Legalizing your business will protect you from laws you may not even know pertains to you and your business. Oftentimes, people start their home or internet business, not realizing that there are laws that must be obeyed. These laws are put in place, to not only protect consumers, but also you the business owner, from getting into legal jeopardy. Obeying these laws will not only give you peace of mind, it can also strengthen your credibility.
Please Note: I am not a qualified attorney and I'm not giving you legal advice.
There are resources and qualified lawyers online, who can answer your questions and help you along the way, when legalizing your business. Simply visit their website to get in touch with them.
Decide what form of business you want to do. Do you want to run it as a sole proprietor, a partnership or a corporation? If you plan to be a sole proprietor, you can file a Schedule C with Form 1040. If you are in partnership, an LLC or a corporation, then your tax return must be filed separately as a business. I suggest you using a qualified accountant for that to avoid complications. Don't run the risk of doing it all by yourself, and end up getting into trouble with the IRS.
Sole Proprietorship is the easiest form of business. You are doing it as a one man show and there are no complicated issues.
If you plan to take your business to the next level, you can incorporate or, form an LLC. (Limited Liability Company). This is to ensure that you limit your liability, and depending on your State, you may need another individual. Please check what your State's requirements are.
The term "partnership" is self-explanatory. Because it involves other individuals, you may need to form a partnership agreement. It almost never ends well when you and the other party make decisions without an attorney. Also consider forming an LLC or incorporate the business. Whatever you decide, when dealing with your partner or partners, it is advisable to always consult with a qualified business attorney.
After you have made a decision on the form you business you want, choose a name and register it to get licensed. In most States, you can file for your license on the internet. If no-one else has taken the name, it should be an easy process.
Hire or contract with a qualified accountant. Your accountant can save you a whole lot of headache when it comes to your taxes and the IRS.
Depending on the product you plan to sell, you may not need to charge sales tax for some items. For example, in NJ, there are no taxes for clothing and groceries. If you do plan to sell taxable items, you should first of all obtain a "certificate of authority," "a resale license" or a "seller's permit." This is to enable you to buy wholesale.
Additional Resources - COMING SOON!