Asked & Answered - Starting a Business
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There are several Internet sites that offer this type of data. RMA (formerly Robert Morse Associates), www.zone6.com/bizstats, http://www.roi.com/ (this is the Retail Owners Institute). Search the web and you can find significant data sources, however most of them now have a charge or membership fee.
Most cities of any size have a Transportation Dept. They do traffic counts by location. Often you can see the increase or decrease from reviewing the most current count and previous counts. If they offer on line access, enter your street address or the intersecting streets. Many cities also have the foot traffic in their downtown area. If you are considering a mall location, ask the leasing agent for the mall demographics.
Copyright forms are readily available at Federal Centers or can be ordered from the COPYRIGHT OFFICE, Library of Congress, Washington D.C. 20559. Applying for a patent is more complicated and a patent attorney's services should be sought. Their names are listed either in the telephone book or at the "Attorney's Referral Service". Trademarks are protected by the Federal Government; again an attorney's services should be procured.
It's a good idea to have these items in place:
1. An employee handbook - This is a set of workplace
rules and policies you want your employees to follow.
It also explains the company policies regarding paid
time off, jury duty pay, disciplinary actions, benefits
and such as well as policies to insure compliance with
laws regarding sexual harassment, drug-free workplace,
antidiscrimination, Americans with disabilities and so
forth.
2. Job descriptions - This outlines the major duties and
job-specific expectations. It's a good idea to mention
that there is flexibility here...cross-training of staff and
other (minor) task assignments may be given.
3. I-9 forms. You can get these from the Citizenship and
Immigration Service at www.uscis.gov/files/form/I-9.pdf
Also, it's helpful to download the wage and hour rules from
your state's Department of Labor. You can also download
the required federal and state workplace posters. Most
states also have a helpful compliance guide, as well as
wage surveys. Useful Oregon sites are www.oregon.gov/BOLI
and http://www.qualityinfo.org/ For Washington, visit http://www.lni.wa.gov/
and www.dol.wa.gov/business/hire.html For federal labor
laws and helpful hiring information, visit http://www.dol.gov/ and their
online 'law advisor' at www.dol.gov/elaws/firststep/
It's hard to give a clear answer without knowing more about your circumstances, but we can offer some general guidance. We believe that you should begin with a computer-based accounting system. The costs are modest, it will save you tremendous time compared to manual systems, and the same computer will be important in your business in many other ways. For small companies the choices of accounting software are becoming somewhat limted due to the clear dominance in the market that QuickBooks enjoys, although Peachtree is another good alternative. If you expect your business to remain simple, using cash-basis accounting, you should consider Quicken Home & Business as a simple alternative to QuickBooks or Peachtree. SCORE can help you with the choice of software, and we offer courses to help you get started with QuickBooks and Quicken Home & Business.
This is one of the most vexing issues facing new business owners. It’s very important to prepay the proper amount to avoid penalties and to avoid a shocking tax debt at year end. Avoiding penalties requires that you meet one of two tests by year end: 1) You must have paid in at least as much as the actual tax from the previous year, or 2) You must have paid in at least 90% of this year’s actual tax. Remember, this tax is calculated on the profits from your new business, and in combination with all other taxable income from other sources, so you must be able to approximate your business income as you progress through the year. Many businesses will earn modest or no profits in the first year, but you must watch the issue carefully. Typically you should review your profitability and your estimated tax status with your tax advisor before the end of each quarter until your business becomes stable and more predictable.
http://www.filinginoregon.com/ will open the Oregon website for registering your business. This is where you can file the initial registration for a new corporation and LLC or for an Assumed Business Name. The “Business Wizard” is particularly useful to help you register properly with all of the regulatory agencies that affect your business type.
Sole Proprietorship
- It is easy to form.
- You are in full charge regarding all decision-makings.
- Offers the most flexibility.
- Simpler taxes.
- Less bureaucratic restrictions.
BUT:
- Has unlimited liability.
- The business is vulnerable to critical events.
- Difficult to raise capital and financing.
- Depends on the singular ability of the owner.
- Less professional in appearance.
Partnership
- Association of two or more persons to carry on a business.
- Co-ownership of assets.
- The need for a Written Articles of Partnership.
