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Checklists: Start-Up Stuff, Legal Stuff, Financial stuff
Business Start-Up Check List - Check the ( ) when done.
1.) Decide on business form – Sole Proprietor ( ), Limited Liability Company ( ), General Partnership ( ), S Corporation, C Corporation ( ) 2.) Prepare Business Plan ( ) 3.) Estimate how much cash is needed to start the business · Business Licenses & Fees · Legal Fee · Insurance Fees · Fixtures · Telephone · Answering machine · FAX machine · Post Office Box · Computers · Software · Work area · Working Capital · Advertising · Web Site · Mailings · Journal Placements · Conference booths · Salaries · Other monthly expenses
4.) Check Local ordinances: zoning, permits and licenses ( ) 5.) File a business certificate (d/b/a) ( ) 6.) Check Federal securities requirements ( ) 7.) Check “Blue Sky” requirements ( ) 8.) Reserve Business name both primary and secondary ( ) 9.) Obtain logo ( ) 10.) Establish Web site, e-mail, and reserve domain. Describe services, use for marketing, order taking and communications ( ) 11.) Select officers and directors (Names, Addresses and Social Security Numbers) ( ) 12.) Develop marketing, advertising and public relations plans. ( ) 13.) Develop a capitalization / borrowing / credit / debt service plan and cash flow plan. ( ) 14.) Develop income projections ( ) 15.) Develop Company Operating Agreement ( ) 16.) Develop reimbursement plans for expenses and time worked by officers and consultants prior to Company adoption. ( ). 17.) Select a regular meeting time and place. ( ) 18.) Obtain Mailing Address, P.O. Box. ( ). 19.) Open a separated business checking account. The bank will require a certified copy of your business certificate or a copy of the Company filing receipt. Establish banking procedures and check-signing authority. Maintain a reserve for three to six months of expenses. ( ) 20.) Install a business telephone line. Using an answering machine or answering service. Order telephone directory advertising. ( ) 21.) Mail and e-mail announcements of your business start-up to the media, potential customers and friends. ( ) 22.) Obtain free counseling services from SCORE (SBA Service Corps of Retired Executives) or Small Business Development Centers (SBDCs). ( ) 23.) Identify all patents, trademarks, service marks, use licenses or copyrights will need to register or purchase ( ) 24.) Retain legal services ( ) 25.) Find Accountant Services. Tax requirements, withholding, record keeping, pay roll. ( ) 26.) Obtain all government forms ( ) 27.) Identify product suppliers, the mechanisms of delivery of supplies to business, delivery time, and risk of loss ( ) 28.) Prepare covenants forbidding employees and/or consultants from revealing trade secrets, trade lists or confidential information and competing with you after they leave the business employ. ( ) 29.) Set up record keeping system including payroll records. ( ) 30.) Ensure that owners living trust or wills provides for the equity in the business. ( ) 31.) Apply for Federal employee identification number. ( ) 32.) Apply for state sales tax identification number. ( ) 33.) Establish credit procedures for clients. ( ) 34.) Establish check-cashing procedures and safeguards ( ) 35.) Establish employee compensation and benefits package. ( ) 36.) Decide to hire or lease employees. ( ) 37.) Insurance: · workers’ compensation, · disability, · liability, · fire, · business interruption, · life, · automobile, · crime, · group health, · delayed profits, · rental value, · flood Useful URLs;
Small Business Legal Survival http://www.friran.com/small_business.html
The Consumer Information Center ******
Legal Structures for the Company.
In this litigious world, you will want to protect your personal assets. Also, if you want to use your company equity to raise money for corporate growth, thus you want some form of a corporation. These formats vary slightly from State to State. So check with your state web sites for the most current and accurate descriptions.
Also I am not a Lawyer. I am not suggesting anything specific to you. This information is meant to aid you in thinking about what you need to do, nothing more. This is just background.
Get a Lawyer to help you.
No Personal Liability Protection - Sole Proprietorship and Partnerships
With a company structure of either Sole Proprietorship or Partnerships you have virtually no personal liability protection against company debts and litigation.
Sole Proprietorship - You are the sole owner of the company. Profits from the business are taxed as your individual income.
