Starting A New Business: Learn What Legal Paperwork You Will Need

Filing Your DBA: If you plan to conduct your business under a fictitious name, you must file a DBA, which stands for "Doing Business As." It may also be referred to as the Fictitious Name Statement. A fictitious name is any business name that does not contain your full legal name as a part of it. In some states you will be required to file a DBA even if you are using your legal name.

The purpose of the DBA is to inform the general public that you are beginning an operation under an assumed or fictitious name and that you are the individual who will be conducting that business. It must be published in a general circulation newspaper in the county in which your business is located. The ad generally must run in four consecutive issues. During this time, anyone may challenge your right to do business under that name. Following publication, verification must be filed with the city or county clerk.

The DBA gives you the exclusive right to use the name and keeps others from using the same or similar name. The time and money spent is very small compared to the benefits you will derive from becoming the owner of your business name.

Obtaining A Seller's Permit: A seller's permit number is required of anyone who purchases items for resale or who provides a taxable service in all states where sales tax is collected. An example of a taxable service would be clock repair. The labor or repair is not taxable, but the parts may be. A seller's permit is obtained through the state agency responsible for the collection of sales tax. Most often it will be the Department of Revenue.

The retailer or final seller, not the customer, is responsible for paying the sales tax. Consequently, every seller engaged in the business of selling a tangible product or of providing a taxable service in a state where sales tax is collected is required to hold a seller's permit for the purpose of reporting and paying their sales and use tax liability. The seller's permit may also be referred to as a resale number or a resale certificate.

Your application must be based on the fact that you will be purchasing taxable items that you will offer for sale to the ultimate consumer or to other resellers or that you will be providing a taxable service. Any other reason for your request may be grounds for denial.

Sales Tax: The rule of thumb is: if you do not intend to resell your purchase through your business, do not use your resale number to buy it tax-free. Contact the agency responsible for the collection of sales tax in your state to determine the regulations on your particular type of business.

Setting Up A Business Bank Account: Often a business owner is tempted to run business finances through personal accounts. It is imperative that you keep your personal and business finances separate. Failure to do so can cause problems with your recordkeeping and tax computations. Business accounts are necessary for credibility when dealing with other businesses. You will not have much credibility with wholesalers or suppliers if you do not pay with a business check.

The first account opened with a bank is usually the business checking account. You must show proof of DBA filing before the account can be opened under your business name. The DBA gives verification that you are authorized to deposit checks made out to the business name. The DBA gives verification that you are authorized to deposit checks made out to the business name. Be sure to take your verification with you. The bank will make a copy for their records.

Tip: When you open your account, request that your checks be numbered beginning with a number higher than 101. This is a tip-off that you are a new business. You want to look established in the eyes of your creditors. The selection of the bank with which you will do business should be undertaken with consideration. Banks vary greatly in the services they offer, as well as in the charges for those services.