Home Based Business Leads

I need information on starting a custom scrapbook business in Pennsylvania?

I am looking to start a home-based custom scrapbook business in Pennsylvania. I have done basic research and it appears that I will need a Tax ID number and to register my “business” with a ficticious name with the Department of State.

I actually live in PA so I might be able to help some… but before I do so… a disclaimer:

I’m neither a lawyer, nor an accountant and therefore am not qualified to give you official legal, financial nor tax recommendations. I’ll just tell you what I’ve seen in my experience.

First off: the two professions listed above would be good to talk to as there are legal repercussions to doing things wrong. But to minimize the time spent with the above on basic definitions you could learn on your own, you might check out a book on starting a business in PA (I’ve seen them in Barnes and Noble, and online at Amazon).

One of the first decisions you’ll need to make is the structure decision based on your risk tolerance and ease/cost of set up flexibility.
*Sole Proprietorship – you are your business – high risk (you are personally liable for all of your businesses debt/risks/injuries/etc.) But very little overhead costs
*Partnership – you and a partner are your business (pretty much the same as above, except divided by the number of partners
*Limited Partnership – two classes of partners: General partners are just like partners in a partnership. Limited partners, however, just provide money and own a portion of the company but do not control the operations of the company. Limited partners are not personally liable for the businesses debt/risks/etc. This takes more work to set up though.
*S-Corporation – Very few reasons why you’d choose this over an LLC so I’m not going to explain it.
*LLC – now we’re looking more like corporations, which means guidelines, documentation, debt/risk/etc is borne by the company, etc. However, with a LLC the income of the company is still pass-through for income purposes, so the income goes straight onto the owners’ tax forms
*C-Corporation – This is what the big guys are, the company is now it’s own legal entity and is completely separable from its owners for income, tax, and liability purposes. Pretty expensive to set up.

Depending on what you choose for the above will change what you have to do to legally set up the entity (from sole proprietor being easiest, to C-Corp or LLC being hardest).

For taxes.
*You may have to pay a self-employment tax
*You will have to collect sales tax from customers and submit it to the gov’t
*Your tax filings every year will get a lot more complicated (if you didn’t use an accountant before, you will now… TaxCut and the like won’t cut it for you)
*You will have additional taxes that you didn’t see before as an employee of another company and will have to make periodic estimated payments.

Long story short…..there is a lot to keep in mind for this. Small business owners generally get to know their accountant very very well and even use them as an adviser/consultant since they will know your business so well. Being self-employed isn’t for the weak of heart or for someone who thinks it will be easy. You will probably work harder self-employed than you did as an employee.

You didn’t ask, but something I always suggest is to put together a business plan before doing anything else. Make sure that the numbers work out and that there’s a big enough market that you can grow in good times and at least survive in hard times. (and be honest, if you’re too optimistic in your numbers, you’re only fooling yourself)

A colleague of mine actually opened a scrapbooking store in Tucson for a while and said that the scrapbooking community was very welcoming and helped him get started… might see if the PA community will help you out with advise.

But I digress, there are many books and websites out there that will help you put together your thoughts into a business plan. I’m leaving you some particularly helpful/reputable sites in the source list.

Best of luck with the new business

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