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STARTING SMALL BUSINESSES
How you can start small businesses
If you plan on starting small businesses, here are some tips and guidelines
to help you start small businesses of your choice. Remember these small business
tips are only guidelines and should not be applied literally to every business
situation. Every business opportunity that comes your way is unique and should
be dealt with according to your sound judgment.
Small business plan basics
A business plan precisely defines your small business, identifies your goals,
and serves as your firm's resume. The basic components include a current and pro
forma balance sheet, an income statement, and a cash flow analysis. It helps you
allocate resources properly, handle unforeseen complications, and make good
business decisions. Because it provides you specific and organized information
about your company and how you will repay borrowed money, a good business plan
is a crucial part of any loan application. More, it informs sales
personnel, suppliers, and others about your operations and goals.
Plan your work
The importance of a comprehensive, thoughtful business plan cannot be
overemphasized. Much hinges on it: outside funding, credit from suppliers,
management of your operation and finances, promotion and marketing of your
business, and achievement of your goals and objectives.
"The business plan is a necessity. If the person who wants to start a small
business can't put a business plan together, he or she is in trouble" ---Robert
Krummer, Jr. (chairman of First Business Bank in Los Angeles).
Despite the critical importance of a business plan, many entrepreneurs drag
their feet when it comes to preparing a written document. They argue that their
marketplace changes too fast for a business plan to be useful or that they just
don't have enough time. But just as a builder won't begin construction without a
blueprint, eager business owners shouldn't rush into new ventures without a
business plan.
Before you begin writing your business plan, consider four core questions:
What service or product does your business provide and what needs does it fill?
Who are the potential customers for your product or service and why will they
purchase it from you?
How will you reach your potential customers?
Where will you get the financial resources to start your business?
What does it take to start a small business?
Becoming successful even at small business takes
time, energy, motivation, and a
bit of luck. Getting an idea, testing an idea, finding the right people and
help, locating access to capital and credit, understanding and using technology,
and planning ahead are just a few of the steps to the process.
Throughout the various stages of your small business' lifecycle: starting,
financing, expanding, training and counseling, management assistance, advocacy,
and eventually closing a business -- the right help at the right time can make
all the difference between failure and success. Besides access to capital and
credit, business owners need management and technical assistance, training and
education, counseling and user-friendly access to information all along the way.
Before you open your business, determine which of the numerous local, state and
federal regulations apply to you. Avoid the temptation to ignore regulatory
details. Doing so may save time in the short term, but could become an obstacle
as your business grows.
Below is a list of the most common requirements that affect small businesses.
The list is by no means exhaustive, however, as regulations vary by industry.
For example, if you are in the food service business, you must comply with
health department regulations. If you use chemical solvents, you must meet
environmental standards. Consult the list below for a solid start to meeting
your regulatory requirements, and then carefully investigate the additional
regulations that affect your industry.
Business licenses
There are many types of licenses, and you will need one to operate legally. If
your business is located within the city limits, you must obtain a license from
the city. If you are outside the city limits, you must obtain a license from the
county. Investigate whether you need a business license through your state
government web site.
Business location
The three most important things in real estate are: location, location, and
location. Location is important in business too. Researchpaper.com has an idea
directory for small businesses. The directory provides research tools for
finding answers to many questions, including the question of how to find the
ideal location for a small business.
Certificate of occupancy
If you are planning on occupying a new or used building for a new business, you
may have to apply for a Certificate of Occupancy from a city or county zoning
department. For more information contact the county or city office in your area.
Business organization
There are many forms of legal structure you may choose for your business. The
most common structures are Sole Proprietorships, General and Limited
Partnerships, C and S Corporations, and Limited Liability Companies. Each legal
structure offers organizational options, which are appropriate for different
personal situations, and which affect tax and liability issues. We suggest you
research each legal structure thoroughly, and consult a tax accountant or
attorney prior to making your decision.
Fictitious business name
Businesses that use a name other than the owner's must register the fictitious
name with the county as required by the Trade Name Registration Act. Check for
the appropriate name of the Trade Name Registration Act in your area. This does
not apply to corporations doing business under their corporate name or to those
practicing any profession under a partnership name.
Protecting your idea
If applicable to your business, you may want to apply for trademarks,
patents
and your
copyrights. Information regarding these applications is listed below.
Trademarks
Trademarks are names or symbols used in any commerce that is subject to
regulation by state government or the U.S. Congress.
State registration of a trademark
Trademarks and service marks may be registered in a state for a term of ten
years. For more information about Applications for Registration of Trademark or
Service Mark in your state, contact your state government.
Business insurance
Like home insurance, business insurance protects the contents of your business
against fire, theft and other losses. Many small businesses must protect
themselves from lawsuits and other situations for which they might be deemed
liable. All businesses should research the advisability of appropriate liability
insurance. Contact your insurance agent or broker.
Sales tax number
In each state, there is a specified percent sales and use tax which applies to
the retail purchase, retail site, rental, storage, use or consumption of
tangible personal property and certain services. In other words, sales tax must
be collected on just about every tangible item sold.
A sales tax number is required for each business before opening. The number,
plus instructions for collection, reporting and remitting the money to the state
on a monthly basis, can be obtained through your state government.
Other small business considerations
All businesses with employees are required to comply with state and federal
regulations regarding the protection of employees. For information on state
labor laws, work force availability, prevailing wages, unemployment insurance,
unionization, benefits packages and employment services, contact your state
government.
Federal information may be obtained by contacting the Department of Labor.
Unemployment insurance tax
Businesses are required by the state to pay unemployment insurance tax if the
company has one or more employees for 20 weeks in a calendar year, or it has
paid gross wages of $1,500 or more in a calendar year. The taxes are payable at
a rate of 2.7 percent on the first $8,500 in annual wages of an employee.
Unemployment insurance must be reported and returns made to the state. To learn
more, visit your state government
US immigration law
The Federal Immigration Reform and Control Act of 1986 requires all employers to
verify the employment eligibility of new employees. The Bureau of Citizenship
and Immigration Service (BCIS), formerly makes available a Handbook for Employers which provides
step-by-step instructions on how to complete the "Employer Eligibility
Verification" Form I-9, which is required by law when hiring a new employee. To
obtain a copy of the handbook and the form, and for additional information,
contact the Bureau of Citizenship and Immigration Service.
Health and Safety
The Federal Occupational Safety and Health Administration (OSHA) outlines
specific health and safety standards employers must meet for the protection of
employees. Many states have similar standards. For information, contact OSHA.
Workers' compensation
If a business employs three or more people, workers' compensation insurance must
be carried to provide protection to those injured in on-the-job accidents. The
State Board of Workers' Compensation aids people who need claim assistance.
Minimum Wage
Virtually all business entities are subject to the federal minimum wage,
overtime and child labor laws. Information on these laws and other federal laws
may be obtained from the U.S. Department of Labor's Wage and Hour Division .
Bar Coding
The Uniform Code Council, Inc. (not a government agency) assigns a
manufacturer's ID code for the purposes of bar coding. Many stores require bar
coding on the packaged products they sell. For additional information contact:
Uniform Code Council Inc., P.O. Box 1244, Dayton, Ohio 45401, (513) 435 3870.
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