Do you want to turn your talent or passion into a business? The first step in how to become a legit business is filing for a business Tax ID. Whether you are a pastry chef or a dog walker, the first step to going professional is getting an EIN. Whenever you have to start an LLC or corporation, you always need to start with getting a Tax ID number.
Choose Your Entity Type
Every business must file taxes. The business tax return shows an accurate summary of the income and expenses the business incurred that year. How businesses are taxed depends on the type of business. The classification of your business is known as an entity type. A business with multiple shareholders and lots of growth potential is a corporation. Meanwhile, a business consisting of one self-employed person is a sole proprietorship. You can still be a sole proprietorship even if you hire employees to work for you.
Now You’re in Business
Once you apply for your EIN online and receive it in the mail, you can open a bank account for your business. You will then have to get the insurance coverage that your state requires for businesses in your industry. Even if you are the only employee in your business, the business will have to contribute to Social Security and Medicare for you.
Filing business taxes is probably the biggest difference between running a business and operating as an amateur.
Many businesses file quarterly financial reports in addition to annual tax returns. If you do not have a background in accounting, all of these financial forms can seem quite daunting.
Getting an EIN for your business is the easy part. After that, you should ask an accountant for advice about making the transition from amateur to profession