STARTING A BUSINESS
WHAT YOU NEED TO KNOW
Ø Starting a Business:
- Are you starting a business or purchasing a current operating business?
Ø Selling the Product or Service:
· Product
Resale product
Manufactured product
· Service
Office base service
· Outside service
Ø Do you have any experience selling your product or service?
Ø Is your product or service provided by other companies? (Who is your competition?)
Ø To whom are you selling your product and service?
· Consumer
· Business
Ø What is the selling price range?
Ø Target Market
· Define Target Market
· How to reach Target Market
· How large is the Target Market?
Ø Purchasing, Manufacturing, and related Costs of your product or Service.
Resale Product
· Who are your suppliers and what are the financial arrangements for payment?
· Do you have the space to hold inventory?
· How would the product be delivered to customers?
· Can your product become obsolete, worthless, spoiled?
Manufactured Product
· Will you need to obtain a Patent?
· Will you manufacture the product or sub-contract the manufacturing?
· Do you have the space to hold inventory?
· How would the product be delivered to customers?
· What are your direct and indirect manufacturing costs?
· Can your product become obsolete, worthless, spoiled?
Cost of Goods Sold
· Product for Sale
Ø Raw Materials
Ø Resale Products
Ø Freight-In
Ø Packaging Supplies
· Factory Labor & Related Payroll Taxes & Employee Costs
· Factory Overhead
Ø Rent
Ø Electric
Ø Insurance
Ø Factory Expenses – Cleaning Services & Supplies, Alarm Contracts, Repairs, etc.
Ø General, Administrative and Selling Expenses
Salaries |
Pension Plan |
Insurance - Medical |
Insurance - Long Term Care |
Employee Benefits - Other |
Fica & Medicare Tax |
Federal and State Unemployment Insurance Tax |
Dbl Insurance |
Workers Compensation Insurance |
Rent |
Electric |
Rent - Storage |
Telephone |
Internet Services |
Office & Stat, & Comp. Supp |
Postage & Messenger Service |
R & M - Office Equipment |
Office Repairs & Maint. |
Equip. Maint. Contracts |
Computer Consulting |
Accounting, Legal, Computer Fees |
Professional Publications |
Professional Seminars |
Dues & Subscriptions |
Licenses & Permits |
Auto & Truck Rental |
Auto & Truck Expenses |
Parking & Tolls |
Trains, Taxis & Buses |
Travel |
Advertising & Promotions |
Entertainment & Meals |
Gifts & Holidays |
Insurance – Business, Liability, etc. |
Interest |
Bank Charges |
Moving Costs |
Federal Corporation Tax |
State Corporation Tax |
NYC Corporation Tax |
New Jersey Corporation Tax |
Ø Capital Expenditures & Security Deposits:
· Office Furniture and Equipment
· Computers
· Manufacturing Equipment
· Packaging Equipment
· Transportation: Automobiles and Trucks
· Factory & Warehouse: Storage Shelving & Forklifts
· Leasehold Improvements – Walls, Electrical Etc.
· Security Deposits – Rent, Telephone, Electric, Insurance Etc.
Ø Capital/Investment:
· Initial Investment into the business
· Additional Investments into the business during startup period & cash shortages
Ø Where is the Business Going to be Located?
· Location of
§ Administration Offices
§ Manufacturing Facilities, Warehouse/Shipping
§ Selling Offices
Ø How far is the business location from where you live?
Ø Income Statement Projection
· Cash Basis or Accrual Basis
· Monthly & Yearly Reports
· Narrative regarding how and why income and expense items are computed
Ø Cash Flow Projection
· Initial Investment
· Startup Costs
· Monthly & Yearly Reports
· Narrative regarding how and why receipts & disbursements are computed
Ø Formation of Official Business Entity (Organization Plan)
o Sole Proprietorship
· County Registration with Doing Business As (DBA)
· Unlimited Liability
o Single member Limited Liability Company
· State Formation with required advertising notices.
· Limited Liability
· Taxed as Sole Proprietorship
o Partnership
· County Registration with Doing Business As (DBA)
· Unlimited Liability
· Partnership Agreement
· Income/Losses Pass Directly to Partners
o Limited Liability Company (LLC)
· State Formation with required advertising notices.
· Limited Liability
· LLC Operating Agreement for Members
· Taxed as Partnership upon election
o Corporation
· State Formation
· Shareholders Agreement
· Limited Liability
· “C” Corporation
· “S” Corporation
· Must have employees
o Business Plan
· Nature of the Business
· Business Objectives
· Marketing Plan
· Financial Plan
· Organizational Plan
· Owners’ Biography regarding experience in this business
Ø Name of Business Entity and DBA Names
Ø Registration with Government Agencies
- Federal Government: Internal Revenue Service
o Form SS-4: Application for Federal Identification Number
o Form 2553: Election by a Small Business Corporation
o W-4: Employer’s Withholding Allowance Certificate
o Immigration Services - I-9 Employment, Eligibility, Verification
o Employer – NYS–100 NYS Employer Registration for
Unemployment Insurance, Withholding & Wage Reporting
o Sales Tax Authority – DTF-17 Application for Registration
as a Sales Tax Vendor
o CT-6: Election by a Federal S Corporation to be treated as a New York S Corp
Ø Payroll Taxes
- Employee Withholding Taxes – Fiduciary Responsibility of employer who makes decision on business bills to be paid. Personal liability.
- FICA Tax (Social Security and Medicare Tax) – Employer Cost 7.65% per employee wages up to maximum calendar yearly wages of 106,800.
- FUTA Tax: (Federal Unemployment Tax) – Employer cost .8% per employee wages up to a maximum per calendar yearly wages of $ 7,000.
- New York State
- State Unemployment Tax – Employer cost of .1% up to 9% per employee wages up to a maximum calendar yearly wages of $ 8,500.
- Required Insurance coverage:
- Workers Compensation Insurance – rates vary depending on industry
- Disability Insurance – Short Term
Ø Sales & Use Tax
- Fiduciary responsibility of owners – Personal Liability
- Resale and exempt organization certificates
- Invoices and Register Tapes
- What is taxable and what is tax exempt?
- Interstate and Intrastate sales
- Internet Sales
Ø Nexus : A connection, tie, link
Ø Insurance
- Liability
- Property
- Auto
- Business continuation
Ø Permits and Licenses
- Better Business Bureau
- Health Department
- Environmental
- Clothing Registration - Clothing Manufacturer Number
Ø Bookkeeping
- Computer Programs,
- Supporting Documents
- Payroll Services
Ø Web Sites
- Internal Revenue Service – www.irs.gov
- New York State Department of Finance – www.tax.state.ny.us
- New York City Department of Finance – www.nyc.gov
- US Department of Justice – www.usdoj.gov
- New York State Department of State – www.dos.state.ny.us
NOTICE:
U.S. Treasury Circular 230 Notice:
Any tax advice contained in this document is not intended or written to be used, and cannot be used for the purpose of:
· avoiding penalties that may be imposed under the Internal Revenue Code or by any other applicable tax authority, or
· promoting, marketing or recommending to another party any tax-related matter addressed herein.