Business or Hobby

When deciding on starting your own business, take a good look at your focus and your goals to decide whether you have a true business, or a hobby.

A simple rule of thumb:
A business you make money, with a hobby you spend money.

Because the IRS understands that business startups (and other circumstances) may cause Net Operating Losses, they have laid out their own guidelines to help you determine whether your activites are a business or hobby:
*If your activities have produced a profit for 3 of the past 5 years, you may presume it is for profit and is a "business"
*If your activities are treated as a business and you are dependent on the income for your livelihood
*The time and effort you put into your activity indicate that it intended to be profitable
There are other more specific guidelines which you can find in IRS Publication 535.

Why the difference?
Hobby income and business income are both taxable.
Hobby losses are NOT tax deductible while business losses are.

Tips on Trademarks

If you´re using a trademark or service mark, be sure to:

*Capitalize the first letter.
*State on your packaging and/or advertising that your company owns the mark.
*If you´ve registered the mark, use an R with a circle around it to indicate this.
*If you´ve registered the mark only within your state or not at all, use the letters TM for trademark or SM service mark to indicate your ownership.
*Enforce your rights by notifying other businesses or the media if they´re improperly using your mark.

Making Connections

If you´re just getting started in your business and aren´t sure where to turn for networking, advertising, and professional support, go to your local Chamber of Commerce. Better yet, become a member and get involved in your local business community.

Naming your business

When considering a name for your new company, there are some required registrations (usually filed at the county level), and there are state registrations. Depending on the structure of your business, you will most likely need only one or the other.

Required Registrations
1. Trade or fictitious name: In most states, this registration is done at the county level by filling out a short form and paying a small fee. Usually a sole proprietorship or a partnership requires such a registration, but it may also be required of a corporation if the company will be operating under both the corporate name and a dba.
2. Incorporating. As part of the process of incorporating, you´ll be registering your corporate name with the secretary of state in the state you´ll be doing business. This registration process will reveal whether any other business has a confusingly similar corporate name.

These "required" registrations not only show others that you are using a particular name, but are also a means of tracking your business by the local taxing authorities.

Optional Registrations
For additional protection, and if you plan on doing business nationally, you may want to look into registering a trademark or service mark. Conduct a search of the federal register of trade and service marks. You may refer to http://www.uspto.gov for the patent and trademark office information. At the time of this posting, the initial application fee is $325 (or $650 in some instances). There may be additional fees (ranging around $100 each) for various renewals and other actions.