How do you set up and organize your new ice cream business? This article is an excerpt from our FREE Ice Cream Business Guide – Click the book cover below for details on how to download for free.
How to set up and organize your new business
When starting your new business you will need to decide if your business will be a sole proprietorship, a partnership or a corporation. This should be one of the first decisions you make once you have decided to go into the ice cream business. Some people are overwhelmed with the thought of making this decision. Below are the definitions of each type of business and the pro’s and con’s of each type. While we can explain your options if you want further advice on which way you should organize your business you may want to consult with an attorney or an accountant.
Sole proprietorship: a business owned by one person or a married couple that files jointly.
Partnership: a business owned by more than one person.
Corporation: A business organized as a separate legal entity owned by stockholders. You can have a corporation with as few as 1 or 2 people.
Most people choose the sole proprietorship form for their ice cream shop. This is really the easiest option and probably simplifies things at tax time since most of the time you just fill out a business profit and loss form and you claim the shop income on your personal return.
Business license and Tax ID numbers
Once you have decided which type of business entity you are going to have you will have to set it up. For a sole proprietorship you will need to file for a business license in the city you live. At city hall there will be a department for business licenses. Go there and fill out the pertinent information. There will be a minimal charge to obtain this license. You will also need to register the name of your business in the city and county so that no one else will use your name and you will not use a name that is already registered. You will need to do the above for a partnership and a corporation as well.
All 3 forms of business will need the following numbers in order to sell products, charge taxes and file taxes. You will need a tax id number. Your tax id number is also called an Employer Identification Number or EIN. You can apply by phone at 1-800-829-4933 between 7am and 10pm or simply go to www.irs.gov . Once online search for form SS-4. When the search is complete click on the online application. On the next screen scroll down and click on “apply online now”. You can submit the form electronically or print and mail it in. There is more information online if you need more help. You must also check with your state regarding state and county sales tax id numbers. To find out what forms to complete check with the Department of Revenue in your state.
The most important decision you will make on the road to success is most likely to be the location you choose. You’ve probably already heard of the 3 most important factors involved in a successful retail operation: location, location, location. I cannot stress enough the importance of this, especially when it comes to ice cream.
Ice cream is an “impulse” product. In other words, people who buy ice cream usually do it on impulse when they see it and are tempted. It is less likely these days that people will make a conscious thought to go to an ice cream parlor. Sure, some still do, but many more sales are made to customers who happen to be brought to the area for another reason.