Starting a small business

Jason Carter said:I’m in the process of opening up my own little bistro, and I have a few questions—if anyone wouldn't mind lending me a hand! 1. Regarding the "complaint book"—is that still a legal requirement? I heard a rumor somewhere that they aren't really used anymore. 2. Where exactly does one go to get the menu pricing officially certified, and what kind of fees am I looking at there? 3. Someone mentioned that for tax purposes, I can choose not to register for the Value-added tax system—if that's true, who do I report this to and where? 4. As the owner of a small business (my bistro), am I required to register myself as an employee, or can I just work under the radar alongside one hired staff member? THANKS SO MUCH!

Technically, you don't register yourself as an "employee," but if you aren't working somewhere else, you absolutely HAVE to register as a business owner for Social Security and healthcare purposes.
To handle the Social Security side, you'll need to submit a specific application form, your ID, your business formation papers, your business bank account details, and forms M-1P and M-11P.

For health insurance coverage, you'll need everything mentioned above (minus the Social Security form) along with forms 1 and 2.

There is no way to go completely unregistered if you aren't employed by another company. Just keep in mind that you won't be listed as a "worker" in the system; you'll be officially classified as the business owner.

Good afternoon, everyone. I have a few questions regarding the process of starting a sole proprietorship.

1) Suppose I’m currently unemployed, but I decide to launch my own cleaning business—I've actually already struck a deal with a local office building where they want to pay me $8333 per month for their maintenance. In this scenario, how much of that goes toward taxes and general overhead, or is there just a standard flat fee I need to worry about?

2) If my monthly revenue hits $8333, am I required to register for sales tax, and if so, how does that change the math on all my other tax obligations and fees?

3) What is the actual upfront cost to get everything up and running? I was doing some digging and stumbled upon this note:
Under certain conditions, specifically during the window from January 1, 2014, to January 1, 2015,
an individual could be exempt from the registration fee for a new business license, meaning in that
particular timeframe, the total cost of registering a small business would be roughly $90.

wearycrane55 said:Good afternoon, everyone. I have a few questions regarding the process of starting a sole proprietorship.

1) Suppose I’m currently unemployed, but I decide to launch my own cleaning business—I've actually already struck a deal with a local office building where they want to pay me $8333 per month for their maintenance. In this scenario, how much of that goes toward taxes and general overhead, or is there just a standard flat fee I need to worry about?

2) If my monthly revenue hits $8333, am I required to register for sales tax, and if so, how does that change the math on all my other tax obligations and fees?

3) What is the actual upfront cost to get everything up and running? I was doing some digging and stumbled upon this note:
Under certain conditions, specifically during the window from January 1, 2014, to January 1, 2015,
an individual could be exempt from the registration fee for a new business license, meaning in that
particular timeframe, the total cost of registering a small business would be roughly $90.

1) The difference in what you owe depends on whether you register as a simplified sole proprietor or go the "standard" route. Based on your projected monthly revenue, if you start out under the simplified tax rules, you'll likely hit the limit and need to switch to standard income tax by January 15th. The annual threshold is $49833. There’s a specific thread on simplified businesses you should check out for more details.
Since you aren't working elsewhere, you'll be filing as a self-employed owner. Your monthly contributions would be: for simplified filers, $373
while for others, it's $606
.
The tax breakdown for simplified filers is covered in that other thread. For standard businesses, income tax is calculated as: total revenue (what you actually collected) minus expenses (your business costs) equals your taxable income.

You pay tax and surcharges on that income based on specific brackets. Honestly, my best advice once you get things moving is to hire a CPA. It's hard for anyone on a forum to give you a perfect "from A to Z" explanation because it's so complex and depends entirely on your specific business model, your overhead, and so on.

2) Regarding Sales Tax, the threshold is $76667 in annual revenue. This means if you start now, you don't necessarily have to register immediately, assuming you aren't sure if you'll hit that limit right away. You'll definitely cross that line if you're billing $8333 monthly, but for the first year, you can choose to stay out of the sales tax system. Just remember, you have to file your application to join the sales tax registry by January 15th if you've crossed the limit.
Once you are registered for sales tax, if your final price including tax ends up being $8333, then the actual sales tax portion is $1667. To find out what you owe the government, you take the sales tax you collected and subtract the sales tax you paid on your business expenses—you only remit the difference.

