Questions about officially starting a business

by Kaidemarco. Posted on Sep 12, 2020    1    6


My dad has been working as a private contractor on the side in my town, for about 5 years now. He mostly just does jobs for friends, and through recommendations from them, and so on. He does not have an official company, or phone number, or business name or anything. I told him he should quit his regular job, and start a business in my town, as he has to deny most of the work he is asked to do, because he does not have the time. He agreed, and we're trying to see what steps he would have to take to officially become a business.Would he have to get it registered through the city? Can he legally just come up with a name and start advertising for himself? I was going to help him make cards, and stuff like that, but I feel like it can't be that simple, right? He does all kinds of construction work for people; hvac, kitchens, plumbing, flips. Any tips or steps would be greatly appreciated. We live in New Jersey, if that helps.


Comments

chrisldavis 1

>Would he have to get it registered through the city?

Depends on what city you live in. Call the city administrator's office and ask.

>Can he legally just come up with a name and start advertising for himself?

Well, again it depends on where you live. You said you live in New Jersey, where most of his services are taxable, so he needs to get a tax ID and collect sales tax. But sure, he can come up with a name and start advertising himself. It's when he starts accepting money is when he needs a tax ID.

Also, if he's not going to go by his real name, like "Joe Johnson Services" then he needs to file for a certificate of assumed name, or what is more commonly known as a DBA.

Check out the Small Business Development Center. They will provide all the information you need: https://njsbdc.com/

GearsNimports 2

He will need to file for an LLC or similar entity with the state. If you go to the state website it should have links to help guide you guys in the right direction. Every state is different, but establishing the LLC and setting up a business account was literally the easiest part of starting a business for me. He’s going to want to meet with an insurance agent as well and see what type of coverage he will need. Overall, it seems overwhelming but establishing an LLC is quite simple

CrimsonWolfSage 2

Best thing you can do is point him at the SBA.GOV website! It has a ton of great resources and guides for getting a business going officially!

GardenGood2Grow 2

He will need to register his business and start collecting sales tax, and declaring the profits for personal income tax.

GearsNimports 2

So as a contractor, you don’t technically have to tax your customers. You do however, have to pay income tax. Not sure what you mean by profit tax, you pay taxes on the total revenue, not just the profit. What you’re referring to is capital gains tax.

With an LLC, I believe the term for taxes is pass through income. Essentially you’ll be taxed as a whole instead of taxed on the business income and what you pay yourself. I’m not a cpa so my explanation could be off. Moral of that story is every business owner needs to consult with a cpa. Also very important to keep records of income and expenses.

Also think about equipment and monthly expenses. These are all things you can write off. A CPA will be able to guide you in the direction of how to best utilize the country’s tax laws

FinishLineElectric 1

> you pay taxes on the total revenue, not just the profit.

This isn't correct. You pay taxes on the profit only.

Regarding LLC's, they can be taxed as an S or a C. An S is the pass through, where the company doesn't pay the actual taxes. That income (minus 20%) goes onto your personal return in combination with the W-2 wages you should be getting.