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jbsiii3
01-27-2011, 11:19 AM
Hello SBF,

I am starting a mostly online t-shirts business that will also sell the tee's at local small shows. Before I get to the selling though I obviously want to do things by the book so registering a DBA with the State is first in line.

I have reviewed the form that needs to be filled out but I still have a few questions that I need to be advised on. Attached is the Assumed name form I have questions about: http://www.sos.state.tx.us/corp/forms/503_boc.pdf.

1. The first question is for the business name I want to operate under, correct?
2. In #3, if I want to be I sole proprietor, I need to put that in the "other" section?
3. In #9, if at this point I don't plan on changing the name I should check 9a?

Secondly, once this is filed, where should I get information about how to file the yearly taxes? Estimated taxes need to be paid throughout the year right?

Thanks for all your help!

vangogh
01-27-2011, 12:01 PM
Welcome to the forum jbsill3. If it were me filling out the form I'd interpret all 3 questions exactly as you did. I'm not the legal authority of course. You could always give a call to the secretary of state if you want to be 100% sure. If it were me I'd fill out the form exactly like you're thinking.

For estimated taxes visit the irs.gov site and look for form 1040es. It's not a long form and there are instructions on how much you should be paying each quarter. It's an estimate though and you can adjust your payments throughout the year. I try to estimate on the high side for the first payment in April and then adjust as the year goes by and I have a better idea what I'm making that year.

There are some requirements about how much you have to pay. Mostly those will be based on prior years so I don't think it's something you need to worry about this year. After a couple years being in business and filling out taxes you'll get a better feel for how much estimated taxes you'll want to pay. Ultimately you're going to owe the IRS whatever you owe them. Usually I prefer to pay more in estimated taxes throughout the year and not have a big bill at the end.

jbsiii3
01-27-2011, 12:08 PM
Thank you Vangogh for the response. I get a little nervous about tax related talk because of the fact of owing money I guess. I appreciate your incite. Now, when I do year end taxes as a sole proprietor, will I be doing my taxes just as I do normally? (ie. I currently file married, file jointly) Will the 1040es just be another supplemental form to add to that?

Spider
01-27-2011, 02:15 PM
Re; Assumed Name record. This is administered through the County Clerk's office at the County Court. Go to your CountyCourt building, enter the County Clerk's office, and they will help you fill the thing out right there and then and, as long as you have the money with you (about $20, I expect) you will walk out of there with a DBA certificate.

jbsiii3
01-27-2011, 03:01 PM
Sounds simple enough Spider. Now while I am there should I want to get an EIN # also? What is the typical process in going about obtaining one? I'd probably want to be able to buy items in bulk and wholesale so I know the number would be useful at times.

vangogh
01-27-2011, 04:24 PM
I found a phone number to call to get an EIN. I don't remember the number or where I found it unfortunately. I think it was through the Secretary of State website, but I'm not sure. The call was under 15 minutes. You may even be able to do it all online now.

With filling out taxes I use a 1040 instead of the 1040EZ I used to use. One of the big differences is previously you would have reported your income based on W2s. Now you'll fill out another form (1040 Schedule C) to show income from business. Then depending on your particular situation you may fill out other forms for items you purchased and are depreciating for example. I work out of my home and am allowed to deduct a portion of my home expenses as business expenses, which is another form.

Most of the forms I fill out I was led to by the 1040. It pointed me to the Schedule C, which pointed me to the 4562 (depreciation) and 8829 (business use of home) and others. The first year I filled out taxes I was admittedly confused and a few fields on various forms trip me up each year. It's gotten easier every year though. I start by looking through last years forms and grabbing those for the current year from the irs.gov site. 5 or 6 years in and I have a pretty good idea what I need to do.

If you use accounting software like Turbo Tax you won't even have to worry. The software should ask the questions that lead it to filling out the appropriate forms. I purposely wanted to do it all manually at first in order to learn more what I was doing.

With estimated taxes you're just trying to make sure you don't owe a lot at the end. In my first year when I had no business I was more concerned with paying as little as possible in estimated taxes. There's a formula on the 1040Es (2 I think) to help you figure out what you'll likely owe. The minimum payment is very small your first year, though if you think you'll make more money you should pay more in estimated taxes. I think the major requirement after that is to pay at least as much as you did last year or maybe should have paid based on your return. After a few years it gets easier to predict how much you'll make and consequently how much taxes you'll owe. Now I pay a little more than I think I'll need and roll over any return into the next year's estimated taxes.

The hardest part now is remembering that I have to make the payment. I need to mark my calendar and have it alert me a few days in advance.

I promise it'll get easier after the first year.

Evan
01-27-2011, 09:12 PM
I do not believed the "Assumed Name" form is correct, as often DBA's are filed at the county/city level and NOT the state level. That is for a legal entity (corporation, LLC, LLP, LP) to do business under an assumed name -- not an individual.

For an EIN, go the IRS.gov website and you can fill out the SS-4 electronically and get your EIN in 5 minutes, and print off the letter verifying it was issued to you. You'll probably need that information when you register in Texas to collect sales tax on the goods sold (assuming clothing is taxable in TX) to those with delivery addresses in TX.

I think vangogh stated everything fine regarding your tax situation. For estimated taxes, generally estimated tax payments are not required unless you have a balance due over $1,000. If you have a job on the side, you could have your withholdings increased to prevent making estimated tax payments (it's essentially the same thing). Otherwise, there is a "formula" for calculating it, based on your total tax obligation for the year. That requires you to do a bit of planning though for your income numbers.

Business Attorney
01-28-2011, 12:36 PM
Evan and Frederick (Spider) are correct. As a sole proprietor registering an assumed name, you should NOT be filing that Secretary of State form. Go to the website of the county clerk of the county in which you will be conducting business and look for the information there for filing an assumed name.