I have a job. I am a retail associate at a Penn State apparel store called "Lion and Cub". I’ve been working this job for more than a year, it’s fun but there are sometimes long durations of no customers forcing employees to find entertainment.
Me and my coworkers were bored out of our minds, she started to watch Netflix on her phone and I just stood there thinking about life. What do I need from CVS? What do I want to eat later? Is the sky blue? You know important questions.
I began thinking about BodiedByScorp™️ (my business name) and what I needed to do to progress it. I started to think pessimistically to prepare myself for anything: What could be the worst possible thing that could happen? The IRS audits me because I owe millions in taxes and I go to jail. A very cynical dramatic answer but then I realized I didn’t know how my business would pay taxes? My brain began to spin, I actually had no idea how any business pays taxes. How does CVS pay taxes?
Now you may be thinking, isn’t she a college educated student how doesn’t she know how to file for taxes. Trust me, I was thinking the same thing. How come I never learned or understood how paying taxes work or anything tax related at this point of my life.
As I ran a google search about how to pay taxes, I realized that taxes were not the only governmental issue I could run into. What about if someone got hurt and tries to sue me, do I have insurance? What if I give reckless misleading information (which I don’t plan to) that causes someone to get injured and they try to sue me, do I have a lawyer?
Am I a LLC or a Sole Proprietor? What is a LLC or Sole Proprietor?
The questions kept coming and my coworker could read it on my face.
“What’s wrong, you look worried?” She asked me.
I wasn’t worried, I was unprepared.
You can’t just wake up and start a business… well you can but it’s probably not the best idea. I wanted to cover all my grounds before launching but I almost missed the important one; the law. There are so much more important obstacles that I could foresee in my future (especially in a post Obama, Trump world) that I needed to get myself together, legally.
Fortunate enough, being at Penn State, we are surrounded by helpful resources. I wish I knew about all the free supplies and faculty that we had here my freshman year; virtually you can get help to do anything.
I first met up with Anne Hoag. She is an entrepreneurship professor that was not only a leading force to getting entrepreneurship prominent at Penn State but she is also an expert on helping students start small businesses. If she doesn’t have an answer, she will give you contact information for someone who does.
In our meeting she broke down for me the difference between an LLC and a Sole Proprietor, how to become a non-profit, where to register my company and sent me to LaunchBox, an establishment in the downtown State College area specifically focused on helping students begin businesses.
After meeting with her I scheduled 2 appointments at LaunchBox, one with a lawyer (that is free of charge) and one with a business advisor. Honestly, two of the best decisions I have made in life.
Linda Feltman, the business advisor, spat out a lot of information to me. It was overwhelming because my mind had never even thought about any of things she was saying. I left the meeting with 2 pages of notes and a list options I had to explore. Thomas Sharbaugh, the lawyer, sent me to one of his law students, Vittoria Buzzelli. She has been helping me write up Terms and Conditions (another legal aspect I forgot) and how to get my business registered.
If I had not attended this university, I wouldn't have gotten these critical assets. Although I had help, that still didn’t mean that I was off the hook. I had to do my own research and findings to verify everything. I wanted to make sure I was aware of all my options and made the best possible decision for myself.
Time wise, I didn’t have anymore. My days were packed, my sleep was deprived and I was exhausted. But, I was willing to sacrifice anything to make my business successful. Somehow, I found time to cram readings of New York State laws in my day.
Very boring but imperative.
I would advise anyone who is starting a business to really look into the legality of it and how to avoid the IRS auditing you and you going to prison for 25+ years (or something a little less severe.)
Song- I’m Alright (Cudelsac)
“All I know is baby I’m so tired"
- Childish Gambino
Here’s a little synapsis of terms you should look into. I will include my definition and a link with the formal definition as well. I hope this helps:
LLC- This stands for a limited liability company. This separates you from your business. These are very popular in that you can be a separate entity from your business. Therefore your business can have its own bank account, tax identification number and you (for the most part) aren’t personally liable to debt or other legal matters in regards to your business. However, if you are dependent on someone (parent, guardian, other) you should look into if they have to file their taxes differently or if they can claim you still under their taxes. You also have to register your company as a LCC in your state and it can be done online.
Sole Proprietor- This is when you are your business. You get all the profits after tax but you also are liable for all its losses. Anything that happens to your business is virtually happening to you. This is the most common chosen paths for most start-ups. This makes your business easy to own, easy to start and you get to keep full control over everything.
Terms and Conditions – This is the giant contract of stipulations that you probably never read when signing up for something. However, these are your conditions and exemptions you tell your customers. If their information could be sold to third parties, if they need to be 18 and up or any other information you need them to know you put it in here. Often times people skip through this and don’t know what they are giving up or what they owe a company. The terms and conditions are important because it makes your company transparent and gives all the facts to customers.
Privacy Clauses/Policy – Often bundled into the Terms and Conditions, this is a statement to tell customers what you are doing with their information. Some sites sell it while others keep everything confidential. It is important to let the people know exactly what will happen when they sign up so they aren’t blind sighting later.
Taxes – To file for taxes you first have to be making a profit. Most start-ups don’t make profits for the first 5 years and incur losses up until then. Keep track of all the money and expense spent in your business from the moment you conceived it. This will make filing for taxes so much easier. Once you have a profit, go see a tax agent to help you figure out the rest. Knowing a little bit of accounting can also help you understand positive or negative cash flow. I am not too familiar with taxing rules but I am keeping track of every dollar spent on my business until it is time for me file them.
Trademark – Trademarking is when you have you company name or logo and are basically telling the public that you own all rights to it. Putting the “™️” next to it symbolizes that it is yours and it is no charge to you. However, you need to trademark your logo or name from the first moments you use it. Make sure no one else is using it by doing a simple google search. After you trademark, however, it is your responsibility to make sure no one else is stealing your name or logo. The government does not regulate this. If you see that someone is, send them a cease and desist letter immediately.
Registered Trademark – Registered trademark is when you go through the government and legally have your name or logo trademarked. This is recognized by the government. This is in the form of the “®️” after a name or logo. You have to pay to file this and upkeep it for as long as you are using it. Although it is registered, it is still your job to make sure no one else is using it as well. If matters go to court, registered trademarks may hold up better but there is no guarantee that you will win.
Copyright- Copyright is when you show that your work/content/pictures are yours and is represented by the “©️” or “Copyright©️”. You can either register your work by filing and paying the copyright fee or choose not to.
Terms and Conditions: http://thelawdictionary.org/terms-and-conditions/
Privacy Clause: https://termsfeed.com/blog/sample-privacy-policy-template/
Trademark/Registered Trademark: https://www.legalzoom.com/business/intellectual-property/trademark-registration-overview.html
I am in no way a legal system guru or am formally trained in any legal matters. I am not giving guaranteed results, prescribing you to do anything or am 100% positive that my legal opinion is correct. These are my understandings of what I have been told and my own research. Please feel free to go out and research on your own and make a decision that is best for you. These are my opinions. Thank you