3) That sounds about right. Even before, it didn't cost more than $500, and if the registration fee is waived right now, then that's really it.

Brenda Chase3 said:1) The difference in what you owe depends on whether you register as a simplified sole proprietor or go the "standard" route. Based on your projected monthly revenue, if you start out under the simplified tax rules, you'll likely hit the limit and need to switch to standard income tax by January 15th. The annual threshold is $49833. There’s a specific thread on simplified businesses you should check out for more details.
Since you aren't working elsewhere, you'll be filing as a self-employed owner. Your monthly contributions would be: for simplified filers, $373
while for others, it's $606
.
The tax breakdown for simplified filers is covered in that other thread. For standard businesses, income tax is calculated as: total revenue (what you actually collected) minus expenses (your business costs) equals your taxable income.

You pay tax and surcharges on that income based on specific brackets. Honestly, my best advice once you get things moving is to hire a CPA. It's hard for anyone on a forum to give you a perfect "from A to Z" explanation because it's so complex and depends entirely on your specific business model, your overhead, and so on.

2) Regarding Sales Tax, the threshold is $76667 in annual revenue. This means if you start now, you don't necessarily have to register immediately, assuming you aren't sure if you'll hit that limit right away. You'll definitely cross that line if you're billing $8333 monthly, but for the first year, you can choose to stay out of the sales tax system. Just remember, you have to file your application to join the sales tax registry by January 15th if you've crossed the limit.
Once you are registered for sales tax, if your final price including tax ends up being $8333, then the actual sales tax portion is $1667. To find out what you owe the government, you take the sales tax you collected and subtract the sales tax you paid on your business expenses—you only remit the difference.

3) That sounds about right. Even before, it didn't cost more than $500, and if the registration fee is waived right now, then that's really it.

Regarding this particular matter, I’ve been giving it some serious thought—sort of like how one might weigh the pros and cons of a complex investment strategy. Here is my vision: I would want to be operating alongside a small, dedicated team of four employees, plus myself. Now, I’m not suggesting we need astronomical salaries here; that wouldn't be practical. However, to maintain a proper hierarchy and ensure everything runs smoothly, my compensation should naturally sit just a notch above what my staff is earning. Specifically, this is the structure I am aiming for:
Let me walk you through this scenario, because when you start looking at the math behind four employees, things get surprisingly complicated once you factor in the gross salary versus what actually hits their bank accounts. It’s a bit like trying to estimate the total cost of a family road trip across the States—you can’t just look at the price of gas; you have to account for the tolls, the snacks, the hotel stays, and those unexpected flat tires that always seem to happen right outside of St. Louis. When we talk about "Gross Salary" for four staff members, we aren't just talking about the number written on their offer letters. In the US, there is a massive gap between that top-line figure and the actual take-home pay. You have to consider federal income tax, state taxes (depending on whether you're sitting in sunny Florida or busy Chicago), Social Security, and Medicare. If you are an employer looking at this from a budgetary standpoint, you also have to realize that the "cost" of these four employees is significantly higher than their combined gross wages. You’ve got the employer's share of payroll taxes, plus workers' compensation insurance, and potentially health benefits or 401(k) matching. It’s much like buying a high-end steak dinner in New York City—the menu price is only the beginning of what you're actually going to spend by the time the check arrives! $1333 It appears we have reached a bit of a mathematical crossroads here! If you're looking for the solution to that particular equation, the answer is simply 4. It’s one of those fundamental truths, much like how a perfectly brewed cup of coffee in a rainy Seattle cafe just makes sense. Simple, direct, and undeniably correct. $5333
Well, if you want my honest take on the matter—and I suppose that’s why we’re all here, isn't it?—I’d say my paycheck is basically just a placeholder. It arrives, it looks impressive for about five minutes on a Friday afternoon, and then, much like a sudden summer thunderstorm in the Midwest, it vanishes before you can even get the umbrella open. It's less of a steady stream of income and more of a brief, fleeting visit from a very wealthy relative who refuses to stay for dinner. Honestly, at this rate, I should probably start looking into a side hustle involving artisanal woodworking or something equally unpredictable. $1667 Gross income. It’s that big, shiny number you see on your offer letter that makes you feel like you've finally made it, right? You see that figure and start mentally picking out the color of your new SUV or planning a weekend getaway to Napa. But here's the thing—it's a bit of an illusion. It's the total amount before Uncle Sam takes his massive slice of the pie. It’s like looking at a delicious, triple-layered chocolate cake through a window; it looks massive and satisfying, but once you actually sit down at the table to eat, you realize you have to share most of it with everyone else before you get a single bite. Always remember to look at the net, or what's left after taxes and deductions, if you want to know how much you can actually spend.
It’s just... that's the thing, isn't it? It really is. $7000If I go ahead and include the office supplies along with the specific accountant I need to bring on board... plus? $667 Monthly.
That’s just it. $7667 So, here’s the million-dollar question: which menu should I actually be looking at? And more importantly—let's get down to brass tacks—how much do I need to demand from this firm just to ensure I’m actually walking away with a decent paycheck in my pocket? $7667How much should I actually be quoting when I'm part of the VAT system versus when I'm not? It’s one of those things that sounds simple until you start crunching the numbers and realize how much it shifts your bottom line. If I’m looking at a potential contract or responding to an RFP, I definitely need to have my pricing locked in and ready to go. It’s a bit like deciding whether to buy a car at MSRP or negotiating a deal—you have to know exactly what your "out the door" cost looks like before you even step onto the lot. If you don't account for that tax component upfront, you might find yourself winning a job only to realize you've essentially agreed to work for less than you intended.

