Starting up a business differs slightly by state. I have started up 3 businesses here in Arizona, and depending on what city the business resides in will determine whether you need a business license to operate and what tax rate you should collect.
Start out by going to your local state/city government website and checking out their business resources. Usually you can find all the forms you need to get things going.
Here are some basics to starting up a company:
- Determine if you want to be sole proprietor, partnership, or corporation (LLC, INC or SCorp). This is important because if you start with one and decide to change to another it can be a little tricky
- Apply for an EIN (employer id number) - required for tax filing and collection purposes, as well as if you have people on payroll. I know in AZ you can apply for one online and get it immediately. You'll need this to identify your business on everything you do.
- Determine if you are required to obtain a business license for your city, and if so, get one
- Obtain a tax resale certificate. You are required to collect tax for all sales transacted in your state. If you're a brick and mortar shop, you collect tax from everyone. If you're an etailer, you only need to collect city/state tax from customers who are located in a state that you have a physical business location in. You'll need to sendin monthly tax payments to your city/state based on sales, even if you lost money that month or made $0.
- Pick a trade name and file for a trade name certification so nobody can legally steal your name (or so you can know that you're not using someone else's business name)
These are just some of the basics. I suggest consulting with a business attorney if you are serious. They can take a look at your desired business model and goals and point you in the right direction to keep everything legal, and also set up in a way that protects your personal liability.
It sounds like a lot to conquer, but actually it all can be set up in just a couple of days if you aren't incorporating. Incorporation (LLC, INC, S-corp) take a little setup time, but only a few weeks. I started up 2 sole proprietorships in literally one day with a trip downtown to get all of my licenses and necessary docs. Startup was less than $100, but again that's here in Arizona. Each state with differ.
How you operate it and become successful depends on your skills and dedication. It's rewarding work, so you'll find yourself putting twice as much time into it as you would for a "regular" job, so prepare to be busy. Here are some tips I found to be successful and profitable:
- Keep deadly accurate books. Consider using a part time bookkeeper to make sure you are doing it right and staying on top of expenses, taxes, etc.
- Keep ALL of your receipts, regardless. Everything has its expenses, and those are write-offs.
- Partnerships with friends/family can be disastrous. Don't choose a business partner out of emotion, but base it on skillsets that each of you have. Be careful who you go into business with, and put all duties in writing for accountability reasons in case your partner flakes out. Draft up a buy-out plan so if one of you wants out, the other one can have the opportunity to buy you out and you get out of the liability.
- Keep personal and business money SEPARATE. Using your own personal funds to start up is ok, but PAY YOURSELF BACK out of the business funds as soon as financially possible. Set up a separate business account.
- If you use an investor to start up, make sure the amount is reasonable to pay back in the shortest time possible. I recommend paying back an investor with interest, not a percentage of the business. It's easy to start dishing out percentages of your profits to those who helped you start up, but before you know it you'll have only a small share left for yourself
- Set money aside to constantly be improving the business with. Think ahead, plan big. R&D, investment in new equipment, getting better computers, etc. Always be moving forward, not catching up.
Hope this helps.