There is no shortage of advice from experts and entrepreneurs to help you open a business. Have a business plan, they say. Make sure you have accumulated enough capital. Put together a team of consultants. Watch your head. Be prepared to spend a lot of time.
All this advice is true. But what if you start a business in Philadelphia? Is there anything additional you should know? The answer is yes, a lot of things.
“Philadelphia has its own way of doing things,” said Evy Cruz, a small business coordinator for Philadelphia VIP, a nonprofit organization that provides volunteer attorneys to provide pro bono legal representation to Philadelphians for individual and business purposes. Cruz heard “the feedback from small businesses and other service providers is that it’s uniquely difficult to start a business in Philadelphia because there’s often a lot of red tape.”
Yes, there is red tape. But the process can be much easier if you know the basic steps ahead of time — and get some help.
Step 1: Set up a Philadelphia tax account
Step 1: Set up a Philadelphia tax account
To open a city business tax account, you need a federal tax identification number, which can be either an employer identification number (EIN) or just your social security number, depending on whether you have employees. You can apply for this on the Internal Revenue Service website.
You also need to decide on your business education. This isn’t really a Philly thing. See the article : Vicksburg gets high-tech cameras through the NOLA project to fight crime. It is more about choosing the type of business organization that is most suitable for tax and legal purposes. Different legal forms your business can take include S corporations, limited liability companies and partnerships, as well as sole proprietorships and C corporations.
This decision affects the types of tax returns you file with the city, state and federal government. Because this decision can be complicated and because it is so important, it is best to get help from an attorney or an accountant, or explore your options on such legal sites as LegalZoom and Incfile.
Once you’ve done the above, you’re finally ready to apply for a Philadelphia tax account at the Philadelphia Tax Center.
Step 2: Get a Philadelphia commercial activity license
Step 2: Get a Philadelphia commercial activity license
This is required for every business operating in the city and is issued by the Department of Licensing and Inspections. To see also : CMC asks businesses to complete a workforce needs survey.
You must have a city business tax account number to obtain this license, which you can apply for online.
Step 3: Understand the taxes you must report
Step 3: Understand the taxes you’ll have to report
There are more than a dozen types of business taxes in Philadelphia, ranging from the business income and receipts tax (BIRT) to the outdoor advertising tax. See the article : Mayor Adams has announced a $1 million anonymous donation to start the Student Loan Forgiveness Program.
Some are specific to certain industries, such as hotels or liquor sales. You should be aware of which ones your business is responsible for paying.
Instructions on the various business taxes can be found on the city’s website.
If it seems that there are many taxes to consider, well, there are. But Karen Fegely, deputy commerce director in the city’s Commerce Department, says the city has programs to reduce some of those costs for start-ups.
“Businesses with $100,000 in Philadelphia taxable gross income or less have no BIRT liability and are not required to file a return,” she said. “In addition, new businesses that employ six people in the first two years of operation can receive a two-year tax holiday on the BIRT.”
Fegely also says additional tax credits such as the Job Creation Tax Credit provide $5,000 per job created in Philadelphia, as long as additional requirements are met.
Step 4: Apply for zoning permits and licenses
Step 4: Apply for zoning permits and licenses
Depending on the type of business you’re starting—especially if you’ll be receiving customers or outside visitors at your location—you may need to obtain a zoning permit from the city. The Philadelphia Zoning Code regulates development and includes rules related to property use, the height and size of buildings, population density, parking requirements, sign placement, and the character of development on private property.
The best place to find out what zoning requirements apply in your targeted location is the City Atlas website.
Special rules apply to certain trades. For example, if you are a contractor, a sheet metal technician, a plumber, an electrical contractor, an engineer – or if you want to perform a number of other special functions related to the construction industry – you must obtain a specialized license from the Department of Licensing and Inspections .
If you’re a little overwhelmed by all of this, you’re not alone. Therefore, there are a number of nonprofit organizations such as Philly VIP, SCORE, Philadelphia Industrial Development Corporation, the Women’s Opportunity Resource Center, and the Enterprise Center that can help. The Free Library of Philadelphia also runs workshops for starting businesses in the city.
In her experience, Cruz said, the city’s Commerce Department is also “very helpful,” especially its Office of Business Services. “They are very responsive and knowledgeable,” she said.
According to Fegely, the Office of Business Services helps business owners at “all stages of their entrepreneurial journeys” with one-on-one support. Individual business owners can meet with a dedicated business services manager who can help them get started.
“Business Services Managers can provide advice that simplifies the process of providing city services, understanding business regulations and opening and operating a business in Philadelphia,” she said. Entrepreneurs can call the city’s Business Services Hotline at 215-683-2100 or email business@phila.gov.
Gene Marks is a certified public accountant and the owner of the Marks Group, a technology and financial management consulting firm in Bala Cynwyd.
