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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,
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
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
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
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
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
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
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
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,
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
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
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
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 people
like 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:
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