How do I start my own buisness?

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I have been in and out of jobs like a revolving door since I could remember (over 20 years). It has gotten to the point where I'm actually afraid of doing it again, because I know what is going to happen. The last few jobs really screwed my head up.

I have not found a job I am willing to do, however, in that time, I have been working for cash. Doing pritty good too. I could probably do this for the rest of my life, sustain myself, and be successful, however there is a hiccup. I am not insured, not bonded, not zoned, not registered, and I don't pay taxes.

I am quite sure that where I am doing the things I am doing are not entirely legal, even though no one seems to care. In fact, everyone around me so far wants me to do it, and doesn't see a problem. I have found a loophole in the system, that may get me what I want, but I may have to cheat a little just like every corporation I have ever heard of.

It is a small jump to be able to afford the right information for dealing with taxes, insurance, permits and stuff ($), and lets face it, with the exception of knowing the job, and knowing how to make cash, I really don't know what the heck I'm doing. This small buisness "game" I really know nothing about. I would like to overcome that, so I can be better at what I do than those people I have worked for that don't do my job. HELP!! ! .

If I do not figure out how to be legal, I just may keep doing what I am doing, and hope nothing bad happens. Please, wish me luck.

What is it that you are doing and where do you reside. That will be helpful in getting you the answers. If you are in the USA, I would suggest starting with your State's department of commerce.

My brother worked for himself for a period time and went 'legal', he had to pay SS taxes, and its double what is subtracted from working at a company. Then he had to get medical insurance and some other things. One of the advantages was I think it was called a Keogh account ?? A retirement account for the self-employed.

As I recall you pretty much have to get an accountant and maybe an attorney, I do not know how one limits themselves from lawsuits. I know one of the disadvantages to getting a PE (professional engineer) is that you can be held legally responsible in some fashion.

Okay, one thing about a CPA is that he or she DOES NOT have privileged immunity like a lawyer has, where a lawyer cannot be compelled to testify against a client. Okay, so one method might be to visit some tax attorneys in neighboring towns and just ask, what all would be involved in formally setting up a business?

Okay, so you're running a business under the table. So be it. Please do not be stampeded into panicking. If a state official catches you, don't lie, but then don't confess to anything or volunteer any information. The official is likely to catch only part of what you're doing. And he or she might be very sincere in wanting you to come clean and do it legally, but have no idea of the penalty involved. Just don't enter into the conversation at all. Be polite, but just very matter-of-fact and disengaged. Maybe a statement like, 'I'm going to need to talk with my attorney before I do anything,' and leave it at that.

Ideally, you could take the business legal from this point on into the future, and not worry about the past. That may or may not be fully possible.

And you are right, dealing with officialdom is a whole other set of skills, and besides a lawyer and then accountant, you may need to hire a part-time employee largely for that role.

And as long as you treat your customers honestly, you are a reputable business person. Please remember that. Yes, look into your options, but don't rush and don't panic.

I will look into that state commerce thing. Thank you.

Going to the department of commerce in my state online is alot like trying to read brail.

Try Googleling starting a small business and your state and see what you find. My state gives out, for free, a huge book on starting a business that is produced by State Department of Economic Development. The library may have a copy too.

Generally, the question about licenses and zoning is dependent on the business you are doing. Obviously CPAs and Lawyers need licenses and need separate offices because clients will be coming in and out. A computer programmer however could work out of their own home and generally do not need a license (some states such as Texas require a license if you call yourself a software engineer). That can be done out of your own home. The rule of thumb is a license is required if the job is in a state regulated field. You need an office if you have people coming in and out all of the time or the UPS delivery person and you get on a first name basis.

As for taxes, an easy way to deal with it in your situation is to set up a separate business checking account at your bank. All income from the business go into the account and all expenses come out of the account. What is left over should be profit (of course if you are buying equipment, that is depreciated). When you go to take money out of the account, set aside 25% - 50% depending on tax bracket and state of the money you take out and put that in a separate savings account or fill out estimated tax forms to deal with taxes.

As far and what you have done in the past, as long as someone did not file a 1099-MISC for you, the IRS probably does not know about your business or income and so you are probably safe. If you did get a 1099-MISC this year, make sure to file a schedule C and associated forms because the IRS does know about your income. I would review all the forms associated with Schedule C anyways so that I would be familiar with what expenses can be taken off of income.

Thank you. There is a site I have been scrolling through called sba.gov. it is pritty helpful. I have a relitive idea of what I need to do now. I do need general liability insurance, and a license. I need to go to the county courthouse and register myself for what I am doing. There is one guy who tried to 1099 me, but I never gave him enough information to do that. He wouldn't pay me cash so he doesn't use me anymore. If I go legal, he will.

The transition can often be tricky. I really encourage you to talk to an attorney first. And also maybe hiring a college student in a business major to help with some of these administrative tasks.

It's good that you're scoping out the terrain and getting the lay of the land, but please understand that a business being partially legal may be the worse of both worlds.

And actually, if you can get to the place in your own mind where both options are winners, where continuing with an informal, under the table business is a winner, and wher going the formal route is also a winner, that's a pretty good place to be.

All I can say is talk with people who have actually run a successful business...if even a small one. State resources are largely a joke because many people handing out the information have not actually made a living running a business.

