Do I need a business license?

Factual Questions
1

I live in Virginia and some friends have asked me to write some blog posts for their small businesses and look over their social media strategies. They will be paying me, but it’s only like $60/month and there are only two people I’m doing this for (at least so far).

So I’m wondering, do I need a business license? If so, how much does one cost and how should I classify myself?

I also have a website but do not currently advertise my services on it or list any pricing. If I decide to in the future, does that change anything in terms of taxes/how I classify myself legally?

Thanks in advance!

2

You must be in high school.

60$/month is severely underpaid for what you’re talking about.

8 hours of work = 7.50/hr.
9 hours of work = 6.67/hr

Federal minimum wage is 7.25$/hr.

Do you really think you’re only going to spend 4 hours per person per month doing this? Even if it’s a learning experience you’re way under charging.

I have no experience managing social media for businesses or blog writing, but I would think that at minimum, i’d be working an hour per day checking up on that stuff, not including the blog writing. Realistically, social media needs to be checked more than that since stuff can get of hand very very quickly (probably more of a concern for larger organizations).

That all said, a business license cost will change depending on your state, and possibly your county.

These guys say 75$ roughly in California.

Assuming the economy/standard is the lowest you can get away with, these guys say it’s $89 in california for the state fee.

3

I would say no. My wife was a professional translator. When she went free-lance, she started making around $30,000 a year. She got a licence to collect sales taxes and did. She did this for nearly 20 years and never got a business licence. The town we live in also bans businesses from home, but since no one ever came to our door (for the first few years she received her work and sent back her translations back by a courier service, but that was a couple times a week) the town never knew and had no reason to object.

What you are describing is not a real business and I see no reason to ask for a business license.

4

Virginia does not require a business license for what you are planning on doing, however it’s possible (but unlikely) your city/county may require one. I definitely wouldn’t even bother checking with your county’s Department of Finance for the amount of money we’re talking, but you could if you were paranoid.

Advertising your services will not change anything in terms of taxes or classification. You are operating as a sole proprietor which is perfectly fine for what you are doing.

The only thing I’d suggest is keep meticulous records of the money you take in and most importantly any expenses that are even remotely connected to the “business”. Save receipts for all computer goodies, printer paper, etc, even if you don’t think it’s related right now. You can sort all that out come tax time, assuming you make enough to worry about that – but once the information it’s gone, it’s gone. So keep track of it now. At $60/mo x2 you shouldn’t have to worry about taxes this year since it’s already October.

Good luck with your business, and if you have any other questions don’t hesitate to ask.

Don’t let anyone tell you you’re wasting your time with small dollar amounts. McDonald’s doesn’t make all their money by selling one gigantic million dollar hamburger! Find a way to make $60/mo, do that 100 times, and you’ve got a decent monthly income.

5

Thanks for your replies, everyone.

Harmonix - I have a master’s degree. I actually have a full time job in addition to this, I’m just helping someone out who needs 3 hours a month of help with her blog posts and website. Someone else came along and wanted me to do it for them, too. I’m just thinking of this as a weekend job for a few people.

Also, if I’m sending invoices to people for tax purposes, do I need to send them anything come tax time?

Thanks!

6

No, you do not need to send them anything. They are supposed to send you a 1099 at the end of the year if the amount they’ve paid you is over $600 that year. If they don’t, no big deal to you at least. (Certainly do not ask for one! ;))

7

I have my own small pet sitting business. I don’t need a license, there is no pet sitter license in my state.
I doubt there is any kind of blogger/website owner license.
AFAIK licenses are for businesses that affect health and safety, or require a certain level of skill or certification to practice. Barbers, carry-outs, plumbers, therapists, kennels, roofers, caterers, etc

I use my own SSN, you can get a Federal EIN but you don’t have to.

I didn’t have to register my business, but I did register with the state, that way my company name was mine and no other pet sitter in my state could use it. I stopped renewing it a few years ago because I am slowly letting it fade away.
I got a coupon book from the state each year for me to send in my employees’ state tax withholding each quarter but since I had no employees I didn’t have anything to send. Every quarter I’d get a threatening letter from them warning of the 10% penalty on late payments but since 10% of 0 is 0, I ignored them, until they called me and marked my account that I had no employees. There was something about workman’s comp as well but since I have no employees I don’t have to carry that either.

If you ever get big enough that you need to hire help, that is when things get complicated. You have to decide if you want employees or independent contractors, and you have to be really careful with that distinction. The IRS gets a little pissy if you treat your contractors like employees.

When I lived in a different county I had a different home based business and that county required home based businesses to be registered. Mostly all they were concerned with was how many people would be coming to my home and how my business would affect traffic and parking. There were a few questions about how much of my house would be dedicated to the business and how much product I would be storing on the property. I think they wanted to do a home inspection, but then decided it wasn’t worth coming out. All I was using was a phone and a file cabinet.
Really, I think all they are concerned with is how your business is going to affect the neighborhood. I know people who run tupperware or avon businesses out of their homes and even with the weekly deliveries they never have any problems. The woman who ran an escort business did, too many people coming and going at all hours. If you are not doing anything to disturb the neighbors, nobody is going to know what is going on.

If your friends’ blogs/websites are their business they may want to deduct what they pay you as a business expense, in which case they will want to give you a 1099. If they don’t offer then don’t ask.

If you want to keep this money separate, when you open a new checking account don’t go for a business account, they charge you for everything. Get one in your name with DBA (doing business as) your business name. Banks won’t let you deposit checks made out to a business name into your personal account, but unless or until you get big just have people make the checks out to you.

If you are dealing with friends I wouldn’t worry about it, but if you get to where you are dealing with ‘clients’ you may want to look into some type of liability insurance in the event you cause a site to crash or something. I don’t know enough about what you are doing if that is even something to worry about though.

I have never used any kind of contract, some pet sitters do, but a lawyer client told me keep it simple. If you get bigger that is something else to think about.

If I were you, I’d just keep my mouth shut and do what you do unless or until you have so much work that you want to make it a business. Keep it as simple as possible for now. Good luck and have fun!

Oh, and I forget what the IRS rules are, but you have to show a profit I think in the first 3 years and so many years out of the first 7? years. If not, your business becomes a hobby and you lose all your business deductions for some of the past years.
I never had to worry about that part, but I had friends who bred horses who did.

8

Sahirnee, many states, counties and cities have a business license that is required to do any kind of business, and they have separate health or professional licenses. In Washington state, a state business license is required for anyone who collects even $0.01 of sales tax, or anyone who does more than $12,000 a year in non-taxable services. In the City of Seattle, a city business license is required if you so much as have coffee with a potential client within the city limits.

The only answer to the OP’s question is to call the IRS, then your state, then your county, then your city. Don’t expect that any of these four have any idea about what the others require.

9

Interesting.

I thought MD was bad about rules and regulations!

10

I didn’t say it was a waste of time. I said s/he was potentially under charging.

However, s/he has now stated that it’s 3 hours of work. Which seems much more reasonable now. When I read

I read it as managing their social media strategies. Which would involve continual monitoring. This does not appear to be the case.

So, basically, I was wrong.