TOPICS COVERED:
Getting a federal EIN number.
Getting licensed by the state.
Getting a business bank account.
It is highly recommended that every independent travel agent form a small business. The government allows you to do business as a sole proprietor using only your social security number, but if you think that this business will generate decent income, or you would you like it to have some separation legally from your person, then it's recommended you form a Limited Liability Corporation (LLC). If you'd like to explore business type options like Sole Proprietor or LLC, read this informative article here.
It boils down to:
How you are taxed
Your legal liability
Costs of formation
Operational costs
Legal separation from your person means that duties performed in a business capacity by you are actually being done by a business. Therefore, your personal liability (meaning legal risk) is limited. It is pretty easy to get up and running, and I suggest you get this all squared away to your liking before you start as an agent.
When you have a small business, you will have some additional tax requirements and accounting costs. So, I suggest you speak to an accountant, although most people are able to do the first steps on their own.
Keeping it simple as a Sole Proprietor
If you decide you'd rather not form a separate business entity right now, that's fine. You can start as a Sole Proprietorship. There's very little paperwork involved, but if you want to do business as a different name e.g. Jess.Travel then you'll need to get something called a DBA or "doing business as." You can always upgrade to an LLC later on.
Here's a breakdown of all 50 states Sole Proprietorship requirements.
Starting your travel planner business as an LLC
First things first, if you're going the LLC route or going to have employees you need an Employer Identification Number or EIN from the IRS. That starts the whole ball rolling.
Head here to the IRS EIN site and apply online.
You will need to choose your company name. However, this can be a more generic "holding company" kind of name. This is because you can always file a "Doing Business As (dba)" form for additional cost at the state level in the next step, which will allow you to do business as other names. For example, this company's name is actually Jess Dorsey LLC dba Jess.Travel. Do a quick search to make sure no one else has that name. Any duplication might delay the whole process. You may also want to do this on your state's site as in the next step.
Fill out the online form and get your EIN instantly. The cost is free.
On to step 2...
Register with your travel planning business with your state
Next, you'll need to register with your state. There are literally 50 different websites for this, but I'll use Florida as an example, since we're here. Head to your state's Division of Corporations.
For Florida, go to Sunbiz.org.
First, use the "search records" function to search your name and make sure it's not in use.
Click on "Start a business," and fill out the form, following the procedure for LLC.
The cost for this will be around $125 depending on if you want certified copies of paperwork. I've never need the copies for anything before.
Wait to get your document number, and head to step 3.
Get a business bank account for your new travel planning business
Choosing a bank will depend mostly on convenience and proximity to you. You should decide whether you'd like a brick and mortar physical location to go to, or an app based experience. I like it when a bank has a robust app experience, as it just makes life easier. I do have a soft spot for smaller Community Banks or even Credit Unions.
Our choice for banking is Novo Bank. It's an online only bank that has a superb app, and it's very easy to get started with a business bank account.
If you go local, hand them your EIN paperwork and State Document paperwork. Order some checks and get your debit card.
Getting your travel planning business licensed and insured
Congrats, you're almost there. Think of it this way...you did the federal EIN with the IRS, the state incorporating at sunbiz, and now need to register with your county and potentially your city. Often overlooked, the county license is sometimes asked for should you want to hold an event in town at a venue.
The county business license is called a Business Tax Receipt, and it is obtained by the County tax collectors office. Google your county's tax collector, navigate to forms, and search for their Business tax receipt application. It'll look something like this. The county site will probably have info on whether you need a city license.
Success! You're on your way to booking custom travel itineraries for clients. The legal part is out of the way and you're a real business owner. Now is a good time to tell your accountant. We'll cover paying yourself in a future article. Just remember that profits are taxable. You can make quarterly federal tax payments through a system known as EFTPS or you can pay it all at tax time with your return.
Next, you might want to get insurance, and you might need to get your Seller of Travel (SOT) license if you're operating in one of the states that require it, like California, Florida or Iowa. Approval can take weeks, so get on it.
For more information on business structure for personal travel planners head here.