...where I can go online to read up on starting a business in Massachusetts? I am looking specifically for tax related information and general rules and regulations regarding starting a business in Massachusetts. My first though was to go to the MA DOR website but I thought I would see if anyone else out there had any suggestions. I am just about the worst person in the world when it comes to understanding tax law and math in general, so something very "plain english" would be good.
Anyone?
1 comment:
It depends what you want to know.
For corporations and LLCs you want the secretary of state's web site, division of corporations, and that can be a good source of more general information too, on business forms, taxes and legal requirements.
You have local stuff. That is mainly in the form of filing a DBA certificate at the town hall, and that can be ignored if you are really small and new or just "you" happening to generate money you would declare on income taxes as a "business" income. That's like a $20 fee or so and usually valid for 4 years. They may have issues with where in town you register, and may tell you something like no more than 1 employee (besides you) may come and work there, or whatever.
The main purpose of the DBA is the town then knows you are operating a business and each year can assess property tax on business assets. Each year you are supposed to file something called a "form of list," which is a standard form across the state that each town uses. You then pay tax on whatever the amount comes to at the same rate as real estate taxes. In Easton I pay about $50 a year in personal property tax on the business.
If you are going to sell stuff on which you should collect sales tax, or want the ability to buy for business use tax-free and handle remitting the use tax yourself, you want to register for sales tax, which is a DoR thing. Not a big deal and IIRC you can register online or get an application online to send in. How often you file a return depends on sales volume. Mine are quarterly and are sometimes zero. Sales and use tax is 5% of course. When I buy computer parts, my supplier charges me no tax and it is up to me to charge tax to people I sell parts or computers to in turn, or to pay it on anything kept for internal use.
To be a sole proprietership you don't need to do anything like you would to form a corporation or LLC. You would file a schedule C or C-EZ with your 1040 at the end of the year, and the state pretty much just uses what the feds do, or an equivalent form. If there is enough income, you have to file an SE and pay self-employment tax. All moot if you incorporate in the traditional form, but then there is an annual minimum excise tax any corporation must pay, $400-something, whether there is revenue, activity or anything. On the other hand, the corporation can deduct expenses no sole proprieter can.
Mostly there aren't rules and regulations if you are small and just starting out, except local zoning or any industry-specific regulations. If I decided to start a business based in my home office doing tech support, computer repair, selling advertising on my blogs, and helping people create and promote blogs and web sites, I would probably go to the town and file a DBA, or have an official office not at home and file a DBA based there. Depending in part on how the town feels about a "business" in that location, but home-based microbusinesses get a lot of leeway. I would consider getting an employer ID number from the IRS, but as a sole proprieter that defaults to your SSN if you don't get an EID (one of the numbers that starts with 04). I would register to collect sales tax if I expected to resell parts or such. That would be about it unless I needed to look into specific regulations or licenses a type of business might require, which luckily for that one would be none. I'd not get employees as long as I could avoid it because that changes everything.
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