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As a small business person-slash-advice columnist I dread the first quarter of the new year. Not because in my mind my own business fortunes start at zero again every January or because I have already dismissed every New Year’s resolutio

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

n I made when the clock rang out the New Year.

No, the reason I dread the first quarter of the new year is that my email box floods with questions about business taxes and the IRS, my two least favorite subjects on earth. It’s not that I

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

am opposed to paying my fair share of business taxes. It’s that I consider the IRS to be a little like Beetlejuice, the movie demon who appeared only after his name was called three times in a row. My fear is if I write too many IRS col

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

umns their dark agents may appear on my doorstep, ready to drag me away to an uncertain fate.

Oh well, one must do his duty no matter the consequences, so here we go….

Q: I am starting a small retail business. While talking to a potenti

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

al supplier last week he asked for my EIN number. I had no idea what he was talking about, so I told him I would have to get back with him because I didn’t have the number handy. What is an EIN number and why do I need one? -- Robert P

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

.

A: Robert, do you remember the old Johnny Rivers song “Secret Agent Man?” There was a line that said, “They’re giving you a number and taking away your name.” An EIN isn’t as cool as a secret agent number, but it works much the sam

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

e way when it comes to your business’ relationship with the IRS. Instead of identifying your business by name, the IRS identifies your business by EIN.

EIN stands for Employer Identification Number and is also known as a federal tax ID n

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

umber. The EIN is a nine-digit number that the IRS assigns to businesses and is used to identify taxpayers that are required to file various business tax returns.

Does your business need an EIN? According to the IRS the answer is yes i

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

f:

· Your business has employees

· Your business is a corporation or partnership

· You file returns for Employment, Excise, or Alcohol, Tobacco and Firearms tax

· You withhold taxes on income (other than wages) paid to a non-resident a

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

lien.

· Your business has a Keogh plan

· Your business involves trust, estate, real estate mortgage investment conduits, non-profit, farmers’ cooperatives, or plan administrators.

Applying for an EIN is a relatively painless task. You

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

an apply online at the IRS website (irs.gov), apply by mail or telephone, or if you do business in a state that participates in the Federal Employer Identification Number project you can apply through you local IRS office (sorry, Alabama i

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

s not one of them).

You will need an EIN number prior to filing business returns with the IRS, so make sure you give yourself plenty of time to obtain one. For more information on EINs and your business, consult your accountant.

And whi

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

le we’re on the subject …

Q: I made extra money selling things on eBay last year. These were items I picked up at yardsales mostly. My husband says I am responsible for paying income tax on the money I made, but I disagree. This is jus

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

t my hobby, not a business. What do you think? -- Gladys A.

A: With so many people selling on eBay these days this is a question I get quite a bit. In fact, I have plans for a future “eBay and taxes” column, but I believe your questi

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

on is more, “is it a hobby or is it a business?”

Again, I went to the horse’s mouth (at least I think it was the mouth) for the answer. According to the IRS there are a number of factors that help determine if your hobby can be considere

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

d a business and thereby make you susceptible to the IRS tax rules governing business.

Do you carry on the activity in a business-like manner? If you conduct your eBay activities like a business, i.e. you keep business records, track you

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

r profit and loss, keep a separate checking account, etc. then whether you think so or not, your hobby is considered a business.

If you put considerable time and effort into your venture, the IRS may contend that you do so for profit and

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

not fun. It seems the folks at the IRS don’t believe in doing things strictly for pleasure. My guess is, neither do you. If you weren’t making money selling on eBay I doubt you’d be bothering getting up at 4am to hit all those yardsales

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

. Then again, maybe you would…

If you depend on income from your eBay activities for your livelihood, it’s a business, not a hobby.

There are a number of other factors the IRS considers to determine if a hobby is really a business, but

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

in your case I think that covers the basics.

For detailed answers to any tax question you should consult a qualified accountant or tax attorney. God forbid you rely on a guy who is afraid to mumble the letters “IRS” three times in a row

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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While so much attention is focused on growing your customer list, what is often overlooked is that your current customer base is your best source for additional revenue. It’s most likely to be the most valuable asset of your business and unfortunately every year a percentage of that customer base stops doing business with you. What you need to do is limit that loss because the longer you hold on to a customer, the more money you make.

Are you layering your qualifying questions for the best result? This article gives you concrete examples of exactly how to do that!

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