Business Set Up Part 2 - Basic Necessities

Whether you sell online or in bulk, once people begin buying your products, you are a business and there are some basic necessities you will need to consider. Firstly bear in mind, a company must make a profit for 3 out of 5 years or it will be considered a hobby. I will not, in any way, call myself an expert here and you will need to research further but below are some points to consider:

Business License – you are often required to keep your business license mounted on the wall at your place of business.

Zoning – you may need to verify that you are allowed to run a business from the location you choose.

Fictitious Business Name – if you run a business under a name that is not your legal name, you will need to file a fictitious business name (FBN), also known as a DBA (doing business as).

Sellers Permit – if the goods you sell are taxable then you will need a sellers permit.

Federal Tax ID – if you have employees then you will need to have a Tax ID number. If you are the sole proprietor then you would fill out a self assessment form instead every year.

Trademarks – a trademark is a word, phrase, symbol or picture that distinguishes your goods from another company’s. Getting a trademark is a protective measure to prevent someone else opening a company or selling a product with the same name.

House insurance – if you are running your business from your home you need to make sure you have enough insurance to cover your tools, equipment, materials and products.

Health insurance – sometimes joining an artists’ guild or association can provide discount rates.

Product liability insurance – this covers you if someone suffers an injury from your product and decided to sue you. Items that may be affected include candles (fire) and bath and body products (skin irritants).

Phone line – it is illegal to have your home phone line as your business line so you will either need a mobile phone or another land line.

Business bank account – it is far better to use a separate bank account so that you can keep track of expenses and keep the income separate. It might also be a good idea to open a separate savings account to set aside money for the tax bill.

Friday, 10 July 2009 | 2 Comments

2 comments:

Anonymous said...

Hi

are these UK rules? I don't recognise a lot of them. E.g. the UK tax office certainly never said anything about home phone lines being illegal.

It's also quite straight forward to use your personal bank account (if you keep good records) and in fact banks will charge fees on business accounts.

Never heard anything about a business licence in the UK either

Cheers

Butterfly-Crafts said...

Hi - thanks for the comment. These are a mixture of UK and USA. No, in the UK using your personal phone is not illegal. As for the bank, I do not have a business account because as you say there are too many fees, but I do have a separate personal current account which keeps money separate.

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