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When does a business need to be "on the books"?

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  • When does a business need to be "on the books"?

    I am unsure if I will get clients - when would I need to go on the books, so to speak and is that simply a matter of getting a tax ID?

    Also, where can I learn how to tax people. I am looking at starting an educational tutoring service.

    thank you in advance

  • #2
    It's not clear what you mean by "on the books." First, if you are just planning a business and having no customers or employees, you don't really have a business. You don't have to do anything particular while you are in the planning phase.

    Once you have a business, that is a different story.

    If by "on the books" you mean obtaining a business license, that is usually done on a local basis (city or county). You need to check with your local authorities to see whether an educational tutoring service requires a license.

    If you mean registering with the federal and state tax authorities, that also depends on a lot of things? Will you be a sole proprietor or an entity such as a corporation or LLC? The latter require filing forms with the state, the former does not, unless you are using an assumed name for the business (such as (MyTown Tutoring). Businesses with trade names or assumed names typically have to file the name and publish a legal notice.

    Will you have other employees? That is a whole another set of requirements.

    There are so many questions and so many nuances that you should talk to a lawyer to understand your local requirements before you start.

    As far as taxing your customers, that is a state issue. Most states still only tax sales of tangible goods, not services. However, that is changing and many states either tax services or are planning to start to do so. You should check with the state's department of revenue to see whether tutoring services are subject to a service tax in your state.
    David K. Staub (www.illinoisbusinessattorney.com)
    Forum posts are not legal advice, are for informational and educational purposes only, and are not a substitute for proper consultation with legal counsel.

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    • #3
      The day you start you should be registered with the state and federal government.

      You will find that in the long run doing things correctly will save you a lot of headaches.
      Not everything in America is actionable in a court of law. Please remember that attorneys are in business for profit, and they get paid regardless of whether or not you win or lose.

      I offer my knowledge and experience at no charge, I admit that I am NOT infallible, I am wrong sometimes, hopefully another responder will correct me if that is the case with the answer above, regardless, it is your responsibility to verify any and all information provided.

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