Secrets To Successfully Starting Your Own Business

The American Dream is, and always will be, to come up with anidea, start a business and become rich from your own efforts. Based upon this motivation, thousands of businesses fail eachyear, due primarily to not being familiar with the basicsinvolved in runninga business.
This report will enlighten you, and give you a number ofsuggestions you can use to better guarantee your chances forsuccess. This report is written with the warning that any andevery business venture contains certain inherent risks, and anynumber of alternatives. We do not espouse that any one way isthe right way or that our suggestions are the only way. On thecontrary, we advise that before investing any money in a businessventure, you seek counselling and help from a qualifiedaccountant and/or attorney.
Just about the first thing you should consider before deciding tostart or purchase a business is the legal form you'll beoperating under. There are basically four choices: soleproprietorship, partnership, limited partnership, and/orcorporation.
Each has a number of advantages and disadvantages. We'll try toenumerate some of them for you.
As much as anything else, for many people starting a business isa form of ego-gratification, and they form a corporation for somesort of prestige gain - just to say, "I own a corporation."
With just a little bit of observation, you'll find that one ofthe major causes of business failures is due to the founderwasting start-up capital on frills, such as an impressivestore-front office, expensive furnishings, and corporate legalcosts.
One of the basic traits you must develop it you're going to besuccessful in business, is a tight hold on your expenditures. Infact, a good rule of thumb is that anything that does not makemoney for yo or protect your investment, should not be purchasedat this time. Very definitely, this applies to the expense ofsetting 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 tobe that a corporate structure will semi-protect the property youpersonally own.
As an example, you own a home and car. You form a corporation toprotect these possessions from business losses. Yet, if you canbe found guilty of misusing corporate funds, your businesscreditors can pierce the corporate shield and come after yourpossessions.
Basically, if you invest everything you have in your business, asmost newcomers do, you don't usually need a corporation becauseyou have nothing to protect. Your household possessions,personal belongings, generally your car, and even a portion ofthe equity in your home is protected by the homestead provisionof the Federal Bankruptcy Act, and cannot be taken away from you.
As a sole proprietor or partner of a business you'll be payingtaxes on your overall earnings, much the same as if you wereholding down a salaried or hourly paid job. Whether you do ordon't take out money as a salary will have no bearing on theearnings of your business and tax return.
The often advertised advantage of incorporating, that you canmanipulate your salary in order to save on tax dollars, is realbecause of corporation laws. However, the IRS frowns on thispractice. When your business is successful and making a lot ofmoney, definitely check with your accountant on the advantages ofincorporating.
As a corporation, you'll be subject to a number of otherdrawbacks as well: generally higher state taxes, stricter lawsconcerning the operation of your business, more elaborateaccounting procedures, and legal papers that are required justabout every time you make a major move or sign almost anycontract. Thus, your legal and accounting fees will be muchhigher as a corporation than will those required for a soleproprietorship type of business.
As a sole proprietor or partnership, you'll find many areasrequire the registration of your business name. The costhowever, is minimal, ranging from $5 to $100. About the best wayto find out what laws apply in your area, is to call your bankand ask if they need a fictitious name registration card orcertificate in order for you to open a business account.
Selecting a name for your business is quite important to you andparticularly relative to advertising. Your business name shoulddescribe the product or services you offer. Fancy names such as,Linda's Clipping Service will lose potential "walk-in andpassing" customers to the beauty shop across the street thatcalls itself, Patti's Beauty Salon or Jane's Hair Styling Shop.
The advantage of using your full name in the title of yourbusiness, such as Johnny Jones' Meat Lockers, has the advantageof making credit somewhat easier to come by - provided you payyour bills on time - but it also includes the disadvantage ofconfining your services to a local or at most, a regional area.
Should you buy, lease, or rent a space for your business? thinktwice before you make any decision along these lines. Mostbusinesses tend to grow quickly or they never get off the ground.
There are a few exceptions, but only a very few, that tend togrow at a modified rate.
So, buying a piece of property and setting up your business on orwithin that property, obligates you to ownership regardless ofwhat happens to your business.
Leases are almost always very strong contracts written byattorneys to the advantage of the property-owner. When you signan agreement to pay someone for the use of their space over anylength of time, you're "nailed in" to paying for that spaceregardless of what happens to your business.
