that is likely to disturb the neighbourhood with noise, additional traffic et cetera you should not have a problem getting the zoning permission for working from your home.
Doing Business As, aka ‘DBA’
Some crafters start a business with a fiction name that is not the legal or personal name. You will need to file a ‘doing business as’ with your county office. You will also need to run an advertisement in the local newspaper for your DBA business and provide a copy to the County office. Running an ad of this kind is not a problem or expensive. Some of the local newspapers keep in touch with the county office and will offer you this service once you have applied for the permission. They might also offer to send a copy of your advertisement to the county office on your behalf, saving you the time and trouble.
Certificate of resale
Also known as sales permit, you will need this certification if you are operating from a state that charges sales tax. You will need to collect this amount from every sale generated in your state.
Sales that generate outside your estate will not have to pay this tax. You will need to find out which agency is responsible for collecting the sales tax in your state and visit their local office.
Depending on the amount of sales tax collected, you might have to deposit sales tax monthly, quarterly or on any yearly basis. Some kind of items may be exempt from sales tax altogether. Check with your qualified business accountant or an attorney.
Wholesale sales and purchases are also exempt from sales tax as long as you can provide your resale certificate number for the purchases you make. Similarly a buyer who buys will not have to pay you sales tax if he can provide his resale certificate number.
Federal Tax ID
Federal tax ID is only required if your company is a partnership or a corporation, or if you have employees working for you. Otherwise your Social Security number is sufficient for the purpose of filing taxes.
A trademark is any kind of protected identity of your business. It can be your business name, product name, product design and a business logo. Intellectual property, store design and website design can also be your trademark. Getting a trademark registered is an important step. Start with the business name. This ensures that no one else can start doing business under the same name. Remember, your business name and logo does not legally belong to you unless you have had it formally registered.
You can do a trademark search yourself or hand the matter over to a professional. Business accountant or a business attorney in a trademark firm can execute the entire process for you from searching to filing.
In many places you can do the entire process yourself online as well. You can register your trademark on state and national level. The trademark approval can take a few months to more than an year.
Home, business and health insurance
When you are doing business in your home you should ensure that the business is insured along with your home. Your insurance company will be willing to either added add it as a rider on your existing home insurance or take out a new insurance for the business. The business insurance protects your business assets. If you have customers coming to you might also want to extend personal liability in the plan.
Health insurance is should be a necessity for everyone. If you are not working for an employer who provides health insurance benefits, you have to get your own health insurance. Do it for a safe future for yourself and your family.
If you intend to make your craft business a source of full-time income it makes sense to have your health and personal insurance covered.
Health and personal insurance become even more important if you are working with machinery or tools, and engaging in activities that have the potential of causing you harm.
Product liability insurance
This kind of insurance is uncommon and depends on the craft you are making. It is to protect you from lawsuits resulting by customers resulting from harm caused to them by the product.
Separate phone line
You cannot legally print your home phone number as a business contact number. Therefore you will have to install a separate phone line if you have the need for it. It’s a good idea to have a mobile phone that you use for your business so that you are more easily available during business hours. However, the advantage of having a separate phone for your business is that you can always man in a professional manner. This creates a good impression on the buyers when they call as well as for all other business enquires that come through.
Business bank accounts
Personal accounts are not allowed to be used for the business. You should open a current business account and savings business account. The business account should have all the transactions related to your business. The business savings account can be used for depositing a part of your profits and sales tax amount.
The savings that you put in your business savings account will allow you to purchase additional supplies and equipment as you need it in the future. This will help you avoid running up credit.
The sales tax that you put away in the business savings account will ensure that when time comes for filing the taxes you have the money ready and has not been use up for other business expenses. Contact your existing bank or another convenient and reputable banking institution. See which one offers you the most services at the best charges and rates.
Consult with a tax accountant or attorney. There may be additional conditions and exemptions for filing taxes for your kind of business. They will be the best people to advise you under which category you ought to report your business.