Written by: Julia Tang
Starting Business Secrets will
help you to start your own business successfully.
The American Dream is, and always will be, to come up with an idea,
start a business and become rich from your own efforts. Based upon this
motivation, thousands of businesses fail each year, due primarily to
not being familiar with the basics involved in running a business.
This report will enlighten you, and give you a number of suggestions
you can use to better guarantee your chances for success. This report
is written with the warning that any and every business venture
contains certain inherent risks, and any number of alternatives. We do
not espouse that any one way is the right way or that our suggestions
are the only way. On the contrary, we advise that before investing any
money in a business venture, you seek counselling and help from a
qualified accountant and/or attorney.
Just about the first thing you should consider before deciding to start
or purchase a business is the legal form you'll be operating under.
There are basically four choices: sole proprietorship, partnership,
limited partnership, and/or corporation.
Each has a number of advantages and disadvantages. We'll try to
enumerate some of them for you.
As much as anything else, for many people starting a business is a form
of ego-gratification, and they form a corporation for some sort of
prestige gain - just to say, "I own a corporation."
With just a little bit of observation, you'll find that one of the
major causes of business failures is due to the founder wasting
start-up capital on frills, such as an impressive store- front office,
expensive furnishings, and corporate legal costs.
One of the basic traits you must develop it you're going to be
successful in business, is a tight hold on your expenditures. In fact,
a good rule of thumb is that anything that does not make money for yo
or protect your investment, should not be purchased at this time. Very
definitely, this applies to the expense of setting up your own
corporation.
Unless you have a partnership and start your business as such, the only
real advantage to forming a corporation would appear to be that a
corporate structure will semi-protect the property you personally own.
As an example, you own a home and car. You form a corporation to
protect these possessions from business losses. Yet, if you can be
found guilty of misusing corporate funds, your business creditors can
pierce the corporate shield and come after your possessions.
Basically, if you invest everything you have in your business, as most
newcomers do, you don't usually need a corporation because you have
nothing to protect. Your household possessions, personal belongings,
generally your car, and even a portion of the equity in your home is
protected by the homestead provision of the Federal Bankruptcy Act, and
cannot be taken away from you.
As a sole proprietor or partner of a business you'll be paying taxes on
your overall earnings, much the same as if you were holding down a
salaried or hourly paid job. Whether you do or don't take out money as
a salary will have no bearing on the earnings of your business and tax
return.
The often advertised advantage of incorporating, that you can
manipulate your salary in order to save on tax dollars, is real because
of corporation laws. However, the IRS frowns on this practice. When
your business is successful and making a lot of money, definitely check
with your accountant on the advantages of incorporating.
As a corporation, you'll be subject to a number of other drawbacks as
well: generally higher state taxes, stricter laws concerning the
operation of your business, more elaborate accounting procedures, and
legal papers that are required just about every time you make a major
move or sign almost any contract. Thus, your legal and accounting fees
will be much higher as a corporation than will those required for a
sole proprietorship type of business.
As a sole proprietor or partnership, you'll find many areas require the
registration of your business name. The cost however, is minimal,
ranging from $5 to $100. About the best way to find out what laws apply
in your area, is to call your bank and ask if they need a fictitious
name registration card or certificate in order for you to open a
business account.
Selecting a name for your business is quite important to you and
particularly relative to advertising. Your business name should
describe the product or services you offer. Fancy names such as,
Linda's Clipping Service will lose potential "walk-in and passing"
customers to the beauty shop across the street that calls itself,
Patti's Beauty Salon or Jane's Hair Styling Shop.
The advantage of using your full name in the title of your business,
such as Johnny Jones' Meat Lockers, has the advantage of making credit
somewhat easier to come by - provided you pay your bills on time - but
it also includes the disadvantage of confining your services to a local
or at most, a regional area.
Should you buy, lease, or rent a space for your business? think twice
before you make any decision along these lines. Most businesses tend to
grow quickly or they never get off the ground.
There are a few exceptions, but only a very few, that tend to grow at a
modified rate.
So, buying a piece of property and setting up your business on or
within that property, obligates you to ownership regardless of what
happens to your business.
Leases are almost always very strong contracts written by attorneys to
the advantage of the property-owner. When you sign an agreement to pay
someone for the use of their space over any length of time, you're
"nailed in" to paying for that space regardless of what happens to your
business.
In the beginning, it's wise to either get the shortest-term lease
possible, or arrange to rent with an option to lease at a later date.
This does not apply to a retail business, unless your particular
business happens to be an untried one.
