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The Advisor
REQUIREMENTS FOR STARTING
YOUR BUSINESS
by Robert Sullivan
It
may be inconceivable to you that your home-based consulting service would
have to comply with any of the numerous local, state and federal regulations,
but in all likelihood it will. Avoid the temptation to ignore regulatory
details. Doing so may avert some red tape in the short term, but could
be an obstacle as your business grows. Taking the time to research the
applicable regulations is as important as knowing your market.
Below is a listing
of the most common requirements that affect small businesses, but it is
by no means exhaustive. Bear in mind that regulations vary by industry.
If you're in the food service business, for example, you will have to
deal with the health department.. Carefully investigate the regulations
that affect your industry. Being out of compliance could leave you unprotected
legally, lead to expensive penalties, and jeopardize your business.
Business Licenses
There are many types of licenses. You need one to operate legally almost
everywhere. If the business is located within an incorporated city limits,
a license must be obtained from the city; if outside the city limits,
then from the county. For more information contact the county or city
office in your area.
Certificate of
Occupancy
If you are planning on occupying a new or used building for a new business,
you may have to apply for a Certificate of Occupancy from a city or county
zoning department. For more information contact the county or city office
in your area.
Business Organization
There are many forms of legal structure you may choose for your business.
The most common structures are Sole Proprietorships, General and Limited
Partnerships, C and S Corporations and Limited Liability Companies. Each
legal structure offers organizational options which are appropriate for
different personal situations and which affect tax and liability issues.
We suggest you research each legal structure thoroughly and consult a
tax accountant and/or attorney prior to making your decision.
Fictitious Business
Name
Businesses that use a name other than the owner's must register the fictitious
name with the county as required by the Trade Name Registration Act. [Check
with your local government offices] This does not apply to corporations
doing business under their corporate name or to those practicing any profession
under a partnership name.
Protecting Your
Idea
If applicable to your business, you may want to apply for trademarks,
patents and your copyrights. Visit http://www.uspto.gov.
Trademarks
Trademarks are names or symbols used in any commerce that is subject to
regulation by state government or the U.S. Congress. Trademarks and service
marks may be registered in a state for a term of ten years. For more information
about Applications for Registration of Trademark or Service Mark visit:
http://www.sba.gov/world/states.html
Copyrights
Copyrights protect the thoughts and ideas of authors, composers and artists.
A copyright prevents illegal copying of written matter, works of art or
computer programs. In order to ensure copyright protection, the copyright
owner should always include notices on all copies of the work.
Business Insurance
Like home insurance, business insurance protects the contents of your
business against fire, theft and other losses. Many small businesses must
protect themselves from lawsuits and other situations for which they might
be deemed liable. All businesses should research the advisability of appropriate
liability insurance. Contact your insurance agent or broker.
Sales Tax Number
In your state there is a percent sales and use tax which applies to the
retail purchase, retail site, rental, storage, use or consumption of tangible
personal property and certain services. In other words, sales tax must
be collected on just about every tangible item sold.
A sales tax number
is required for each business before opening. The number, plus instructions
for collection, reporting and remitting the money to the state on a monthly
basis, can be obtained from: http://www.sba.gov/world/states.html
Employees
All businesses with employees are required to comply with state and federal
regulations regarding the protection of employees. For information on
state labor laws, work force availability, prevailing wages, unemployment
insurance, unionization, benefits packages and employment services visit:
http://www.sba.gov/world/states.html
Unemployment
Insurance Tax
Businesses are required by the state to pay unemployment insurance tax
if the company has one or more employees for 20 weeks in a calendar year,
or it has paid gross wages of $1,500 or more in a calendar year. The taxes
are payable at a rate of 2.7 percent on the first $8,500 in annual wages
of an employee. For more detail visit, http://www.sba.gov/world/states.html
Unemployment insurance must be reported and returns made to the state.
Immigration Act
The Federal Immigration Reform and Control Act of 1986 requires all employers
to verify the employment eligibility of new employees. The Immigration
and Naturalization Service makes available a Handbook for Employers, which
provides step-by-step instructions on how to complete the "Employer Eligibility
Verification" Form I-9, which is required by law when hiring a new employee.
To obtain a copy of the handbook and the form and for additional information
visit: http://www.ins.usjog.fov/graphics/formsfee/form/I-9.htm
Health and Safety
The Federal Occupational Safety and Health Administration (OSHA) outlines
specific health and safety standards employers must provide for the protection
of employees. Many states have similar standards. For information visit:
http://www.osha-slc.gov/SmallBusiness/Safety.html
Workers' Compensation
If a business employs three or more people, workers' compensation insurance
must be carried to provide protection to those injured in on-the-job accidents.
The State Board of Workers' Compensation aids people who need claim assistance.
Minimum Wage
Virtually all business entities are subject to the federal minimum wage,
overtime and Child labor laws. Information on these laws and other federal
laws, may be obtained from U.S. Department of Labor Wage and Hour Division.
Visit them at: http://www.dol.gov/dol/asp/public/programs/handbook/minwage.htm
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