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Expert Answers to Biz Questions

Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.

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The Biz Question

Can any other owner of a sole proprietorship that deals with graphic design help me? I've started my company but I don't know where or if I need a tax number or who I contact from the state and local governments. Basically, share anything you went through that could make it easier for a fellow freelancer. I've asked many people but they all tell me a different thing. Is getting the paperwork for starting a small business really that difficult? There must be an easier way to deal with this problem of starting up. I thought the hard part would be finding customers!

Lewis

Answer from our Guest Expert Laura Wiegert of Creative Consultants

Lewis,

Starting a graphic design business as a sole proprietor really IS one of the easiest ways to go for a graphic designer! Any paperwork on your end is fairly minimal. I know when I started my desktop publishing (DTP) business three years ago, the process was fairly simple. I'm not sure why you're getting a variety of answers from others you talk to. Perhaps they're from different communities, and laws and regulations vary from state to state and even city to city.

To help you start your business, focus on these main areas:

Registering Your Business

Do you have a name for your business? If so, in most states, you can simply start using it. However, you may be required to file a "DBA" or "Doing Business As" form. This usually involves registering with your local government and publishing your intent to use the name in your local paper. Because this is not required in all states, call your secretary of state's office or city hall to find out what the scoop is on business name registration in your state.

Licenses and Permits

Most businesses don't require any special type of license or permit to operate. But if you're running the business from your home, check on any zoning requirements in your neighborhood. Usually it's no problem, but zoning rules vary from community to community. A quick call to your local government will answer this question.

Federal Tax Number

As a sole proprietor, you don't have to apply for a federal Employer Identification Number (EIN), unless you hire employees. You can simply use your Social Security number for tax reporting purposes.When someone asks for your federal EIN -- usually a company you've done work for who needs to issue you a Form 1099 -- simply use your Social Security number. Easy as pie!

Taxes

Taxes are the least fun part of running a business. But the good news is they can be a piece of cake for a sole proprietor! Basically, the government sees your personal and business finances as one and the same. All you need to do when you file your tax return is make sure you include your business income on a Schedule C. Remember to file your Social Security taxes, and if you qualify, to pay quarterly estimated income taxes during a tax year. I recommend using an accountant to at least get you started, and think about keeping him or her around for the long haul. I've used one since the start of my DTP biz, and it's money well spent!

Resources

For additional info and questions specific to starting a small business, try calling your local SCORE (Service Corps Of Retired Executives) chapter for free counseling. It's good advice from people who've "been there, done that." You can find them listed in the phone book, or go to their website at www.score.org. (E-mail counseling is also available!)

In addition, you can refer to a few informative books, including:

Hope this clears up some of the questions you had! Best of luck!

Laura Wiegert of Creative Consultants

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