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First
Steps to Starting a New Business
What
do you do when starting a new business? Before
starting up you need to identify your market.
Ask
yourself, “Do I have enough customers to make money?”
You
need to choose your management advisers - one of the SBA
Resource Partners, such as us here at the Women’s Business
Center, SCORE or Small
Business Development Centers; an accountant, an attorney,
a banker and an insurance agent.
Establish
a relationship with a banker.The possible services you may need
from a bank are: credit-card merchant account, business checking
account, small business loan, working capital loan, equipment
loan.
Next
you need to select your legal entity, such as sole
proprietorship, partnership, limited
partnership, or corporation or
Subchapter S corporation.
Sole
Proprietorship:
This is one of the easiest methods of starting your business. No
legal papers required except a business license called a DBA (Doing
Business As), and this is done by filing your business name and
address with your county clerk’s office. There may be a nominal
fee.TOP OF PAGE
Partnership:
An attorney is a must when setting up a partnership. Consult with
your attorney about all issues that can affect you. Do not use
your partner’s attorney. Her attorney is working for her
and you want your attorney to protect your interests. A partnership
can lead you into a dangerous situation because each partner is
liable for the other’s actions. If one partner skips town,
the other is left holding the bag. In any legal action, each partner
will be sued personally with property, bank accounts, etc. So,
that is why we ask you a very important question, “Why do
I need a partner?” If you can go it alone do it! The cost
of a partnership formation is about the same or not much less
than the cost to incorporate. TOP
OF PAGE
Limited
Partnership:
This is much like a corporation. Many limited partnerships are
organized like a corporation. The investors become limited partners
and are personally liable for the amount of their investment and
that is all they can lose.TOP
OF PAGE
Corporation:
The corporation exists as a separate entity. You will be personally
protected by the corporate shield unless you are grossly negligent
or there is fraud. You are an employee of the corporation and
if you die the business can go on. Partners can form a corporation
and divide responsibilities. If one partner wants to leave, there
is not much of a legal hassle or the need to close the business.
TOP OF PAGE
Subchapter
S Corporation:
This form elects not to be taxed as a corporation; instead, the
shareholders of a Subchapter S Corporation include in their personal
gross incomes their proportionate shares of the corporate profits
and losses. There are specific rules and restrictions to incorporating
as a Subchapter S and you must seek your attorney’s guidance
and advice in this legal form.TOP
OF PAGE
Our
best advice to you is whatever legal form you decide on, consult
your attorney and use his/her assistance.
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2 - Naming Your Business
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3 - Business Regulations Sources
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4 - Location, Location, Location
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5 - Startup Costs
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