Question regarding running a business from home and building?

say the owner of the business lives on the east side of the US and he wants a friend on the West coast to be his right hand man or manager. how does this actually work in terms of it being official? is there a contract to be signed? can you fax a signed contract? how does the person on the west coast get paid if this is even possible? if the business has a website, and the person that lives on the west coast is listed under it as a manager could that be made official?

Good answers here already!

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You will need a Contract and a " DBA" ( Doing Business As" from the Court House. Then you can get a " Tax I.D. # from IRS. Then you can go to your Bank and Open a " Business Account" under your Business Name and Pay the person the Agreed Rate out of that Account. Make sure you Get a IRS Form W-9, a Copy of the Managers Social Security Card and Their Driver's License, along with some form of Standard Application that Plainly States that the Manager is an " Independent Contractor" for your Company.

There are a million ways to deal with that. Yes, a faxed document is as good as an original unless it's contested with proof. Paying someone anywhere is easy, just send a check or do it via electronic transfer to a bank account or other means that are to numerous to list and less effective.

How you deal with the legalities depends on what you want to do. A lot of people just work off a signed agreement and do business as a sole proprietorship. If you do something which requires a tax id and licenses and such stuff you do of course need to get those.

If you don't want to be an employer and do all the tax paperwork then you do need to have your friend work as an independent contractor. He will have to understand the tax implications of this, as you will. There is about a 15% tax off the top of net profit income you have to pay called self employment tax, which covers social security and things like that. Usually this comes out automatically by an employer, and it takes some self employed people by surprise at years end. If you want your friends to work as an employee I'd recommend an employment service in the area you are based which will do all the paperwork and send payment and all that.

Since we brought up your companies base, we should address that. You want to research taxes and other laws and choose the most friendly state for your business. Usually California is a night mare, and some places on the east coast are to a lesser degree. If you want to use another state you probably need to set up a corporation, which might be a good idea anyway. A sub chapter S corp is a good way to go often if you don't plan on getting huge fast. That won't get you charged a corporate tax in addition to the income you make from the business.

I would probably talk to a good accountant for business if I were you. A good one can really help a lot, but it will cost you over $100 an hour and could be up to $300 an hour or more in some areas ... but a good accountant can save or make you a lot of money too.

Good Luck on whatever it is you are going to do.