Starting a new business in Philadelphia, PA can be a confusing and frustrating chore. The key to starting any new business is knowing the proper steps to take to get to each point in the process. It is important to put in hard work and research and take careful consideration in each step to ensure you are building a strong foundation for the business; doing so will greatly increase the chances of building a successful business.
Start writing a business plan. A business plan will include goals and objectives, marketing plans and projected financial feasibility. Research the Philadelphia business market and show why the new business is unique and needed. The business plan will show that the new business can create positive cash flow; this is essential if the owner will need outside financing because it will work as a full presentation of the business. The business plan will keep you on target as you move through each step of the start-up process.
Choose a legal structure. The business entity type chosen will have a direct effect on the owner’s liability concerning the business. Financial, legal and tax responsibility can differ greatly depending on the business structure. There are benefits and disadvantages to each type of business entity; it is imperative to study and consider each type. The legal structure can be any of the following: sole proprietorhip; general partnership, limited liability corporation (LLC), S corporation, C corporation and not-for-profit organization. If you are uncertain of the structure you should choose, it is important to get professional legal advice.
Register for state and local taxes by acquiring a federal employer identification number (FEIN), or EIN. All partnerships and corporations must have a FEIN. To apply for the FEIN go to the IRS website or call 800-829-4933. The form needed is an SS-4. A sole proprietorship may use the individual owner’s Social Security number for tax purposes with the exception of businesses that pay employees or sell alcohol, tobacco or firearms; these businesses also require an FEIN.
Register a business name. Any business that is not operating under the owner or legal entity’s name must register a fictitious name also known as a DBA (doing business as). In Pennsylvania the fictitious business name is filed at the department of state office. Use the Online business registration interview (OBRI) on the Pennsylvania open for business website.
To do business in Philadelphia you will need to obtained a business privilege tax account number, and certain licenses and permits. The license and permits will depend on the type of business being started. All the forms and information needed can be found and submitted on the city of Philadelphia, business services website.
- Sole proprietorship and general partnership are common for new small businesses. A sole proprietorship is a business with one owner, while a general partnership has more then one owner. These two business types give the owners complete control of the business but do not provide financial or legal protection for the owners. The next business entity is the LLC or limited liability company. The LLC gives the owner some of the business control of the sole proprietorship or general partnership but also provides some of the benefits of the corporation such as a limited amount of legal and financial protection. The final group of entity types is the corporation. The corporation protects its members from legal and financial responsibility. Corporation types include general corporation, C corporation, S corporation, and not-for-profit. Members or shareholders own corporations and make all business decisions. Corporations are also subject to different federal tax guidelines. It is important to do the proper amount of research or consult legal advice before choosing the