- Mutual agency: share of management and profits.
- Easy to form.
- Direct rewards, combined efforts.
- Easier to attract capital.
- Flexible.
BUT:
- Unlimited liability of at least one of the partners.
- Instability, dependence on the other partner.
- Dependent on the judgment of the partners as an agent.
- Difficult to dissolve.
Corporations
- A distinct legal entity existing on its own.
- Better image, suggest more professionalism.
- Offers limited liability.
- Lower tax rate.
- Easier to sell stocks.
BUT:
- Activities limited by the charter.
- Extensive government regulations.
- Double taxation.
- More complicated to form, could require legal assistance.
- Strict regulations of modes of operation.
"S" Corporation The S Corporation is a corporation, for which an election has been made with the Internal Revenue Service for the income to pass through and be taxed directly to the stockholders on a pro-rata basis, avoiding double taxation on profits and dividends. It allows the stockholders to offset business losses against their personal income according to certain IRS regulations.
- The S Corporation must have seventy-five or fewer shareholders.
- The corporation can have only one class of stock.
- All shareholders must consent to the election.
- Cannot have alien, non-resident shareholders.
- The corporation cannot own more than 80% of another corporation.
- At least 75% of the receipts must be generated by business.
Limited Liability Companies (L.L.C.)
It is a combination between corporation and partnership. Has the limited liability advantages of a corporation, but operates with the flexibility and tax obligations of a partnership, a corporation or a sole proprietorship.
Loans from relatives or friends are a source of financing. Many people are reluctant to approach a friend or relative, not wanting to risk the relationship. But if other alternatives are not available, by all means, talk to your friends. They might be glad to help, but they want some kind of an assurance that they will get their money back. It is good policy to be professional, have all agreements in writing with clearly defined perimeters, as to the term of the loan, the method of repayment and possibly an amount or interest paid for the money. You will need to demonstrate why you need the money, how you will repay it and what the interest rate, if any, would be for the loan. The more professional you can be, the more likely that the relationship can be preserved intact. But be prepared that your friends will develop a sudden interest in your business and offer unsolicited advice.
We will take you through the steps outlining the procedures to prepare the plan. However, it is important that you put your own thoughts in detail on paper of how you plan to structure and operate your business. This will help you walk through your thoughts and ideas about your business. When you have completed your draft, we can then go over it with you to "fine tune" it if it is necessary.
A business plan is a written summary of what you hope to accomplish by being in business and how you plan to organize your resources to meet your goals. It is a vehicle to describe your business and your product or services and is a road map for operating your business and measuring progress along the way. The plan describes in writing, the market, the industry, customers and competitors, your products/services, your marketing plans and your operations along with sales and cash flow forecasts. The business plan is a document that should change as your business grows.
One of the leading causes of business failure is insufficient start-up capital. After you have determined how much you need for equipment, stocks and facilities, make sure you have enough money set aside to cover your operating expenses (fixed and variable) for at least one year. Be sure to include sufficient funds to repay any loans you may have taken out and your salary as an owner. Successful businesses have started with less, but many more have failed for lack of sufficient start-up funds.
Having a business partner will not guarantee success. However, if you require additional management skills or star-up capital, engaging a partner may be your best decision. The ultimate success of a partnership depends upon the personality and character of the partners. Successful partnerships usually result when partners complement each other so that a weakness in one is a strength in the other. If you decide to have a partner, make sure that each of you has a clear understanding, in writing, of the responsibilities and rights of each partner.
You will be your most important asset so an objective appraisal of your particular strengths and weaknesses is an essential element in starting a business. To determine if you have what it takes to success ask yourself some of the following questions and be brutally honest with your answers. Am I a self-starter? How well do I get along with a variety of personalities? How good am I at making decisions? Do I have the physical and emotional stamina to run a business? How well do I plan and organize? Are my attitudes and drive strong enough to maintain motivation? How will the business affect my family?
When you have answered those questions, ask someone who knows you well and will provide honest replies to answer those questions about you – and then compare results. If the answers differ, re-consider your decision. Few people start a business with all of these bases covered. Honestly assess your own experience and capabilities and then look for partners or key employees who can provide abilities that you don't have or in which you are not strong.