small/home business owners, your advice is needed

I am thinking of starting up a business.

I mainly make buttons for rock bands to sell and I am thinking of expanding into novelties.

I have the idea, the website, the supplier, etc.

the advice I need is about tax type stuff.
What do I need to know?
How do I get a tax number? Do I collect taxes from people?

I have been putting all the money I have made into a savings account and not spending any of it. This way if I need to pay taxes on it, I am ok. I am also saving all my receipts for any purchases made for my business.

Please give me advice on stuff you think I need to know.

Thanks in advance!

Barbara Brabec has a couple of good books for beginning home businesspeople. Handmade Money is supposed to be good. Although she focuses on hand-craft businesses, this book is supposed to have a ton of good general information for home businsess people. I think she answers a lot of the tax stuff.

I’ve always found the Small Business Association SBA
to be very helpful in questions like yours.

You won’t be able to get a federal tax id# unless you have employees, but there are a myriad of tax issues (income, state sales, county sales) that either the SBA or your state & county Treasurers can answer. Look in the blue pages of your phone book for state/county Treasury numbers & just give them a call.

Ditto on the Brabec books for lots of small business issues & answers.

I third the Brabec books. The one I used is “Creative Cash” and it was hands down the best small-business book I read. She has a website which I believe is

For the basic tax info: Small-Time Operator by a gentleman whose name eludes me. Your library should have it though. It’s updated yearly so our library had around 10 copies. It might help to run to the library (before they put them all away!) and pick up some of the business tax forms so you can see what sort of info you’ll need to keep track of. (You’ll need a schedule C for sure, and one other that I forget.)

A great reason to become a legitimate business is that you get to write off a whole bunch of stuff as expenses, and if you buy stuff for resale, you don’t pay sales tax on it. (Or if you do, you can reclaim it at the end of the year.) A lot of suppliers sell to businesses only, so you’re sure to find some better deals than you might be paying now.

I second Small Time Operator by Bernard Kamoroff. Lots of good information on staring your business off on the right foot. Forget about the library, you’ll refer to it time and again, it should be on your bookshelf. Less than 15.00.

I’ve had several businesses and have had a federal taxpayer ID with and without employees.

You might need to check local zoning restrictions. And whether or not you’re required to have a license.

If you sell in Texas, you’ll need to setup a sales tax account with the Comptroller.

And don’t forget that you likely (I’m not in Tarrant County, so I don’t know for sure) need to file a business personal property rendition with the local property tax appraisal district.

It may well be worth it to find a CPA and get your books setup right from the start. If it’s a relatively simple business, you can do the bookkeeping and let the CPA check it all once a year when you file your annual tax returns. He can also advise you as to what interim tax forms you may need to file. And, if you have a relationship with a CPA, you can always call when you have a question. You can also get some guidance about what business form to take (sole proprietor, some form of corporation, etc).

If you’re going to be a sole proprietorship, at the least file a DBA with Tarrant County.

And you’ll want to consider insurance - a commercial insurance broker can tell you what’s involved.

A couple more thoughts. Above I’ve mentioned a CPA and an insurance broker; you might want to seek some counsel as to business form from an attorney - especially if you incorporate or have any partners or investors. And you’ll at least want to know who you’re going to call should the need for an attorney arise.

It occurs to me as I look at the above that my long time attorney, who has served as such for more than one business, is my best friend from childhood, the insurance broker who protected two corporations for many years was a high school buddy’s younger brother whom I hired, for that reason alone, to work for me when I was just out of college - we’ve long since become friends - and my CPA, who is still my personal CPA, I inherited from a friend.

My point is that the personal relationships I’ve enoyed with those three professionals definitely greased the skids several times over the years. So, don’t just plop open a phone book and pick a CPA whose name you think you can pronounce. Work your friends and acquaintance for contacts and recommendations first.

And last, but hardly least, you need a business plan. It doesn’t have to be a formal document that will withstand some kind of 3rd party’s scrutiny. It’s for you. It can be quite brief. But you need to go into this knowing exactly what you are trying to do, an approximation of what you think you can do, and the costs involved. If you’re more given to brevity than I, I suppose you could do it in three sentences (or one long one).

Well, OK, that was second to last. Another thought. I get the impression you’re contemplating a sole proprietorship wherein you make and sell, and possibly resell, novelties. A serious marketing effort may well require resources to generate sales that go beyond what you’ve experienced as yet. Not that it’s necessarily right for you, I’ll note that I took on as a full partner a dedicated marketer in one effort, and we wound up with additional marketing staff - it was worth it.

Anyway, bloviation attack is over now.

Good luck, Bad News Baboon!

I think one primary point of a business plan is that if you have an idea of what you’re expecting, it gives you a warning if the business is in fact failing.

Certain threshholds need to be met by certain times.

If the redline is reached, then it’s time to either bail or refashion the business plan.

thanks so much guys!

I really appreciate it!

the books are on order as we speak.

Ringo, I especially appreciate your advice. that was what I was looking for.

This business I have planned is really just for fun and its sole employee is me.

I don’t expect it to be a huge business. I enjoy sellling the stuff and if all it brings in is ‘fun cash’ then thats cool. I don’t have any intentions on quiting my day job. If I make about 20 a week, that’s fine.

That said, I want to set it up right from the get go. One never knows when one strikes gold, right? I don’t want problems to crop up that could have been avoided to begin with.

my nightmare:
I just dont want the horrid tax man to come and collect my first born in lieu of not having a tax number! :wink:
I think what I need is a rich person who wants to start a business but has no idea what to sell. THAT would be an ideal partner!

Good thinking. Another plus is that the whole process can be quite educational. While you’re setting up Quick Books or some such as per the CPA’s instructions, and getting your tax accounts right, you’ll learn a lot about how business works. It can be quite fascinating and it’s nice to understand what some Yahoo stock message board pundit is talking about when he screams that such and such company is capitalizing expenses, anon, anon,…