Definitely, you should open a business bank account. In selecting a
bank for your business, scout around and look for one that can, and
will help you. Determine what your banking needs will be, and then via
telephone, interview the managers of the banks in your area. The
important convenient bank to your business location.
A point to remember: the closer you can make the relationship between
you and the bank manager, the better your chances are going to be for
approval on loans and/or special favors you may need at a later date.
Try to become acquainted with as many of the bank employees as
possible. The better you know them, the more courtesies they'll be
extending especially to you in the course of your association.
Just as a doctor is a specialist in his field, and you go to him for
medical problems, your banker is a specialist in his field and you
should go to him for your money problems. In business, you'll have to
learn that everyone is an expert in his own line of work, and in your
associations with other business people, refrain from acting like a
"sharpie" and/or pretending that you know exactly how everything works
in someone else's specialty.
You'll find that very often, different banks specialize in different
types of businesses. As an example, you're sure to find banks that
specialize in real estate transactions, export- import businesses, and
even manufacturing operations only.
What I'm saying here is that if you're planning to sella fairly
expensive item, your customers will probably need and/or want
financing. It will behoove you to select a bank familiar with your type
of product that will afford your customers, through you, contract
financing.
Some of the questions you should ask of your banker include the
following:
Is it necessary to maintain a certain balance in your account before
the bank will approve a loan for you? What qualifications must you have
in order to obtain a line of credit with the bank?
Does the bank limit the number of loans, or types of loans it will
approve for small businesses?
What is the bank's policy regarding the size of a check you might
deposit that requires holding for collection?
And what about checks less than that amount - will they be immediately
credited to your account?
In almost all types of businesses, it will be to your benefit to set up
with your bank, a method of handling VISA, Master Charge, and regional
credit cards. The important thing here is to ultimately set up your
account in the bank that will service all of these credit transactions
for you - one stop for all your banking needs. In most instances,
you'll find that having the capability to fill orders/make sales via
credit card transactions, will increase your volume of sales
appreciatively.
Once you've made the decision as to which bank is going to handle your
account, you'll need your Social Security Number or your Federal
Employer's Identification Number, your driver's license, the fictitious
name certificate, and if you're requesting a VISA or Master Charge
franchise, you'll also need a financial statement.
For corporations, you'll also need a corporate resolution approving of
the opening of your business account.
There are different policies exercised in just about every state
regarding installation/hook-up charges by the telephone and utility
companies. Some require a deposit, and some don't.
You'll find that a great number of city business license departments
are there solely for the purpose of collecting another tax. Depending
on the type of business you're asking a license for, the building and
zoning people may inspect your premises for soundness of structure and
safety. Generally, you won't encounter any difficulties - you simply
pay your fee to operate your business in that city, and the clerk types
your name onto a city license certificate.
Relative to sales tax permits and licenses, each state's rules and
regulations very widely. The best thing to do is call your state
offices and ask for information concerning registry and collection
procedures. Many states require an advance deposit or bond, and you'll
find that some wholesalers or manufacturers will not sell to you at
wholesale prices until you can show them your sales tax permit or
number.
Should your business entail selling your products or services across
state lines, in another state, you're not required to collect taxes
except in those where you have offices or stores.
You may find also that your particular business requires the collection
of Federal Excise Taxes. For information along these lines, check in
with your local office of the Internal Revenue Service.
Some states also require certain businesses to hold state licenses,
such as those required in many states for TV Repairmen.
These are known as "occupational permits" and are most often required
of barbers, hair stylists, real estate people and a number of other
consumer oriented businesses. If you have any doubts, check with your
state offices for a list of those occupations that require licensing.
Any business doing business in any type of interstate commerce is
subject to federal regulations, usually through the Federal Trade
Commission. This means that any business that shops, sells or
advertises in more than one state is subject to such regulation, and
this includes even the smallest of mail order operations.
Normally, very few business people ever have and contact with the
federal regulatory agencies. The only exceptions being when there is a
question of your operating your business unethically or illegally.
Any business that sells or distributes food in any manner almost always
requires a county health department permit. If your business falls into
this category, simply call the county health department and invite them
out to your place of business for an inspection. The fees generally
range from about $25, depending on the size of your business when they
first inspect it for permit approval.
There are also a number of businesses that require inspection by a fire
marshall, and fire department approval. Generally, these are those that
handle flammable materials or attract large numbers of people, such as
a theater. Overall, the local fire department has to be allowed to
inspect your premises whenever they desire to do so.
You may also run into a requirement for an air and/or water pollution
control permit. These specifically apply to any business that burns
anything, discharges anything into the sewers or waterways, or use any
gas-producing product, such as a paint sprayer.
