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I'm starting a home based business. Do I need to get a business license?

How do I pay taxes?

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His_Mommy26

Asked by His_Mommy26 at 11:30 PM on May. 29, 2009 in Money & Work

Level 4 (32 Credits)
Answers (9)
  • Yes. And restrictions on zoning may make it impossible for you to start the business from home.. for example, in my city you are not allowed to sell anything online "from home" which you dont produce (make) yourself. So for example you can sell dresses you sew yourself.. but you cant sell a dress someone else makes, or you are selling after buying it wholesale. You also cant let people come in your home to directly purchase from you unless you are licensed and insured for it.. which is expensive and you must provide bathrooms, parking, so on and so on...


    You cant sell food without a food handlers permit, and health department inspections. Your best bet is to locate your city's municipal building. just walk in, talk to a clerk in the business license department, and they can guide you to what you can and cannot do out of a home in your city. You'll also need a state business license. Taxes next...

    LuminousMom

    Answer by LuminousMom at 12:15 AM on May. 30, 2009

  • OK and now for taxes... you need to apply for your federal tax ID number. for a sole proprietor its usually your SSN.. once you apply online through your state you get a packet in the mail with further instructions. They will tell you when you need to pay... WHAT you need to pay... (such as do you need to pay into unemployment or so on..)Honestly its best to hire a professional to handle taxes, because they can save you time, money, and an audit. Save ALL of your receipts.. they are write offs. Even down to a box of paperclips. Save ANY receipt that has business expenses on it. A good accountant/tax professional is a wise investment. Paying them $100-$200 bucks to do your taxes for you, but to know they are done right, is a good investment.
    LuminousMom

    Answer by LuminousMom at 12:19 AM on May. 30, 2009

  • OK baby doll, last but not least.. I saw you are from Chicago IL.... so here is where to start:

    http://egov.cityofchicago.org/city/webportal/portalDeptCategoryAction.do?deptCategoryOID=-536895023&contentType=COC_EDITORIAL&topChannelName=Dept&entityName=Business+Affairs+and+Licensing&deptMainCategoryOID=-536895023

    www.tax.illinois.gov To get your IBT (Illinois Business Tax #)
    www.cookctyclerk.com To get your Assumed Name Certificate (aka, if you want to "name" your business, like mine is "Luminous Boutique", I am a sole proprietor DBA (doing business as) Luminous Boutique, so I would need to get this certificate, otherwise I can only operate it under MY name.

    Its confusing but the more you read, and the more research you do the better


    LuminousMom

    Answer by LuminousMom at 12:30 AM on May. 30, 2009

  • To add on to the above: www.irs.gov is where you apply for your FEIN, or federal tax id number. Have you written you business plan? You will need one before you can seek funding/investors, and it is an important step in a successful business. There are many resources out there to help new businesses succeed. SCORE can help you with your business plan and help you navigate the legal and financial issues. the SBA can help you identifiy funding sources.
    I am also a small business owner in Chicago; there are great networking opportunities to help your grow your business. Feel free to contact me for more information.
    rkoloms

    Answer by rkoloms at 7:56 AM on May. 30, 2009

  • I have never heard of anyone needing a lisence to have a home based business. The only time you would/should need one is if you will have customers comming in to your home. As for taxes yes, you will have to pay them if you earn over $600 a year. You should keep all your rent, utility bills, mileage and business costs cateloged so that you can use them as deductions come tax time. Also if you are with any legit company you will get a 1099 in January that you will need to do taxes with.
    SabrinaMBowen

    Answer by SabrinaMBowen at 10:22 AM on May. 30, 2009

  • Having had a home based business in the past, you will need to pay state sales taxes on the sales you have, if you are selling. I did sales at crafts shows, so had my business license through my home county and paid regularly (forget if it was quarterly or monthly or annually, think it was annually) based on sales. Keep all expense receipts (gas, booth space, food for show, lodging, office supplies, and other materials you need for your business). You will need to file with IRS at the end of the year. In addition, www.irs.gov has lots of publications and forms online you can download and print out if you want. Very informative for the federal level.

    Since I was sole proprietor, state used my SSN for my EIN on sales tax forms. Also, paid income tax and, if necessary, FICA taxes through my end of year tax return. That and the local county business license (tax) was it.

    Good luck.
    tngrandma

    Answer by tngrandma at 1:19 PM on May. 30, 2009

  • are you a consultant for another company or is this something you're doing on your own? If you're selling Pampered Chef (for example) they mail you a monthly check based on your commission, you track all of your expenses. You may want to have someone prepare your taxes. In this case you would not need a license or special permits.
    Anonymous

    Answer by Anonymous at 9:48 PM on May. 31, 2009

  • I am reselling these products but the company is based in Fla. When I was reading up on the business license and tax information, I think I was correct in finding that I didn't need a business license. I believe I will have to pay self-employment taxes though. Right??
    His_Mommy26

    Answer by His_Mommy26 at 11:35 PM on May. 31, 2009

  • I do not have to have any type of business license for my business. Most home businesses are 1099 so make sure you put back a portion of your income for tax purposes. I just file with my regular taxes under my social security number. Remember , you have all kinds of write offs with any business so take advantage of all of them.

    http://www.arnola.acnrep.com

    This is what I am doing and its working great. No products or inventory, simply provide services to people that they are already using only cheaper. If you would like more information, click on the link on the website and I will get ahold of you.

    Best of luck in whatever you decide to do
    Residuals4U

    Answer by Residuals4U at 1:31 AM on Jun. 1, 2009

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