Starting Own Business Questions
Hi, There. I have always worked under someone else as an esthetician. I am currently in school for Nursing and want to continue to do business but on my own. I was hoping to utilize a room in my home but it does not have private access. Does anyone know any way around this and also, how do I obtain a business license to purchase product when I dont have my own business? I have been offered a 25% discount from most lines but being an esthetician I would like to be able to purchase at cost. If I don't have employeess how do I go about getting a business license? It isnt an option for me to rent space at the moment and I do not have a spa near to my home that needs an esthetician PT at the moment. Any suggestions are welcome. I live in PA. :)
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Permalink Reply by coldsalineplexus on
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Congrats! The private access depends on your state board's rules, and how flexible your inspector is willing to be. The esthetician I saw before I became an esthetician did business from home - she had a 2nd master style bedroom converted into a spa with a changing area, consultation area, makeup station, product display, and treatment area. She only ever had one client in at a time, and she had the curtains screened between the different areas to help it feel more spa-like. It was very professional and relaxing. At the same time, it did not have a truly separate entrance, either. The entrance was through the back (kitchen) door, and then up the stairs. To use the bathroom, you headed down the hall past the kids' bedrooms. She kept her house clean and orderly and I never felt weird about it in the slightest. She scheduled around family activities so if her kids were home when she was conducting business, they were being supervised by her husband or a sitter. She also had a system for picking up product from the screen porch that led into the kitchen entrance, so she did not have to maintain open hours. This was in SC. I have only ever been licensed in LA, so I don't know whether she was within the law or not, but I do know that she had her business license and licensed establishment status with the state board, so either it was legal, or her inspector was flexible.
If there is any way that you could say your back door or kitchen door or side door or something is your business entrance, I would encourage you to do that and go ahead and apply for your licenses. In most places, you will need a salon/spa establishment license with the state board of cosmetology, plus an occupational license from the city/municipality, plus a state tax ID number/resale license. I would apply with state board first so that they will come and do your inspection before you spend money with the city and state boards of revenue. Make sure your house is immaculate when you are inspected, have your treatment room set up within the letter of the law (eg. those silly fumigants, etc.), and be very friendly and genuine with the inspector. I have a lovely working relationship with my inspector, and it does not have to be all antagonism and trying to play the "gotcha" game. Having a well cared-for space, products lined up neatly (even if it's just your basic products from school or your own stash), and easy visible access to your barbicide, fumigants, closed towel storage, etc. goes a long way to establishing credibility (both with clients and inspectors). Once you get that green light, the business licenses are a cinch. Most places it is a visit to City Hall. You could even do those first if your goal is just to establish wholesale accounts, as the product lines will only require your resale tax ID and your esthetician license, not your salon establishment license.
The other thing to worry about is your official business status with the Secretary of State. This is relevant for your business banking. Your business banker should be able to help you register with the SoS. You'll have to decide if you prefer to do business as Jennifer dba Awesome Skincare or Awesome Skincare LLC (just an example, silly name). I started with dba and then switched to LLC because I was uncertain if my business would succeed, and didn't want to create a legal entity that could be hard to destroy if I needed to, and because "federal employer ID" sounded scary and permanent. My fears were unfounded, and it turned out to be a hassle when I was ready to go LLC because I had to change federal tax ID numbers and business entities and open new accounts and close the old ones and open new accounts with the local and state governments under the new federal employer ID number instead of my SSN, etc. So I'm biased, I recommend starting with the LLC.
Given this, your order of operations should be:
- State board salon/spa establishment application and inspection and wait for green light
- PA Secretary of State website to establish an LLC and obtain its unique federal employer ID
- Trip to the bank to open business checking under LLC with your new federal employer ID
- Trip to City Hall to apply for a local Occupational License (which will also open your local sales tax account)
- Visit with your state's revenue office (sometimes located at City Hall, sometimes in another location) to apply for a state resale permit (which will also be your state tax ID account)
- Wait for the state resale permit to come in the mail, and then you can provide it to your product companies in order to get wholesale pricing.