Without a doubt, you'll need to check on local regulations relating to
advertising display signs. Each city or township makes its own rules
and then enforces those rules according to its own thinking -check
before you contract to have a sign made for your business.
The design and placement of your sign is very important to your
business - specifically to retail establishments - but let me remind
you that your business sign is usually the first thing a potential
customer sees and as such, it should catch his eye and leave an
impression that lasts. It would be a good idea to ride around your town
and take a look at the signs that catch your eye, and try to determine
the impression of the business that sign leaves on you. This is a basic
learning formula for determining the design, size and placement of your
business sign.
Some of the other things to consider before opening for business - If
you intend to employ one or more employees, you'll be required to
deduct Federal Income Taxes, and Social Security payments from their
checks. This will involve your filing for a Federal Tax Number and
necessitates contact with your local IRS Office.
Most states have "unemployment taxes" which will have to be deducted
from the paychecks of any employees you hire. And there are a number of
states that have income taxes - disability insurance - and any number
of other taxes. Again, the best thing to do is check with your local
office of the IRS. And above all else, don't forget to ask for the
rules of the minimum wage law, and comply.
When your business grows to the point of needing additional help, don't
be afraid to look for and hire the help you need. when you're ready to
hire someone, simply run an ad in your local paper and/or register your
needs with the local office of your state's employment service.
Businesses either grow or die, and those that grow eventually need more
people in order to continue growing.
When that time comes, hire the additional people you need, and your
business will continue growing. If you don't, for whatever reason,
you'll find yourself married to your business and your business growth
stymied.
Regardless of how small your business is when you begin, never walk in
with the thought in mind that it's something to keep you busy. Anyone
with an attitude of that kind is a fool. You begin and make a business
successful in order to realize financial freedom. Establish your
business. Put it on its feet, and then hire other people to do the work
for you. And those businesses that require an operations manager, or
someone to run a phase of the business you're too busy to handle, hire
the person needed or the business will surely suffer.
To protect the investment of your business, you need business
insurance. If you've never had any experience with business insurance,
simply look under the heading of "business insurance" in your phone
directory. Ask for bids from several different companies or
agents...Primarily, you should have a policy that gives you general
liability, fire, workmen's compensation, business interruption, and
vehicle coverage. You amy also want coverage against possible losses
related to burglary, robbery, Life & Accident, Key Man, and
Fidelity Bonds.
As the sole proprietor of a business, you won't be paid as an employee,
so there will be no income tax deducted from whatever you withdraw from
the company's earnings. What you'll have to do is a gain check with the
IRS Office for a Tax Guide For Small Businesses Handbook, and probably
end up filing an estimated tax return on a quarterly basis.
The minute you open your doors for business, you'll have to spend some
time engaged in the work of bookkeeping. Exactly how, and using what
forms, you keep books, should be on the recommendations of a good tax
counselor...The same holds true for your overall business and/or
payroll accounting system. Look for an experienced CPA that knows the
accounting problems to your particular kind of business, and solicit
his advise/counseling.
If your business is going to involve the possible purchase or lease of
operating equipment, again seek the help of your tax counselor for the
most advantageous method of obtaining the needed equipment.
Basically, arranging for your suppliers to give you materials on credit
will depend upon your honesty and personal financial statement. The
best way is usually a personal visit to the person with the power to
approve or disapprove of credit at the company where you want to set up
a credit account. Show him your financial statement, and explain your
prospects for success. Then assure him that you've always honored all
of your obligations, and that if ever there's a question or problem,
you'd like for him to call you at home. And of course, give him your
home phone number.
We won't go into the exigencies of advertising your products, services
or business here, but there is something along these lines you should
always keep in mind. The best kind of advertising your business can
receive is that you don't really pay for - publicity.
When something unusual happens to you, your business, or your employees
- that's news, so be sure to tell the news media in your area about it.
The most important ingredient of your eventual success will be the
soundness of the planning you did before you started your business. Any
number of bad things can really throw your business into a tailspin,
but it you've done your homework well - really set up a detailed
business plan before starting - your losses or setbacks will be
minimal. Success takes planning, and within this report, you've got a
basic checklist...The rest is up to you...Good luck, and may your life
overflow with success in all that you undertake from this moment
forward. ---------------------------------------------------------Julia
Tang publishes Smart Online Business Tips, a fresh and informative
newsletter dedicated to supporting peoplelike you! To find out the best
online business opportunities,and to discover hundreds more proven and
practical internet marketing secrets, plus FREE internet marketing
products worth over $200, visit:
http://www.best-internet-businesses.com----------------------------------------------------------Note:
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