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Do I need to register a business? - Andy Wang - 06-17-2014 04:31 AM
I am 13, and three of my friends and I are planning to start a computer repair and upgrade business, with most repairs costing around 20-40 dollars. My question is: do we have to register as a business? It seems like a lot of a hassle especially if we don't make that much. Besides, I know a lot of teenagers that do things like piano lessons and mow the lawn and they just pocket the cash. One of my friend's mom just said that if it is all cash we don't need a license...I'm just not sure how to proceed.
- tro - 06-17-2014 04:34 AM
there is a misconception about 'registering' a business
first your local business license department may require you to get a license which will mean you may be required to publish your fictitious name in the local newspers(a DBA)
then if you plan to pay employees you are required to apply for an EIN with IRS and probably similar number with your state, this means you withhold taxes, file quarterly reports and pay what has been withheld as well as the employer's portion
if you form a partnership this will mean the application of the EIN and also indicate on that form that you will be operating as a partnership, this will require filing form 1065 annually for this business
since all this is way beyond your tender years, you would do well let each of you handle your own repair, advertise your services that you will provide but keep your income and expenses separate
if your net amount is $400 or more yes, you do need to report this income on Sch C and Sch SE with your 1040
- b - 06-17-2014 04:46 AM
it depends on the rules of the state where you live and do your business.
you will have to report your income (tax)
- 776 - 06-17-2014 04:56 AM
It will depend on the state you live in. In general you may need a DBA (or Doing Business As to allow you to use your company name) at the least. But again states vary so please check.
Before you go any further, you might want to check how much you are going to charge. Remember if it takes you 4 hours and you charge $20. Thats only $5 an hour. You might be surprised how long repairs can take. To accurately diagnose, then repair, then test the repair will take longer than you think.
- dotspiders - 06-17-2014 05:10 AM
Yes i agree with all the above. it depends upon the rules of the state and search the rules of that country.