- THEN (and only then) start spending money on your actual equipment. Unfortunately you will usually need a table, steamer, lamp, and foot-pedal trash can for your inspection (ymmv depending on state), but you can still usually use an existing piece of furniture as your "trolley," use an existing laundry basket with a lid, use an existing piece of furniture for closed towel storage, etc. Basically unless you order from equipment companies with generous return policies, I wouldn't invest in equipment until you know you can actually get licensed.
Good luck!
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Permalink Reply by Jennifer on
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That is an awesome and super great reply!!!! Thank you!! I have my work cut out for me as I do have 2 small boys and 2 dogs. Not that my home is a wreck, but I am a busy mom and I have a FT job that I work from home. With all the response you gave I hate to ask another question ...but, would you recommend a simple software for keeping track of business transactions? This really is only going to be very small time so I was thinking of just keeping a book but a program might be easier. Thanks again for the detail. At least I have some direction now!!!!!
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I've used quick books for several years and really like it. Good luck on everything.
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I have went through my township and I cannot operate a business in my neighborhood. My next step is to rent a space from someone. Is there anyway to get your business license to order product to do this?? I am not sure what they mean by business license if I don't actually own a business. Has anyone else done this successfully and can you explain the process to me? I have someone who owns their own place and I can possibly rent space from her and work that way but I can't purchase anything due to not having a biz license. Does anyone have suggestions for a business run like this? Sorry for all the questions, I feel like I am climbing a mountain of ice!!!!
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Yes, when you rent a space you have to start a business. This means business license, LLC, and everything as described above.
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Okay, I get that but how do you apply if you do not have employees or do not intend to have employees? It seems like quite a big to do for such a small thing. Also, if you don't have a profit in 5 years don't you have to close your business?
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You can be the only employee in your business. I would go to your township and see what you are able to do. I would think you would be able to use your room you were intending to for work, for a home office instead, that way you have an address for now. I don't live in PA but I still use my SS number and do my business taxes on my personal return. I have a separate checking account but it's not a "business" account. I think it would be best to do all the above mentioned especially in case of a lawsuit if one of your clients got hurt and sued but for now you may not have to. Just a thought. Not sure on the 5 year thing, haven't faced it but may buy the end of this year!
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Yes, exactly what Deborah Kenney said - you don't have to have employees to get an EIN.
SOLE PROPRIETORSHIP - uses your own SSN or an EIN, no protection for your personal assets from lawsuits
LLC - uses an EIN, protects your personal assets from lawsuits, costs about $75 extra
Other than that, they impact you the same way... for either one, you should bank separately from your personal accounts, you must file a Schedule C, and you do need an occupational license and state reseller license.
***A note on banking - if you don't do a good (perfect) job of separating your banking, then in the event of a lawsuit, a court could decide that you negated your LLC by "comingling" with your finances, and you could lose the protection. For this reason, you should have a separate account, and for it to be a business account under the business name and EIN. Start it off with a cash deposit as your capital investment or seed money.
As for the profit thing... that requirement (I've heard you have to show a profit three years out of five, but I've never looked it up) is to make sure people aren't claiming business deductions for their hobbies. If you are able to pay yourself anything at all (eg $5 yearly salary) from your services/sales, you have made a profit. In other words, unless it is just a money-sucking hobby, you're good. In our industry it's not hard at all to meet that requirement.
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Okay, perfect. Thank you both of you!! I like the office idea until I start. I am also a yoga teacher and I am trying to bring the two together so that when I finish nursing school I will have this unique business..LOL!!! Good starting place. Do you recommend having a lawyer or going through one of those start up business sites or doing it solo? I found this Legal 1-2-3 site and was wondering if they take the pain out of it??
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I love MindBody so much but it might be more than you need for keeping it simple. I would open this up to others who use less-expensive technologies.
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