wearycrane55 said:Regarding this particular matter, I’ve been giving it some serious thought—sort of like how one might weigh the pros and cons of a complex investment strategy. Here is my vision: I would want to be operating alongside a small, dedicated team of four employees, plus myself. Now, I’m not suggesting we need astronomical salaries here; that wouldn't be practical. However, to maintain a proper hierarchy and ensure everything runs smoothly, my compensation should naturally sit just a notch above what my staff is earning. Specifically, this is the structure I am aiming for:
Let me walk you through this scenario, because when you start looking at the math behind four employees, things get surprisingly complicated once you factor in the gross salary versus what actually hits their bank accounts. It’s a bit like trying to estimate the total cost of a family road trip across the States—you can’t just look at the price of gas; you have to account for the tolls, the snacks, the hotel stays, and those unexpected flat tires that always seem to happen right outside of St. Louis. When we talk about "Gross Salary" for four staff members, we aren't just talking about the number written on their offer letters. In the US, there is a massive gap between that top-line figure and the actual take-home pay. You have to consider federal income tax, state taxes (depending on whether you're sitting in sunny Florida or busy Chicago), Social Security, and Medicare. If you are an employer looking at this from a budgetary standpoint, you also have to realize that the "cost" of these four employees is significantly higher than their combined gross wages. You’ve got the employer's share of payroll taxes, plus workers' compensation insurance, and potentially health benefits or 401(k) matching. It’s much like buying a high-end steak dinner in New York City—the menu price is only the beginning of what you're actually going to spend by the time the check arrives! $1333 It appears we have reached a bit of a mathematical crossroads here! If you're looking for the solution to that particular equation, the answer is simply 4. It’s one of those fundamental truths, much like how a perfectly brewed cup of coffee in a rainy Seattle cafe just makes sense. Simple, direct, and undeniably correct. $5333
Well, if you want my honest take on the matter—and I suppose that’s why we’re all here, isn't it?—I’d say my paycheck is basically just a placeholder. It arrives, it looks impressive for about five minutes on a Friday afternoon, and then, much like a sudden summer thunderstorm in the Midwest, it vanishes before you can even get the umbrella open. It's less of a steady stream of income and more of a brief, fleeting visit from a very wealthy relative who refuses to stay for dinner. Honestly, at this rate, I should probably start looking into a side hustle involving artisanal woodworking or something equally unpredictable. $1667 Gross income. It’s that big, shiny number you see on your offer letter that makes you feel like you've finally made it, right? You see that figure and start mentally picking out the color of your new SUV or planning a weekend getaway to Napa. But here's the thing—it's a bit of an illusion. It's the total amount before Uncle Sam takes his massive slice of the pie. It’s like looking at a delicious, triple-layered chocolate cake through a window; it looks massive and satisfying, but once you actually sit down at the table to eat, you realize you have to share most of it with everyone else before you get a single bite. Always remember to look at the net, or what's left after taxes and deductions, if you want to know how much you can actually spend.
It’s just... that's the thing, isn't it? It really is. $7000If I go ahead and include the office supplies along with the specific accountant I need to bring on board... plus? $667 Monthly.
That’s just it. $7667 So, here’s the million-dollar question: which menu should I actually be looking at? And more importantly—let's get down to brass tacks—how much do I need to demand from this firm just to ensure I’m actually walking away with a decent paycheck in my pocket? $7667How much should I actually be quoting when I'm part of the VAT system versus when I'm not? It’s one of those things that sounds simple until you start crunching the numbers and realize how much it shifts your bottom line. If I’m looking at a potential contract or responding to an RFP, I definitely need to have my pricing locked in and ready to go. It’s a bit like deciding whether to buy a car at MSRP or negotiating a deal—you have to know exactly what your "out the door" cost looks like before you even step onto the lot. If you don't account for that tax component upfront, you might find yourself winning a job only to realize you've essentially agreed to work for less than you intended.