Partnerships - · General partners have unlimited liability. Profits from the business are taxed as the partners’ individual incomes. · Limited partners have limited liability; the limited partners' losses can't exceed their investment in the partnership. Limited partners CANNOT have an active role in the partnership.
Personal Liability Protection - Limited Liability Company (LLC) and Corporations
Limited Liability Company (LLC) and Corporations are designed to protect business owners from debt and other business related liabilities. But as the business owner(s) you still have the obligation to act with responsibility. If you are reckless with the company finances or decision making creditors, for example, can hold you responsible.
Limited Liability Company (LLC) - It is essentially a hybrid of a partnership and a corporation. Profits and losses can by passed through to the owners, while owners are shielded from personal liability. Some features of the LLC: · No limitation on the number of shareholders · Articles of Organization with the Secretary of State · Company ownership is solely in the hands of the original partners, not with the shareholders. · LLC does not have a perpetual life. Technically, the company dissolves when a member dies, quits or retires unless it is taxed as a corporation and has written consent of all the members. · For taxation, you must choose whether the LLC will be treated as a partnership or a corporation. · Treatment of LLCs varies with each state. You must keep track of all state regulations
Corporations - A Corporation is a legal entity, separate from the people who own, control or manage it. A corporation is legally a person, entitled to enter into contracts, incur debt, pay taxes, etc. People with claims against the corporation can't reach beyond the assets of the corporation. Unlike Sole Proprietorships, the corporation survives the death(s) of the owner(s).
The C (Standard) Corporation Must pay income tax as corporation · Specific Record keeping is required · Allocation of stock shares can be in both common and preferred · Article of Incorporation need to be filed with the Secretary of State's office. You get a certificate of Incorporation · Corporate Bylaws need to be prepared that describe in detail how the company will be run, that is the responsibilities of shareholders, directors, officers. When stockholder meetings occur, meeting minutes, etc. · Must issue stock · Stock shares are used to determine the ownership of the company and voting rights. · File annual reports · hold yearly meetings to elect officers and directors · Keep minutes of meetings · Must keep financials separate from the owners
The S Corporation is just like a C corporation in terms of corporate liabilities and laws except regarding taxes and certain SEC regulations. An S corporation: · Must be a domestic corporation · Have no shareholder that is a resident alien · Not have more than seventy-five shareholders · Can only issue common stock · All shareholders must consent to the "S" status, · Shareholders must be individuals, estates or certain qualified trusts. · cannot expense extra cost for tax accountants or tax lawyers
Remember that when you take money from other people, that is sell equity in your company, the company is theirs not yours.
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Registering the Company
In the USA, you need a local, city or county, business license. Most can be obtained on-line.
You needed to register a local Fictitious Business Name for your company. Usually your business name has to be filed with the country within 40 days from the time business commences to be transacted. · Check with Country Clerk’s Office to guarantee that the name you propose is not already in use, · Complete the Fictitious Business Name Statement available from the Country Clerk’s Office, · Make certain that the Country Clerk’s Office certifies one copy of the statement and returned it to you · Within 30 days after filing the Statement, you must publish the statement in a newspaper of general circulation in your immediate area. The notice must appear once a week for four successive weeks · Within 30 days of the last publishing date, you must file an affidavit of publication of the notice with the Country Clerk’s Office.
The statement is good for five years.
You need to obtain an Employer Identication Number (EIN) from the IRS.
To pay state-required business taxes check you State government web site.
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Where to Incorporate?
Incorporating in Nevada vs. Incorporating in Delaware vs. Incorporating in Your Home State.
Generally, though both Delaware and Nevada provide tax benefits that other states do not, as well as, the corporate principals have a greater protection from corporate liability in Delaware and Nevada than in other states.
You do not have to live in either state but you do need to have a registered agent within the state. The statutes change so you should check with the individual states web sites.
If you are going to do business in another state, such as incorporate in Delaware but have the corporate office in California, you have to qualify to conduct business in California. To do this you have to draft the appropriate legal documents for California and register in California as "foreign" entity paying the necessary filing fees.
Check the appropriate State’s web site for the latest information.
******* REFERENCE:
How to start, finance and operate Your Own Business, James L. Silvester, Revise Ed. 1990, Lyle Stuart Books, Carol Publishing Group.
Small Business Administration - www.sba.gov
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