GETTING TAX ID STARTING UP YOUR BUSINESS

Tax ID Information

Disclaimer: I am not an accountant or attorney. This is not intended to take the place of professional advice. I'm sharing with you general information based on my knowledge. Be sure to consult an attorney or accountant when setting up a business.

GETTING TAX ID / SETTING UP YOUR BUSINESS

When setting up your business you have several options as to how you want to be structured.

The two forms of business that I have used are: Sole Proprietorship and Limited Liability Company

Sole Proprietorship: To set up a sole proprietorship, all you need to do is go down to you local county clerks office. (Often located in the court house) Go to an information desk and tell them you need to register your business. They should be able to tell you what department to go to. Then go to that department and tell them you want to set up a business. They should be able to quickly and easily provide you the necessary paperwork. The paperwork should be quick, simple and cheap.

Although prices and proceedures vary, it's usually just a one-page form that asks for your name and address and what you want to name your business. (Have a name already picked out before you go in - don't hold up the line while you are thinking about your business name! You will also want to ask them to check and see if your business name is already in use by someone else. You may want to call ahead of time and check this out - just in case the name is already taken. That way, you can think of another name and avoid any problems ahead of time.) The last time I registered a Sole Proprietorship it only cost around $20. So no big deal. When you leave the building, you will be officially "in business." Congratulations! That wasn't so bad now was it? If someone wants to see your "proof of business" you can simply fax them a copy of your paperwork. Also, when I set up my business, they asked if I wanted to use my Social Security number as my tax id. So that's what I did.

The pros of a Sole Proprietorship: It's quick, easy and cheap to set up. You can usually use your social security number as your "tax Id" number. (consult your accountant)

Here is how my company is currently structured:

Limited Liability Company: The Limited Liability company is easy to set up. It can be a bit more expensive. I've set up two of them and each time it cost me around $60 to get it set up. Still very cheap. You may or may not be able to use your Social Security number as your tax id number - ask your accountant.

In the LLC, your personal assets are considered separate from the your companies assets and therefore, if anything bad happens to your business the same thing doesn't necessarily happen to your personal bank account! In the event of a lawsuit, the LLC basically helps to provide some legal separation from what is Your Personal stuff, and what is your Business Stuff. Don't let this talk about lawsuits scare you. You may never have to deal with one at all. It's just a reality of the world we live in and if it ever happened, it's nice to know your personal assets may have additional protection with the LLC. This is the form that I currently use for my business.

Setting up an LLC is easy. Go to your state goverment's website. Just go online and type in: www.YOURSTATE.gov and it should pull it up. For example, if you live in Texas then go to: www.texas.gov Then type in "Limited Liability Company" in the search box they provide. Usually you just fill out a simple form or two and fax or mail it in. That's it! (you will also want to call and check to make sure the business name you want to use is not already registered by someone else.) In my state, I was able to electronically submit the forms online in about 15 minutes. I got my "proof of business" paperwork in the mail the next day! Wow, how easy was that! For me, it was as easy as ordering a pizza. No joke. That's why when I see people shy away from setting up a business, it makes me laugh.

There should be a number on your state government website you can call if you have questions or are not sure which form to submit. Don't be afraid to call, they are there to help. Your tax dollars employ them...ask if your not sure!

Other forms of business you could consider: Corporation (not covered here)

Sales Tax Permit


One more thing. If you are retailing products, you will want to inquire about a sales tax permit from your state.

Relax, you can do this from the comfort of your computer too! Go to www.yourstate.gov (put in your state)

Find their phone number and call them. Tell them you have a new business and you need a sales tax permit. They will issue you a number and mail you a certificate if appropriate. It's pretty much that easy. 'Nuff said.

Setting Up Your Accounts With The Wholesalers


Some sources may want you to fax them proof of business, tax id or "resale certificate" in order to set up your account. You can usually just fax them your "paperwork" from your LLC or Sole Proprietorship. You can also send them a copy of your "sales tax permit" or "resale certificate" if you have one. Don't let all the "permit's" "tax id's" and "proof of business" stuff confuse you. All the wholesaler wants to know is "are you really a legit business?" If you can show them your business paperwork or sales tax permit, then that's all it takes. "Proof of business" is called all kinds of different things. If you think they are asking for something you don't have just tell them: Look, my Company is Called "The Name of Your Company" I am a registered business. Then just fax them what you have, it should work like a charm.