Your questions are a bit premature, and honestly, nobody can give you an exact answer because we don't know anything about those employees—like their local state income tax rates, since we don't even know which city they're in. Furthermore, you can't assume that the gross salary is your total cost. Payroll taxes and employer contributions are calculated on top of the gross salary, alongside the net pay, so your actual cost for one employee certainly cannot be $7.00 if the amount is $7.00 gross. Try typing "Reddit payroll calculator" into Google; you can input your own numbers there to calculate the specific labor costs you're looking for. We can't help you more specifically without knowing the details of your business, such as your city's local tax rate, whether all employees live in the same area, what kind of standard deductions they qualify for, and so on. Additionally, as a small business owner, you don't technically draw a "salary," but rather take home an income based on what's left over, as I explained earlier.

For example, in Washington, D.C., on a $4,000 gross salary—assuming the worker only has one standard deduction for themselves—the taxes and contributions would be $543 and the net pay would be $3,058.40. This means your actual cost for that single employee would be $1563, not $4,000 like you originally thought.

Brenda Chase3 said:Your questions are a bit premature, and honestly, nobody can give you an exact answer because we don't know anything about those employees—like their local state income tax rates, since we don't even know which city they're in. Furthermore, you can't assume that the gross salary is your total cost. Payroll taxes and employer contributions are calculated on top of the gross salary, alongside the net pay, so your actual cost for one employee certainly cannot be $7.00 if the amount is $7.00 gross. Try typing "Reddit payroll calculator" into Google; you can input your own numbers there to calculate the specific labor costs you're looking for. We can't help you more specifically without knowing the details of your business, such as your city's local tax rate, whether all employees live in the same area, what kind of standard deductions they qualify for, and so on. Additionally, as a small business owner, you don't technically draw a "salary," but rather take home an income based on what's left over, as I explained earlier.

For example, in Washington, D.C., on a $4,000 gross salary—assuming the worker only has one standard deduction for themselves—the taxes and contributions would be $543 and the net pay would be $3,058.40. This means your actual cost for that single employee would be $1563, not $4,000 like you originally thought.

We are all based out of Indianapolis. My plan is to hire four employees to work alongside me, offering a $1333 gross salary so they end up with about $3,000 net. My absolute priority is ensuring those four employees receive a solid $1000 NET salary. Since this is a cleaning service, how much should I actually be charging a corporate client to handle their facility? To break it down, my expenses would include: the four salaries + my own take-home (I'd ideally want to clear about $1333) + supplies up to $500.

