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How do you become a business?

Discussion in 'Off Topic [BG]' started by rojo412, Dec 28, 2002.

  1. rojo412

    rojo412 Walnut is fun! Supporting Member

    Feb 26, 2000
    Cleveland, OH.
    I am planning on starting a business that deals with both local and internet sales of cool parts for bass and guitar by various companies, as well as eventually turning out some partially-custom products. Most of these companies will require some proof of business so that I can start an account with them.

    What do I need to declare to them "I am a business"?
    Where do I get it?
    What does it cost?

    I hope there are some accountants or sole proprietors here that can answer this.
  2. Hmmm, my rule of thumb is that anything that makes money is a business. But from a legal standpoint...

    - You will need a business license and a tax number as the government likes to keep track of businesses. You'll have to check with the local government for more details. KEEP TRACK OF YOUR TAXES OWING because the (Canadian) government is a real bitch if you owe money (I used to work there).

    - You'll have to determine the structure of the business: Sole proprietorship, partnership or corporation. Get a good business book to learn the advantages and disadvantages but in summary, a sole proprietorship or partnership requires little paperwork but you are personally liable for any debts you incur. That's a dangerous route because if a major sale falls through and you owe money to suppliers, they can force you to liquidate your assets (including music gear) to repay the debt. On the other hand, a corporation requires lots of paperwork but has a "limited liability" which means that you can only lose the amount of money you pay into the business. This is the preferred method of business.

    - Separate bank account. This is not a requirement but a good business practice. The business is a separate entity from you - there is "you" and then there is "business you." Opening another account and running your revenues and expenses from there is a good way to keep track of money and to prevent "you" from stealing money for personal use.

    From a non-legal standpoint, figure out a business name and contact information (mailing address and email). Develop some professional letterheads for faxing and emailing. Look GOOD and PROFESSIONAL and it will take you a long way.

    Also, I would recommend you develop a "business plan." Plan out the entire business in your head and figure out if you will make enough money to make it worth your while. All financial institutions will demand one if you go to borrow money.

    Too many things to say. PM me and I'll try to answer as much as I can.

    ...oh ya. Best way to answer questions is to ask the person who is asking them. If they want proof, ask them what exactly do they want to prove you are a business.
  3. lneal


    Apr 12, 2002
    Lee County, Alabama
    Also, since you will be doing retail sales you'll need to get set up with a sales tax account.

    If you go as a sole proprietor (good idea for a beginning company, that way there won't be as much to "undo" should it not work out) you'll need to pay your federal income taxes quarterly. If it works, then incorporate. You'll need a lawyer for that. You can do it yourself, but believe me its worth the $500 or so they'll charge because there are LOTS of details. I suggest an LLC corp. Less paperwork than an S corp depending on how you pay yourself.

    I'm certain that rabid is a great accountant, but having run my business for the past 12 years I can tell you that you need a local one that you can look at eye to eye. That accountant will tell you all you need to know.:)
  4. I say to become a bussiness all you need is these five things: 1) a shotgun 2) the guts/will to use it 3) knowledge of local businesses 4)some thugs and 5) to go send your thugs into the place of business that you chose and have them ruff up the owner and tell him to either give up his store and license or you will come by personally shot him and take both by force. then after you obtain the business change it into whatever you want because you have a gun and some thugs so you can do that.

    Also, if the owner gives you his business then you have to tell him to "have a nice day".:D

    This is not advice or even condoned by me
  5. How does that go? Roll around on the floor laughing my...

    As you can tell from my avatar, I'm a young guy. Furthermore, I haven't done any public accounting - I have done a bit of cost accounting, internal auditing and gov't tax work. I have never owned my own business nor have I consulted a business.

    However, I did spent 6 years studying business so I should be able to contribute something useful...hopefully...maybe...yes?

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