Maybe you’ve been downsized, or just out of college, and like many in these tough economic times decided to start your own business. Operating out of your home is often a good option (Steve Jobs started Apple in his parents’ garage) until your business grows sufficiently to justify the cost of relocating. So what steps do you need to take to get your home business up and running?
Initially, you need to decide the legal form under which you’ll operate your business. The simplest way to conduct a business is as a sole proprietor. You’ll open banks accounts and sign agreements under your own name. If you will be doing business under a name other than your own, you will need to file a DBA (“Doing Business As”) Certificate with the county clerk.
The drawback of operating as a sole proprietor is that you expose your personal assets, such as your home and bank accounts to your business creditors and lawsuits resulting from your business operations. To shield your personal assets from such claims, you can form and operate as a corporation or limited liability company. Your corporation or limited liability company will need an Employer Identification Number that you obtain from the IRS. You’ll need an Employer Identification Number to open business bank accounts, file tax returns and to obtain various permits.
Whether you operate as a sole proprietor, corporation or limited liability company, if you will be selling goods or providing services subject to New York State sales tax, you will have to obtain a Certificate of Authority from the New York State Department of Taxation.
Depending on your business, you will need to explore with your insurance broker what type of insurance is suitable and/or necessary. If you will have employees, you need to comply with the worker’s compensation laws and unemployment laws.
Lastly, depending on your business, you may need to obtain various permits from applicable New York State and local agencies. Good starting points are New York State’s Online Permit Assistance and Licensing website and New York City’s Business Express website.
The above may seem daunting, but your attorney and other professionals can guide you on your path to an exciting new career as a business owner.