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Five Steps to Starting a Business By Abe Cherian Copyright ? 2005
Starting a business can be a rewarding experience, but it canalso be very time consuming and difficult. Many resources areavailable to assist you, but information overload can cause youfrom moving forward.
Keeping it simple is often the best way of maintaining themomentum necessary to get your business started. There are aseries of steps to ensure success.
The first step toward getting your business going is deciding ona name, for example “New York Landscaping.” Any name that you dobusiness under other than your own given name is called a”fictitious” or “assumed” name, and certain steps need to betaken in order for you to do business under that fictitious orassumed name.
Depending on where you live, different government agencies trackwhich names are available. Look in your local phone directory,under government agencies to find the number, or contact yourlocal Secretary of State.
Check to find out if the name you want has been taken. If it isavailable, you may need to file a fictitious or assumed namecertificate with the state or local fictitious name office. Someareas will also require you to publish
a notice in the local paper about your new assumed name. Bothstate and federal law regulates the use of names and”trademarks”. To avoid conflicts with other businessesregionally or nationally using your business’s name, or thenames of your products, you may want to consider registeringyour trademark on the federal or state level. Contact anintellectual property attorney for trademark search andregistration services.
The second step is knowing that different areas have differinglicensing and permit requirements depending on the type ofbusiness you are going into. Most businesses that require alicense will have a local licensing authority that can guide youthrough the process.
Find out the licensing requirements on federal, state, andpossibly even local levels for your type of business and getlicensed. Failure to be properly licensed could result inpenalties such as fines, closure of your business, andimprisonment in some cases.
The third step is getting insurance. When things are goingsmoothly, insurance can seem an unduly burdensome expense on asmall business. But when things go wrong, whether or not youhave insurance can mean whether or not you and your businesssurvive a catastrophic event like a lawsuit, fire, or naturaldisaster.
Liability insurance protects you against liability in the eventof injury to others or damage to other persons property.Liability insurers most often have two duties:
1. The duty to defend you. Hire a lawyer, if you get sued and
2. the duty to indemnify you. Pay for damage or injury toothers. Both duties are extremely important, but the first isoften overlooked by small businesses.
The cost of defending a lawsuit can easily run into the tens ofthousands, or even hundreds of thousands of dollars even if youwin. That’s why being careful is no substitute for liabilityinsurance.
Make sure you have adequate coverage for your vehicles and thoseof your employees when used for business purposes. You can besued and held liable for injury or damage done by your employeesif it is within the course and scope of their employment.
Property and theft insurance may be an important consideration,as well as product liability or service liability insurance.This is often called “errors and omissions” coverage.
Interview a few local insurance brokers and find one that seemsknowledgeable and that you feel comfortable with. Then ask thebroker to do a risk assessment to determine what coverages youmight need and why. Remember, the broker makes money by sellingyou insurance “products” so be sure to question the types ofcoverage and amounts. If your broker can’t explain why he or sheis recommending the types and amounts of coverage in the riskassessment, find another broker.
The fourth step is recognizing and implimenting taxes. Soleproprietors need to be conscious of local, state and federaltaxes and registration requirements relating to theirbusinesses.
Hiring an accountant or bookkeeper to help set up a simpleaccounting system, or using a software package is a good placeto start.
Hiring a tax professional knowledgeable about local and statetaxes relating to your business, or contacting the local taxauthorities before you begin generating revenue or expendingmoney can help you stay organized and be ready for tax time.
Additionally, the IRS offers assistance for entrepreneursstarting a small business in various publications. You candownload IRS Publication 334, entitled “Tax Guide for SmallBusiness”, and Publication 583, entitled “Taxpayers Starting aSmall Business” from the IRS web site. http://www.irs.gov
The fifth step is hiring employees (if needed). Though manysmall business people start out running their own shop, successwill often bring the need for expansion. When an employee isadded, you must obtain an Employer Identification Number fromthe IRS. You can download Form SS-4 from the IRS web site.
In the United States, the Workers Compensation scheme does a lotto protect employers from lawsuits by employees injured on thejob, while also providing employees with easier compensation forworkplace injuries. Be sure to talk to your insurance brokerabout workers’ compensation insurance.
Talk to your tax adviser, and make sure you register with yourstate for payment of unemployment compensation taxes.
Download IRS Form W-4 from the IRS web site to take care ofemployee withholdings. You should get copies of INS Form I-9 toverify your employees’ eligibility for employment in the UnitedStates.
Finally, issues regarding wrongful termination, discrimination,workplace harassment, and other legal issues have come to theforefront in today’s business environment. Make sure you have anemployment agreement that spells out whether your employee is”at-will”. ex: can be let go at any time without cause, or theterms of the employee’s contract for employment.
Make sure you Draft employee guidelines or an employment manualto make sure there are no misunderstandings about whatexpectations, rules and responsibilities are in place. Documentany issues relating to your employees well and be proactiveabout handling disputes. A little planning in the beginning cansave a lot of headaches and legal expense later on.
In conclusion- hiring independent contractors is often a goodway to avoid the administrative burdens of hiring employees, butbe precautious. There are many pitfalls to hiring an independentcontractor who is for all intents and purposes an employee. Talkto a lawyer and your tax advisor about who is an employee versusa contractor.
About the Author
Abe Cherian is the founder of Multiple Stream Media, a leading performance-based Internet advertising company dedicated in helping small businesses create online presence, brand recognition and online automation. Main company web site: http://www.multiplestreammktg.com Abe Cherian’s online automation system has helped thousands of marketers online build, manage and grow their business. Learn how it can benefit you too.