In the beginning, it's wise to either get the shortest-term leasepossible, or arrange to rent with an option to lease at a laterdate. This does not apply to a retail business, unless yourparticular business happens to be an untried one.
Definitely, you should open a business bank account. Inselecting a bank for your business, scout around and look for onethat can, and will help you. Determine what your banking needswill be, and then via telephone, interview the managers of thebanks in your area. The important convenient bank to yourbusiness location.
A point to remember: the closer you can make the relationshipbetween you and the bank manager, the better your chances aregoing to be for approval on loans and/or special favors you mayneed at a later date.
Try to become acquainted with as many of the bank employees aspossible. The better you know them, the more courtesies they'llbe extending especially to you in the course of your association.
Just as a doctor is a specialist in his field, and you go to himfor medical problems, your banker is a specialist in his fieldand you should go to him for your money problems. In business,you'll have to learn that everyone is an expert in his own lineof work, and in your associations with other business people,refrain from acting like a "sharpie" and/or pretending that youknow exactly how everything works in someone else's specialty.
You'll find that very often, different banks specialize indifferent types of businesses. As an example, you're sure tofind 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 fairlyexpensive item, your customers will probably need and/or wantfinancing. It will behoove you to select a bank familiar withyour type of product that will afford your customers, throughyou, contract financing.
Some of the questions you should ask of your banker include thefollowing:
Is it necessary to maintain a certain balance in your accountbefore the bank will approve a loan for you?What qualifications must you have in order to obtain a line ofcredit with the bank?
Does the bank limit the number of loans, or types of loans itwill approve for small businesses?
What is the bank's policy regarding the size of a check you mightdeposit that requires holding for collection?
And what about checks less than that amount - will they beimmediately credited to your account?
In almost all types of businesses, it will be to your benefit toset up with your bank, a method of handling VISA, Master Charge,and regional credit cards. The important thing here is toultimately set up your account in the bank that will service allof these credit transactions for you - one stop for all yourbanking needs. In most instances, you'll find that having thecapability to fill orders/make sales via credit cardtransactions, will increase your volume of sales appreciatively.
Once you've made the decision as to which bank is going to handleyour account, you'll need your Social Security Number or yourFederal 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 financialstatement.
For corporations, you'll also need a corporate resolutionapproving of the opening of your business account.
There are different policies exercised in just about every stateregarding installation/hook-up charges by the telephone andutility companies. Some require a deposit, and some don't.
You'll find that a great number of city business licensedepartments are there solely for the purpose of collectinganother tax. Depending on the type of business you're asking alicense for, the building and zoning people may inspect yourpremises for soundness of structure and safety. Generally, youwon't encounter any difficulties - you simply pay your fee tooperate your business in that city, and the clerk types your nameonto a city license certificate.
Relative to sales tax permits and licenses, each state's rulesand regulations very widely. The best thing to do is call yourstate offices and ask for information concerning registry andcollection procedures. Many states require an advance deposit orbond, and you'll find that some wholesalers or manufacturers willnot sell to you at wholesale prices until you can show them yoursales tax permit or number.
Should your business entail selling your products or servicesacross state lines, in another state, you're not required tocollect taxes except in those where you have offices or stores.
You may find also that your particular business requires thecollection of Federal Excise Taxes. For information along theselines, check in with your local office of the Internal RevenueService.
Some states also require certain businesses to hold statelicenses, such as those required in many states for TV Repairmen.
These are known as "occupational permits" and are most oftenrequired of barbers, hair stylists, real estate people and anumber of other consumer oriented businesses. If you have anydoubts, check with your state offices for a list of thoseoccupations that require licensing.
Any business doing business in any type of interstate commerce issubject to federal regulations, usually through the Federal TradeCommission. This means that any business that shops, sells oradvertises 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 thefederal regulatory agencies. The only exceptions being whenthere is a question of your operating your business unethicallyor illegally.
Any business that sells or distributes food in any manner almostalways requires a county health department permit. If yourbusiness falls into this category, simply call the county healthdepartment and invite them out to your place of business for aninspection. The fees generally range from about $25, dependingon the size of your business when they first inspect it forpermit approval.