Based on those costs, what should my service fee be per client? I tried running the math myself, but I ended up completely lost in the weeds. Please, give me some rough estimates... until today, I was under the impression that I was only paying out that "gross" amount, but clearly, that isn't the case at all.

Could someone help me run some rough numbers on potential revenue here?

I'm looking at charging $40 $0.00 per month for the service, and I'll have three employees who need to receive their net pay $1000. This is for a cleaning business based out of St. Louis. My only other overhead would be bookkeeping and supplies, totaling about $333. After I settle all the bills, how much cash will actually be left in my pocket? Also, am I eligible for any kind of tax refund, and if so, what might that annual amount look like? Let's assume I'm not part of the tax system during my first year, but I'll officially enter it in the second.

wearycrane55 said:Could someone help me run some rough numbers on potential revenue here?

I'm looking at charging $40 $0.00 per month for the service, and I'll have three employees who need to receive their net pay $1000. This is for a cleaning business based out of St. Louis. My only other overhead would be bookkeeping and supplies, totaling about $333. After I settle all the bills, how much cash will actually be left in my pocket? Also, am I eligible for any kind of tax refund, and if so, what might that annual amount look like? Let's assume I'm not part of the tax system during my first year, but I'll officially enter it in the second.

What kind of tax refund are you talking about? You're more likely to be paying it, and quite a bit too. If you're serious about turning this into a real business, go find a professional accountant like people have been telling you to do. It used to be $8333 a month, and now it's already $13333 ???

I figured I’d jump into this thread too—basically, life just threw me a curveball and I've decided to start a little seasonal business to run a market stall!
Has anyone here actually dealt with this kind of setup before?

Hey everyone.
I’m looking into launching a small business focused on home healthcare and providing domestic assistance for the elderly and those with chronic illnesses, and I was wondering if anyone could walk me through the specific requirements for getting something like this off the ground...
If I've posted this in the wrong section, please just point me toward the right one, because this is actually quite important to me. Any insight at all would be appreciated...

You really need to be a caregiver, or more specifically, a registered nurse with an associate degree.

Look, I am a nurse, but I’m honestly just trying to figure out what kind of paperwork is required, what the baseline requirements are to even get started, and all that other stuff... I feel like I'm just stumbling around in the dark here, not knowing where to even begin.

Could we be looking at the Chamber of Commerce and the NYSE?

Thanks, David Flores23, that really cleared things up for me... I finally have a starting point now.

It might not be a bad idea to check in with the Department of Health. Since they handle the licensing for medical clinics, they probably need to sign off on this too.

So, when I went to set up my small business, I headed straight over to the state department of commerce—you know, the folks who actually handle all the registration stuff—and I managed to grab a few minutes to pick the brain of one of their advisors...

Hey, I could really use some advice here... I’ve been running my own small fast-food business for about five years now, and things have actually been going great lately! But—and there's always a "but"—business is booming so much that I've hit that 32% corporate tax bracket. It’s starting to sting.
Because of that, I'm really looking to transition from a sole proprietorship to an LLC.
What does that process look like, and what are the big differences I should watch out for? My biggest headache, though, is my lease—I currently rent my space directly from the local municipality since it's government-owned property, and the current lease is tied specifically to me as an individual owner.
How on earth am I supposed to handle that transition without losing my spot?

You can stick with being a sole proprietorship and switch over to the corporate tax system without having to incorporate as an LLC.

I’m looking to jump into online reselling, but I’m a complete novice here. What am I actually looking at? Do I need to keep every single receipt? How much tax am I going to get hit with, and how does that work? Also, does my inventory need official documentation, or can I just ship small packages through the mail like people do on Craigslist? One more thing—will I be getting slapped with extra customs fees on stuff I order from overseas, similar to how it works when you buy something for yourself personally?

Of course you’ll need to address all of those questions, though I should warn you that the process doesn't quite unfold exactly the way you might be envisioning it right now. There happens to be an existing thread covering those specific details somewhere on the forum, so it would be wise to take a moment to look it over.

Sent from my Android using Reddit