Starting a Business (in the state of Ohio)
Friday, August 23, 2019
It’s everyone’s dream to strike it rich or wealthy and be able to be financially free and independent. Many people want to pursue the American dream of owning a business and being able to quit their normal day jobs or 8 to 5 and set their own time and hours and not have to report to anyone.
That’s also our dream too and so here are some snippets taken from Ohio’s website to pursue your entrepreneur streak and try to your own business.
Make sure to consult with the updated website for the most recent information as our site does not give legal and accounting and professional advice. While we attempt to be accurate it’s still your responsibility to check the official site in case of errors or omissions.
When you come up with a great business idea and want to rund your startup and get it off the ground so badly you have to give pause for a minute and consider compliance issues in terms of a regulatory framework also. There may be taxes and legal matters to take care of, as well as, other financial checklists you have to tick off before you really want to consider and so it’s a great idea to educate yourself beforehand so that you minimize problems cropping up. You can’t really wing a business and have to be light as a butterfly ready to take on any challenges with speed and flexibility.
First off, do some research ahead of time a read and get training videos and guides to familiarize yourself with rules. If you are the business owner you often will need to delegate or hire on people to help out since you likely won’t be able to wear all the hats and take on all the roles to succeed all by yourself and sometimes need to have others to maximize use of time. This may require also training and education on your part to make sure you stay up to date on constant changes in law and labor and taxation.
Once you’ve tried out a few experimental scenarios and budget and forecasts when you’re ready it is time to get official.
First you likely will need to register your business at the state level with the Ohio Secretary of State. Check out their phone, website and forms on their website.
Secondly depending on whether you have employees or not you may need to do additional paperwork. This may require getting an Employee ID Number. This EIN is needed to identify your business for tax purposes. It is entirely a free service to provide you this EIN number and you need to go only to the official EIN registration website to get the free EIN. Third party sites may charge you a fee for assisting you in obtaining this number. You may also have to check local state tax requirements or even local city level tax. You may even have to consider unemployment compensation. And if you have employees you may also even have to consider worker’s compensation in the case of accidents or injury. This helps protect employees and also protect you from liability. If no employees then it might be a lot easier.
Also another thing is you may need to register at the state level a vendor’s license to collect sales tax.
Check also with a legal advisor if you’re selling digital products on how to handle these.
WARNING: If you apply for one of these licenses then you may have no choice but to file sales tax returns on a recurring schedule, even if you don’t have any profit. So be careful and you may want to wait till all others things are done before setting this up.
Most people are not going to be making a lot in the first few years and likely to be losing money even. But there is a commercial activity tax or CAT for people with a lot of gross sales. Check the site for thresholds.
It is also a good idea to register your business online so you can make payments through that system.
Make sure you develop a plan for your business because if you fail to plan than you really are planning to fail. And often you will incur further costs for things you don’t know. What you don’t know can hurt you.
There are a lot of structures for a business. These include sole proprietorship, general partnership, limited partnership, limited liability company and corporation. We will not go into detail here but you can check the official site. Once you decide what type of business structure it determines how you file taxes and also to what extent your legal liability is for a company. You can download these registration application forms from the official site.
It’s also important to come up with a unique well defined name for branding purposes and properly identifying your company and differentiating yourself from others. You can find out if the name has been used before by using a business search tool on the state business web site.
Taxes and sales tax and withholding is another major issue. You may need to get a legal expert or accountant or CPA to keep up with changing laws, file correctly and keep up with obligations as a business. We have heard of many companies trying to take shortcuts or not being aware of these obligations or failing to adequately allocate employee payments or diverting funds are meant for the employees into other business costs. These can be dire and catastrophic to an upcoming business and cause further problems and financial liabilities and credit issues later. Don’t let that happen to you.
Your business also must comply with a whole lot of other laws about fair practices, advertising, privacy, and waste removal or where you can operate. This needs to be addressed. Not everything is peachy all the time and if you have a hard physical tangible product as well licenses, permits, and patents may be needed. If you wrote a book or other artistic works there may be a need for copyright laws to be followed.
Some useful resources:
Ohio Small Business Development Centers or SBDC
United States Small Business Administration
Check out Bplans dot com for information on business plans and how to set one up for your business along with other templates.
It’s important to understand your demographic and who you will be serving, where your products and services will be offered and what niche you’re catering to. You will need to know how much you need to save up for your business or if you’re borrowing from a bank, family members, investors or out of pocket and estimates of expenses and other costs. Will you have anything available for collateral? Are you to have shares of stock to be offered.
What happens if your business fails or is not profitable?
Starting a business is not easy and lot of people get bogged down by day to day operations and such and overlook simple things or don’t stay up on things. It shouldn’t have to be hard but it does require foresight and planning and persistence. There are many businesses that fold in the first 3 to 6 years. If you can turn a profit in the first 6 years and keep it then you’re in a good position. Shark Tank’s Kevin O’Leary has been know to say that if you aren’t profitable in the first couple of years then you probably need to close shop and be realistic. It will more likely be a hobby and a drain on cash. Don’t let the dream and fairy tale castles and unicorns and hope of making it rich cloud your thinking. You have to be level headed.