Orchid Girl's Blog

You have an idea for something you want to accomplish. Maybe it's a hobby. Maybe it's just a project. Maybe you're bored and you want to be more constructive and leave a legacy to your children, to all humanity, whatever. Maybe you need a source of more income. In any case, you're looking at your possibilities and need to know how to go about making your dreams comes true, preferably without getting yourself into legal trouble.

Whether you're writing a book, creating popsicle stick lamps, cooking pumpkin pies for charity, repairing bicycles, building birdfeeders, delivering birthday cakes by van for other businesses by contract, cutting hair, painting fingernails, or performing for online fetish porn, it's still running a business and there are plans that need to be planned and legalities that need to be met.

There are realities that need to be considered.

What do you know how to do?

What are you good at doing?

Will the venture require more money to accomplish than you possess?

Will you be able to start your venture on a "shoestring budget" or will you need to borrow money?

Will you need to hire someone to help you?

Do you have a formal education in the field in which you want to start a business?

Will you need to travel?

Will you need to drive a vehicle?

Will you need permits, licenses or pay fees?

Are you good at convincing people to buy the product or service you will be providing?

Do you know how to price your product or service?

Are you planning on selling through your own website, or through Ebay, PayPal, Etsie or some other sales website?

How do you see yourself getting paid?

Will you need to rent a business location or is this something that can be done from your home? Is it a business that can be done wherever you are standing, sitting, or lying down?

Will you need specialized equipment?

Let's start with the business style.

SOLE PROPRIETORSHIP - 

This is the simplest and easiest form of business style. You are the only owner. All business decisions are made by you. You are the one that writes the checks and decides where to head the business. You decide what will be done and how. You alone decide how much to charge and how much will be done for the amount of money. You are the business. You are not a separate person from your business. The income taxes are filed under your personal name. A sole proprietorship is NOT a corporation. In order to incorporate, there must be at least two people in control of the business. By nature, a sole proprietorship has only one owner. A corporation is, legally speaking, a separate person from the owner(s). The rights of the business are the rights of the owner and vice versa.

The only business decision you cannot make is who you serve. By law, if someone has sufficient money to pay your price and that money is legally accepted in the United States, and you are physically capable of providing your product or service, you are legally obligated to provide to anyone who offers to pay..... in most states. 

There are some states that have passed laws allowing businesses to refuse to do business with gay, lesbian, bisexual or transgender people but... tread carefully. 

The drawback to sole proprietorship is that if you are sued, and you lose your case in court, the costs of losing could shut down your business altogether, and land you in lifelong debt. If you are starting this venture on a shoestring budget because you have no money to use as capital, it will not only shut down your business, it will also force you into rocking ramen noodle meals the rest of your life. In some cases, it could land you in prison. Even long before you can win or lose, the cost of conducting the case can put a sole proprietor out of business. 

If you are going to refuse to serve a potential customer, be tactful and pleasant, and give a better excuse than that it's against your religion. Don't argue. Don't name-call. Don't insult. Don't try to convert the customer. Doing anything that insults the customer is bad business, and bad manners. If you truly can't find it in yourself to treat a customer with dignity and respect, be nice, give a reason that sounds logical and reasonable for not being able to perform, and refer them to another business that is likely to be more able and willing to help them. Be aware that if they figure it out that you are refusing to serve them based on your religious beliefs, you may still end up in court.

Setting up a sole proprietorship is generally very easy to do, and comparatively inexpensive:

1. Choose a business name. You can choose your own legal name if you like. This may cut expenses even further if you do that. Some states allow you to just start doing business immediately if you are operating under your own legal name. This includes your full first name, your middle initial, and your full last name as it is listed on your birth certificate. If you want to use a different business name other than your legal personal name, you will need to file an application with the Secretary of State office office in your county for using a ficticious name. (This is separate from the Department of Motor Vehicles office.) If the scope of your operations are limited to your state, check to see if anyone else in your state is already using the name you want. If so, choose another name. You should use something original, or at least not used by someone else in your state.

2. File an application with the Secretary of State's office to use that ficticious name. Some counties are only concerned with the address of the owner. Some counties will ask for more information, such as the address of the owner and the address where the business will be operated. Some counties will have even more questions.

3. You may be required to "publish" your business through a specific newspaper that is most prominent in your county. This WILL cost some money, though relatively not much.

PARTNERSHIP -

The operations of a partnership are much like that of a sole proprietorship except that the partners decide how the profits are split, who makes what types of business decisions, how much of the business belongs to each partner, who is the head partner if the partnership is not equal, who is responsible for aspects of the business and how much capital each partner must invest. A partnership can be equal but does not have to be equal. A partnership may choose whether or not to incorporate. Without incorporation the partners are the business. The partners may be separate persons from each other, but united they are not separate from the business. A corporation is, legally speaking, a separate person from the owner(s). The rights of the business are the rights of the owner(s) and vice versa. If the partners choose to incorporate, that is possible, but then the corporation would be under the business style of corporation and not as a partnership. As a corporation there are rules they must abide because the corporation becomes a separate person that is owned by multiple other people, including the state government where the corporation is formed.

COOPERATIVE - A cooperative may or may not be incorporated. The nature of a cooperative is that it has multiple owners and sells shares. The owners have a mutual need and are cooperating with each other to meet the mutual need. It's something to the point of some partners have something to offer or sell, and others need to use or buy. The ones who need to buy often also have something to sell and it may be something the first group needs to buy. Cooperatives often operate like a club. They are given to members joining or leaving at will or selling their shares. They operate differently than other corporations that sell shares. In a regular corporation, if you own a larger number of shares, you have more voting power at the meetings. In a cooperative, all votes are equal, regardless of how many or how few shares the member owns. Since a cooperative is generally for the use of only members, your customer support is generally just for members. This means that your cooperative lives or dies by how it treats it's members and how well it supports it's members needs. 

A cooperative is taxed differently than most other businesses. An cooperative, as a business, may not have to pay federal taxes at all. The members would have to file federal and state taxes. Some cooperatives, due to the nature of their business, may not require the members to have to pay federal or state taxes. Cooperatives are treated differently by the IRS and state tax agencies. If a cooperative is what you wish to create, check with the IRS and your state taxing agency to find out what your tax status would be. 

CORPORATION -

A corporation is seen by the federal government as a separate person from it's owners. A corporation can own other corporations. Corporations cannot be sole proprietorships. Some states impose regulations on how a corporation is formed, including what board members it must have, minimum number of people operating the corporation and whether or not it must sell shares to the initiating owners. Check with your state's Secretary of State office for more information.