STARTING A BUSINESS IN THE USA

It is relatively easy to start a new business in the USA. If you have a valuable skill, if you can perform a helpful service or if you can produce some useful product, you can create your own business. Simply hang a sign in your front yard and begin to sell your products or services. It can be that easy!

Naturally, most new business ventures are a bit more complex. They might be subject to a few rules and restrictions. We will attempt to explain some of the common steps involved in creating a new business venture in the USA. We will point out a few of the restrictions that may apply.

Business licenses and permits

You are required to obtain a state license before you can offer your services in certain professions such as doctor, lawyer, architect, accountant or teacher. Each state establishes its own requirements of educational training, experience and tested knowledge for licensing. Unfortunately, a professional license in one state does not automatically allow you to practice that profession in any other state.

In many areas, you must be locally licensed or registered to provide certain skilled services such as plumber, electrician, barber or beautician. Each municipality or local government establishes its own sets of requirements. A license in one city or municipality does not automatically allow you to offer the same skills in any other cities or municipalities even in the same state. Fortunately, many professions and skills still do not require any licensing, but you should carefully research the requirements for your skills before you offer them.

If your business venture involves the preparation or handling of food or drink for human consumption, you must obtain a permit from the local health department. This may involve the inspection of your place of business to insure it meets certain minimum requirements of health and sanitation. If you intend to manufacture or sell alcoholic beverages, tobacco products or firearms, you may need special permits. Both federal and state restrictions may apply in these cases.

Doing business under an assumed name

If you start a business under your own name, such as John Smith's garage or Mary Brown cakes and cookies, no special permit is usually required. If you wish to do business under a different name, like Global Internet Marketing or USATourist.com, you must obtain a permit to do business under a fictitious name. This is also known as "DBA" or "does business as". It is not difficult to obtain such permission. You simply submit an application to the state government with a small fee. Permission is usually granted unless someone else in the state has already registered the same name. Registration of your fictitious name should insure that no one else uses that same business name within the state. It does not protect your business name in any other state

Every business must file annual income tax statements.

Every business that generates any income in the USA is required to file a federal tax return and to pay income tax. You will need a federal tax identification number also known as a Taxpayer Identification Number (TIN) or an Employer Identification Number (EIN). The IRS will issue an identification number to you for free if you file a simple request form. The forms are available from any Internal Revenue Office or can be downloaded from the IRS web pages.

You are required to make quarterly estimated tax payments four times a year. If you hire any employees, you must withhold income tax from their paychecks and submit it to the IRS regularly. At the end of each year, you must file an income tax statement with the IRS and you must pay any taxes that have not been paid via the quarterly estimates. You must submit annual salary statements on W-2 forms to each of your employees with copies to the IRS.

You must not fail to file your income taxes in a prompt manner. The IRS has no sense of humor. They severely penalize anyone trying to avoid payment of taxes including large fines and even prison sentences. The US government Internal Revenue Service very strictly enforces the tax laws.

Your business may be subjected to state and local taxes

Most states have various taxes applied to business activities conducted within their state. These can include a state sales tax, usually collected as a percentage added on to every sale; a state income tax; or a business privilege tax. You should check with each state revenue authority before beginning business within that state.

Some local municipalities, cities, towns, counties or school districts impose business taxes. These are usually flat-fee business privilege taxes, but can also include sales taxes or income taxes. You should check with your local community before starting your business.

Keeping business records

You should keep a record of all income and all business related expenses. It is best to keep the receipts for any business related expense. The IRS or state tax authority may require you to provide such proof to justify the legitimacy of your business expenses. It is wise to consult with an accountant or tax advisor before beginning your business venture. They can inform you of all the steps you need to take in starting your business. They can warn you of all taxes that you may be required to pay. They can advise you on proper record keeping;and best of all, they can usually give you tips on how to minimize your taxes.

Resources

The Internal Revenue Service provides a whole array of useful books, publications and papers to assist you in starting a business. They provide manuals that explain the federal taxing system, its rules, regulations and forms. They have publications that explain how to keep proper records and how to go about starting a business. The books and publications are all free. You can obtain copies from the nearest IRS office or from their web pages at www.irs.gov There is an almost endless array of material on the IRS web site. A good place to start would be by ordering a free copy of the small business resource guide.

Note: We are not affiliated with the United States government or any state or local governmental agency. We are an independent Internet business wholly owned by USATourist.com.