There are also a number of businesses that require inspection bya fire marshall, and fire department approval. Generally, theseare those that handle flammable materials or attract largenumbers of people, such as a theater. Overall, the local firedepartment has to be allowed to inspect your premises wheneverthey desire to do so.
You may also run into a requirement for an air and/or waterpollution control permit. These specifically apply to anybusiness that burns anything, discharges anything into the sewersor waterways, or use any gas-producing product, such as a paintsprayer.
Without a doubt, you'll need to check on local regulationsrelating to advertising display signs. Each city or townshipmakes its ownrules 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 yourbusiness - specifically to retail establishments - but let meremind you that your business sign is usually the first thing apotential customer sees and as such, it should catch his eye andleave an impression that lasts. It would be a good idea to ridearound your town and take a look at the signs that catch youreye, and try to determine the impression of the business thatsign leaves on you. This is a basic learning formula fordetermining 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 berequired to deduct Federal Income Taxes, and Social Securitypayments from their checks. This will involve your filing for aFederal Tax Number and necessitates contact with your local IRSOffice.
Most states have "unemployment taxes" which will have to bededucted from the paychecks of any employees you hire. And thereare a number of states that have income taxes - disabilityinsurance - and any number of other taxes. Again, the best thingto do is check with your local office of the IRS. And above allelse, 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. whenyou're ready to hire someone, simply run an ad in your localpaper and/or register your needs with the local office of yourstate's employment service. Businesses either grow or die, andthose that grow eventually need more people in order to continuegrowing.
When that time comes, hire the additional people you need, andyour business will continue growing. If you don't, for whateverreason, you'll find yourself married to your business and yourbusiness growth stymied.
Regardless of how small your business is when you begin, neverwalk in with the thought in mind that it's something to keep youbusy. Anyone with an attitude of that kind is a fool. You beginand make a business successful in order to realize financialfreedom. Establish your business. Put it on its feet, and thenhire other people to do the work for you. And those businessesthat require an operations manager, or someone to run a phase ofthe business you're too busy to handle, hire the person needed orthe business will surely suffer.
To protect the investment of your business, you need businessinsurance. If you've never had any experience with businessinsurance, simply look under the heading of "business insurance"in your phone directory. Ask for bids from several differentcompanies or agents...Primarily, you should have a policy thatgives you general liability, fire, workmen's compensation,business interruption, and vehicle coverage. You amy also wantcoverage 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 anemployee, so there will be no income tax deducted from whateveryouwithdraw from the company's earnings. What you'll have to do isa gain check with the IRS Office for a Tax Guide For SmallBusinesses Handbook, and probably end up filing an estimated taxreturn on a quarterly basis.
The minute you open your doors for business, you'll have to spendsome time engaged in the work of bookkeeping. Exactly how, andusing what forms, you keep books, should be on therecommendations of a good tax counselor...The same holds true foryour overall business and/or payroll accounting system. Look foran experienced CPA that knows the accounting problems to yourparticular kind of business, and solicit his advise/counseling.
If your business is going to involve the possible purchase orlease of operating equipment, again seek the help of your taxcounselor for the most advantageous method of obtaining theneeded equipment.
Basically, arranging for your suppliers to give you materials oncredit will depend upon your honesty and personal financialstatement. The best way is usually a personal visit to theperson with the power to approve or disapprove of credit at thecompany where you want to set up a credit account. Show him yourfinancial statement, and explain your prospects for success. Then assure him that you've always honored all of yourobligations, and that if ever there's a question or problem,you'd like for him to call you at home. And of course, give himyour home phone number.
We won't go into the exigencies of advertising your products,services or business here, but there is something along theselines you should always keep in mind. The best kind ofadvertising your business can receive is that you don't reallypay for - publicity.
When something unusual happens to you, your business, or youremployees - that's news, so be sure to tell the news media inyour area about it.
In closing, let me say that the most important ingredient of youreventual success will be the soundness of the planning you didbefore you started your business. Any number of bad things canreally throw your business into a tailspin, but it you've doneyour homework well - really set up a detailed business planbefore starting - your losses or setbacks will be minimal.Success takes planning, and within this report, you've got abasic checklist...The rest is up to you...Good luck, and may yourlife overflow with success in all that you undertake from thismoment forward.