2008/06/25 00:00:00
By William J. Lynott — June 25, 2008
You’ve decided to take the big step. Your military experience has given you much of the training you need, and you’ve put aside a few dollars to start your own business. Now what?
Before you take that first step, you should seriously consider the most important factors: Are you temperamentally and psychologically suited to be a business owner? Are you prepared to handle the responsibilities and pressures that go along with running your own business?
If you think you have what it takes, here are some tips to help you get started.
1. Check out local ordinances
Most municipalities have local laws affecting the nature of business operations. You don’t want to find yourself in violation of a local ordinance resulting in fines, severe restrictions in the operation of your new business, or even the need to discontinue operations.
Visit or call the headquarters of your local municipality for details about local ordinances that could affect your business plans.
2. Decide on a legal structure
Nearly three-fourths of the millions of small businesses in America are sole proprietorships, according to the U.S. Department of Commerce. Obviously, that makes the mom-and-pop form of business the most popular choice for entrepreneurs. But is it the best choice for your new business?
There are three basic classifications of business entities from which to choose: sole proprietorship, partnership, and corporation. Each has its own distinct set of advantages and disadvantages.
- Sole proprietorship: The simplest, least expensive way to launch a new business is, of course, as sole proprietor. There are little or no legal expenses, no complex tax structure, and no one else to interfere with management decisions. Setting up a sole proprietorship is an easy job — you can do it without the assistance of an attorney or accountant regardless of the state in which you do business. But remember, as a sole proprietor you have unlimited personal liability for all debts against the business. Both your business and personal assets are at risk in the event of legal trouble.
- Partnership: According to the Uniform Partnership Act: “The association of two or more persons to carry on as co-owners of a business for profit forms a partnership, whether or not the persons intend to form a partnership.” As with sole proprietors, partners in a general partnership have unlimited personal liability for debts against their business.
- Corporation: Unlike sole proprietorships and partnerships, corporations are legal entities that exist apart from the individuals who create them. One of the major advantages of the corporate form of business is the protection it affords for the personal assets of the owners. In many states a limited liability company is a legal form of business similar to a corporation. It is a somewhat more flexible form of ownership especially suitable for smaller companies with a limited number of owners.
There is, of course, far more to consider when choosing the best legal structure for your business. Your accountant will be able to offer advice about which is the best choice for your business. The Small Business Administration offers an excellent booklet with additional details.
3. Register your business name
Depending on your business structure, you might be required to register your business name with the local, state, or federal government. If you structure your business as a corporation, in most states your business name automatically will be registered when you file your articles of incorporation.
If you structure your business as a sole proprietorship and don’t use your own legal name as the business name, you must comply with the fictitious or assumed business name requirements of your state. This requires registering the name with a government agency. In some states, you must register at the state level. In others, you will need to register at your county clerk's office. In either case, the procedure is usually quite simple and involves little or no cost. A phone call to your county clerk’s office should get you the information you need.
4. Choose the phone/Internet service best for you
Arguably, no other part of a new business setup is more personal than the choice of an Internet and phone service provider. In all likelihood, you already have both an Internet and phone service provider for your personal needs. If you’re happy with the service you’re getting, it’s probably best to stick with someone you know.
Many of the larger telecommunications companies, such as Verizon, AT&T, and Qwest, offer Internet, cell phone, and landline phone service. Most of these companies offer package deals that can save you considerable money if you use the same provider for all three services.
5. Set up your business bank accounts
You know, of course, that it’s always best to keep your personal and business finances separate. To do that properly, you’ll need to have a bank account in your business name.
Before your bank will open a new account in the name of your business, it will have to see evidence of proper registration. For a sole proprietorship or partnership, you’ll need a certificate of registration with your proper state or county office. If you are incorporated, a copy of your articles of incorporation will serve the purpose.
6. Don’t discount the odds and ends
Just when you think you’ve thought of everything, something else will pop up. Don’t forget business cards and stationery. For a professional look, you’ll need a logo. While computers and easy-to-use software make it possible to design your own logo, it’s probably not a good idea. If there’s a graphic design school near you, a student artist might be able to do the job for you at little cost. Otherwise, recommendations from your business associates or local print shop owner could do the trick.
7. Take advantage of available resources
Military officers — active duty or retired — have two important resources offering help in getting started in business.
- Business Licenses, LLC: This Airmont, NY-based company has helped more than 10,000 businesses in the U.S. file more than 50,000 licenses, permits, and tax registrations at local, county, state, and federal levels in about three years “We’re the one place to go to find out what permits are required to start your business,” says David Polatseck, cofounder and president. “For one low fee, our huge database enables us to determine just what permits you need to start a business anywhere in the U.S., and we’ll do all the work for you.” For more information, go to www.businesslicenses.com or call (845) 369-8799.
- The Veterans Corporation: This is a federally chartered 501(c)(3) organization created by Public Law 106-50, the Veterans Entrepreneurship and Small Business Development Act of 1999. “We exist for the single purpose of providing veterans with access to the tools required to become successful in running their own business,” says Walter G. Blackwell, president and CEO.
“Military training provides essential elements such as leadership, discipline, and commitment needed for success in business,” he says. “The Veterans Corporation helps to put that training to work in the world of business, and everything we do is provided at no charge.” For more information, go to www.veteranscorp.org or call (866) 8267-9835.
Obviously, the road to becoming an entrepreneur is chock full of bumps and potholes. However, most of those who have made the journey say arriving at the final destination makes all the effort worthwhile.
