DISCLAIMER: These guides are for informational purposes only, and do not constitute professional legal advice. Please consult independent legal, tax, and accounting advice for information specific to your country and circumstances. dumpling is not liable to you in any way for your use or reliance on these guides.
Congratulations on launching your new business with dumpling. To help, here’s a list of things for you to consider to protect your business and set you up for future success and growth.
Establish a Business Structure ✅
Get an Employer Identification Number (EIN) from the IRS ✅
Obtain a Business License ✅
Open a Business Checking Account ✅
Get Business Insurance ✅
Ensure Compliance with Local & Federal Laws and dumpling's Terms of Service ✅
Get Ready for Your Business Taxes ✅
✅ Establish a Business Structure
Most business owners using the dumpling platform register their business as a sole proprietorship or limited liability company (LLC). Sole proprietorships are the simplest and lowest cost structure, though provide no legal separation between you and your business. LLCs provide limited personal liability exposure and protections, though it costs a bit more to setup and an annual fee.
Sole Proprietorship: This is the most common business structure in the United States because of its simplicity to setup and prepare taxes. One disadvantage is that there is no legal separation between you and your business, so you are personally responsible for debts, liability, and obligations. If you never legally formed a company and are operating the business under your own name, such as Jane Smith, then you are likely operating as a sole proprietorship. If you want to operate your business under a different name such as Jane Delivers, then you may consider registering a “doing business as” or DBA. Depending on your state, DBAs are registered with either your state or local county offices, also known as registering with a fictitious name. Typical setup costs are $10 - $150. Using an online tool such as LegalZoom adds another $100 or so to the setup cost. Registering a DBA also makes it easy to setup a business banking account. Here are a couple easy ways to get started with your DBA:
Limited Liability Company (LLC):
An LLC is a business entity that is separate from the owners. It offers limited personal liability from debts and claims. See What is an LLC. Typical LLC filing fees vary by state, typically from $50 to $500, to setup. The average is $127, per LLC University. Most states also require an annual fee ranging from $0 to $800. Fees are generally tax deductible. See specific state details and fees to setup in LLC Filing Fee by State
Here are a few resources to considering when setting up an LLC:
✅ Get an Employer Identification Number (EIN) from the IRS
An EIN identifies the tax payer to the IRS. Its similar to your social security number, but for your business. LLCs are required to have an EIN. Sole proprietors typically use their social security to file, though there are advantages to also obtaining an EIN number such as opening a business checking account and separating your social security from your business. See When Does a Sole Proprietor Need an EIN?
You can apply for an EIN for free directly from the IRS website, Apply for an Employer Identification Number (EIN) Online
✅ Obtain a Business License
Most small businesses need permits from government agencies to operate, particularly your city or county agency. Each location varies, though you can easily search for the requirements in your locations by using your favorite search engine. For example, try searching for “San Francisco business permit.”
Cost: usually $25 - $200
✅ Open a Business Checking Account
It is good practice to separate your personal and business bank accounts. There are also many benefits to have a business bank account, see Benefits of business bank account. To open a business account, you’ll generally need your EIN number and a business license. You can see rankings for the best small business banks here - The 11 Best Banks for Small Business in 2019.
✅ Get Business Insurance
Business insurance helps protect you and your business from accidents, lawsuits, and many unexpected costs. Learn more about the different types of business insurance here - Get Business Insurance. General liability insurance is a great place to start. General liability insurance helps protect your business from claims of bodily injury, associated medical costs, and damage to property. Here are some popular options to consider:
Cost: usually around $500 per year
✅ Ensure Compliance with Local & Federal Laws and dumpling's Terms of Service
You are running your own business, so you are responsible for ensuring that your business is operating legally and within dumpling’s terms of service. You should of course not purchase or offer services in violation of federal or local law. In addition, the following items are prohibited on the dumpling platform:
Counterfeit goods; illegally imported or exported goods
Cannabis and related goods;
Tobacco, e-cigarettes, and e-liquid;
Weapons and munitions; gunpowder and other explosives; fireworks and related goods
Toxic, flammable, and radioactive materials;
Pornography and other obscene materials (including literature, imagery and other media) depicting nudity or explicitly sexual acts;
Sexually oriented items (e.g., adult toys); and
Drug paraphernalia or any equipment designed for making or using drugs, including but not limited to bongs, vaporizers, and hookahs.
See dumpling’s terms of service for additional details.
✅ Get ready for your business taxes
As a business owner, you are responsible for accurately reporting your federal, state, and local taxes, including all income that you make on the dumpling platform. Dumpling is required to issue you a 1099-K to you and to the IRS if you had more than $20,000 in annual sales and 200 or more payments. See dumpling’s terms of service for additional details.
If you setup your business as a sole proprietorship or single-owner LLC, you are likely required to report all business income or losses on your personal income tax return using the Schedule C. This is called a "pass-through entity." For more information, consult with your accountant and see How Sole Proprietors Are Taxed or How LLC Members are Taxed.