It's like asking a librarian for a book on brain surgery rather than asking a neurosurgeon to teach you how to do brain surgery.

Yes. I know people with small buisnesses, most got advice, and cannot give me any direct answers. Most go overboard, pay out too much, and do more than they need to. I want to try not to do that. Im just going to do a little at a time until I get everything. I know I need insurance, because humans are stupid, and a licence to have a name. Possibly insurance to get the name, I don't know yet. Or even where I get a license. I have not found any info on what I am going to do, so I don't know if I can even do it yet either. I suppose now that I know this much, I need to see if what I want to do is legal, and how much it is going to cost for insurance. Apparently, that is all I need for now. I know an accountant who can help me too. I am going to be a contractor with nothing that will be taxable. So no unemployment insurance, ssi, or tax id numbers.

The problem is, unless we know what type of business you are doing, we cannot give you a direct answer. Some businesses require licenses, others require nothing or only a DBA name (Doing Business As). You probably do not need to incorporate or an LLC for something the size of what you are doing.

For insurance, again, we need to know what you are doing. Are you handling money in any way? If so, you probably need to be bonded. Most professional businesses also need to carry E&O (Errors & Omissions) insurance. If you have clients coming to your home or use your personal vehicle for business purposes, make sure those liability policies will cover you. Again, this is specific to the business.

For tax purposes, the rule of thumb is if you provide a service to another business and they pay you more than $600 in any tax year, they must issue you a 1099 and you must provide them information to do so. To not do this has serious consequences. In general, if you have a profitable business, you will pay income taxes (state and federal) and the employer and employee portion of FICA (called Self-Employment Taxes). The SE tax is 15.3% and the income taxes depend on your income. You can use your own SSN for this.

If you hire any employees however, you have to get a Employer Tax ID Number for the business. You cannot use your own SSN for those.

Finally, you have to decide on what accounting method you are going to use. There are 2:

Cash - This is where you count income when the cash is received and expenses when the cash is paid out. This is how most taxpayers do their accounting and works for businesses that do not have any inventory and provide only services.

Accrual - This is where you count income when it is earned and expenses when they are due. This is how most businesses do their accounting. The IRS requires that any business with inventory does their accounting this way and it really seems more natural than the cash system in my eyes.

A good free double-entry accounting program is GNUCash. I would suggest learning double entry accounting as that is what most businesses use and it works great in keeping track of expenses and income when it comes to tax time.

If you are looking to get legal, don't have butt it. Make sure you do it all of the way and as quickly as possible.

I just thought of something else. Sounds like you are in the USA. Try to find a SCORE Office nearby and ask for help. There are retired business executives and owners who volunteer for the SBA to help out new business owners. They might be more knowledgeable on the local issues surrounding what you want to do and how to become legal in your community.

Mobile handy man. For cash. Alone.

OK, this helps.

License - This is probably different depending on the city or county you live in. I am sure someone at the county building can help you with that. If you are not doing work that requires inspection by a code enforcer, you may not need a license. If you use a name such as "Joe's Handyman Service", you will probably need to file for a DBA name. Here, that is $25 to the state and then about $200 to publish in the local newspaper. The only time you do not need a DBA name is if you use your first and last name in the business name.

Insurance - You will definitely need a bond. The amount depends on city/county/state law and you will need to check into that. I do not think E&O insurance applies here because the bond would probably cover it. You will not need any changes in a homeowners policy because even if the official business address is your home, odds are, no client will ever visit your home. You will probably not have to worry about zoning laws too unless you plan to carry inventory. You may want to talk to your auto insurance policy company to see if you are covered businesswise. You may need to up your coverage but generally, liability is pretty cheap (I pay about $300 for 250k/500k liability insurance every 6 months on my auto).

Taxes - Here, my advice stays the same. The only thing is, I am sure you are buying stuff to install at various properties as it is needed. If you do, make sure to save those receipts as that is considered cost of goods sold and comes off your income. In general, I would get a separate business account with a debit card. All income (regardless of whether it is cash or check) goes into that account and all expenses comes out of that account. Also, get a log to keep track of vehicle expenses. Driving from home to 1st site and from last site to home is considered a personal expense but every other drive during the date (site 1 to site 2 for example) is considered a business expense and can be deducted from income. Also log stuff like cell phone usage because then you can take a % off those bills too. Note that any tools your business purchases is a capital asset where a % is depreciated each year rather than an expense. Keep those receipts and keep track of that too.

Also, keep extra copies of W9's handy. When you do more than $600 worth of work and the organization asks for one, simply fill it out and hand it to them. That should be enough information for them to issue you a 1099-MISC. The IRS will probably audit you once you become legal because your line of business is an easy one to hide income. In fact, it might be worth it in your case to hire an enrolled agent who can represent you to the IRS if you will have issues with that.

As for which accounting method to use, I would suggest cash since you are not carrying any inventory. Accrural does seem natural for business but it probably will confuse you. Still have a good accounting program that can come up with reports. Along with receipts, that will make things quick and easy for your tax person to complete your returns.

Thank you!! ! I am already confused, but that is to be expected. I am going to figure out where this county building is. Don't know if it is the courthouse or what, or what office in the building i go to? I will ask my insurance company 20 questions as well. Do not know what a DBA is either? I have an accountant.