The following questions and answers are meant to provide basic information and should not be relied upon or considered legal advice with respect to any particular situation. If you have questions about your business or if you plan to open a business, please seek the advice of an attorney who practices business law in your location.
Q. I am interested in starting a business. Where do I begin?
ANSWER: Conduct research on your industry, target market, and know your competition. Investigate all start-up procedures specific to your industry. Develop a business plan that clearly describes your vision of all the details of the business. Determine the costs associated with starting your business and project these costs. Depending on the type of business, there may be licensing and/or registration requirements at the federal, state, and local levels.
Q. What is a business plan?
ANSWER: A business plan defines your business, identifies your goals and serves as your firm’s resume. It describes the products and services you will sell, the customers to whom you will sell them, production, management and marketing activities needed to produce your products or services, and the projected profit or loss that will result from your efforts. The business plan should provide answers to: Who are you? What are you going to do? Where are you going? How are you going to get there? Completing a business plan forces you to examine all decisions of management, marketing, personnel and finance issues in an objective and organized way. Another important benefit of the planning process is that you will project the amount of financing needed for start-up and the early stages of your business.
Q. Why do I need a business plan?
ANSWER: Although the preparation of a business plan can be time consuming, it is essential to business success. Completing the plan provides an opportunity to examine management, marketing, personnel and finance issues in an objective and organized way. The business plan becomes a useful tool in securing capital before start-up because it includes projections of the amount of financing needed for start-up and the early stages of a business. Later, the plan becomes your owner’s manual guiding your daily operation and activities. Business planning is an ongoing activity.
Q. Is it mandatory that I incorporate my business?
ANSWER: No. There are many different types of entities that you can choose from when starting up a business, including a Sole Proprietorship, Partnership, Limited Partnership, “S” corporation, “C” corporation, Professional Association, and the Limited Liability Company. There are certain advantages and disadvantages to each entity. You should consult with a competent attorney to decide which entity is right for you and your new business. Once you have chosen the appropriate entity, the attorney can assist you with the necessary filings and complete the organization of your company.
Q. How can I finance my new company?
ANSWER: Future Entrepreneurs have many options for financing a business. Some individuals rely on loans; others rely on investors and equity financing. Some utilize both debt and equity financing. Sources of capital include financial institutions, federal and state government sources, or private investors. SBA guaranteed loans are common for small business owners seeking financing.
Q. What kind of licenses and permits do I need for my business?
ANSWER: This depends on the type of business you plan to operate. There are State and local laws that govern certain services. Consult your attorney who can help determine which licenses will apply to your business.
Q. What if I want to hire employees?
ANSWER: If you plan to hire employees, there are many federal and state regulations with which you must comply. These include, but are not limited to, tax withholding requirements, unemployment compensation, worker’s compensation, and wage and hour regulations. It is very important that you consult with an attorney before hiring employees to ensure compliance with such regulations.
You should discuss with your attorney additional items that you will need if you hire employees including job applications, employment contracts, employee handbooks, written policies relating to sexual harassment, employment benefit packages, or other documents that relate to employees.
Q. What is a Federal Employer Identification Number (FEIN)?
ANSWER: A FEIN, also referred to as EIN, is a federal tax identification number that is used to identify a business entity. Every employer subject to employment taxes is required to have a FEIN to identify the business with the Internal Revenue Service (IRS) and the Social Security Administration.