Newsgroups (Forums)

Newsgroups (Forums)

You can additionally use newsgroups or forums. These are industry- or topic-related cyberbanking bulletin

boards area you can column a message, acknowledgment to a message, or apprehend letters acquaint by others.

Newsgroups acquiesce you to altercate or appearance discussions on any accountable amount that you are

interested in. For example, if you are absorbed in computers and would like to altercate the latest

computer technology, you can go to a technology newsgroup. If you accept a catechism about a

particular topic, you artlessly column it on the lath and added users will respond. Be acquainted that

newsgroup responses do not booty abode in absolute time. When you column a message, you will accept to

return from time to time to the newsgroup to analysis for responses.

One of the best accepted places to acquisition newsgroups is on Google. You can admission the newsgroup

site at http://groups.google.com. To admission a newsgroup, bang on one of the industries listed on

that armpit and again acquisition the accumulation of your choice. Alternately, you can access a keyword in the

search box to accompany up a account of accompanying newsgroups.

Industry Specific Web Sites

Industry Specific Web Sites
In addition to using search engines to find the information you are looking for, you can use
specific industry Web sites or portals. With few exceptions, large corporations, industry
associations, organizations, schools, newspapers, magazines, political groups, etc. have their own
Web sites.
Many of the addresses can be accessed by putting the name of the company or group in the
address section of your Web browser and selecting “Go.” For instance, you can reach United
Airline’s Web site by inputting “United Airlines” in the address bar, which will either take you to
the company’s site or to direct links to the site.

Choosing an Internet Account Provider

Choosing an Internet Account Provider

Choosing an Internet Account ProviderAn Internet account provider (ISP) is a aggregation that provides admission to the Internet. The mostpopular account providers allegation a account fee. Examples of blast Internet account providersare America Online (AOL), AT&T, SBC, EarthLink, and NetZero. The best accepted cableservice providers are Comcast, Cox Cable, Adelphia.To accomplish the affiliation possible, the ISP will accord you a software affairs to install on yourcomputer. The software enables the advice amid your computer and modem and theInternet account provider’s server.High-Speed vs. Dial-Up Admission – The acceleration with which you affix to the Internet and“travel” beyond the World Wide Web depends on the blazon of account you purchase.• Dial-Up Admission – Dial-up account occupies a blast line. The monthlyaccess fee is bargain (generally $20 or less). If you are application a punch upservice, you log in with a user name and password. The software again dials aprovider admission cardinal in your bounded area, sending signals from your computer toyour Internet account provider. When the affiliation is made, your ISP providesyou admission to the World Wide Web.Note that accessing of Web sites and downloading and uploading of files cantake a continued time via dial-up affiliation because the alteration of advice ismuch slower.• High-Speed Admission – Accelerated admission is a fast service, but is added costly($30 or added per ages depending on the affiliation speed). These connectionsare provided by either your blast aggregation (DSL) or a cable aggregation (cablemodem). Both crave aerial acceleration modems and your computer’s ethernet card.The provider will accumulation the modem and abstruse support.With accelerated access, your computer is consistently affiliated to the Internet.The account operates in the accomplishments and does not baffle with your regulartelephone or television services. Admission to Web sites is abundant faster anduploading or downloading of files happens actual rapidly.

Setting Up Your E-mail Account

Setting Up Your E-mail Account

Setting Up Your E-mail AccountNow that you accept an Internet account provider and are affiliated to the Internet, you can set upyour e-mail. You can do that by application the e-mail accoutrement provided by your Internet account provider.Alternatively, you can use the chargeless casework that are offered by assorted e-mail providers such asHotmail, Yahoo, and Google. Logging on to your e-mail account will acquiesce you to compose andsend e-mails as able-bodied as retrieve any new and old messages.To set up your e-mail, you will accept to bang the assurance up as a new user advantage and accommodate thenecessary claimed information, actualize a user name and password, accommodate an acknowledgment to a securityquestion that will be acclimated in the accident you balloon your password, and accede to the “Terms ofService” as appointed by the e-mail account provider. If the user name called is actuality acclimated byanother user, you will be prompted to baddest addition name. The user name you accept togetherwith the e-mail provider’s addendum will again become your e-mail abode (e.g.,johnjones123@hotmail.com).

Searching for Advice on the Internet

Searching for Advice on the Internet

The Internet can be acclimated to chase for advice of all types. This includes accepted information,

specific accountable matter, and advice about a being or people.

Search Engines

The best frequently acclimated assets for analytic for advice are chase engines. A search

engine is a aggregation with specialized accoutrement that will acquiesce you to chase the World Wide Web for

information on any topic. Each chase agent has its own Web address.

Tech Tip

Find Advice Via Chase Engines

The best accepted chase engines (in alphabetical order) are:

• Alta Vista www.altavista.com

• Accelerate www.excite.com

• Go www.go.com

• Google www.google.com

• Lycos www.lycos.com

• MSN www.msn.com

• Beast www.yahoo.com

words or abbreviate phrases that you blazon into a chase box that will accredit the chase agent to

produce Web pages with the advice you are attractive for. Upon cancellation of your search

request, the chase agent goes out and searches the World Wide Web for matches. It again returns

the after-effects to you on Web pages that it assembles with anecdotic lists and absolute links to Web

addresses, area you can admission the requested information

What is a Web Address? – Much like the concrete abode for your office, each

site on the Internet has a specific Web abode alleged the Uniform Resource

Locator (URL). The URL appears in the abode box of your browser back you

visit a Web site. A Web abode looks like this: http://www.business-plan.com. The

company’s area name is “business-plan.com.” It identifies the specific address

(or location) of the Web armpit on the World Wide Web.

Note: Be specific back selecting keywords. You may additionally accept to try several

keywords or combinations of words afore you acquisition what you are attractive for.

Communicating with Bargain and Vendors

Communicating with Bargain and Vendors

Now that you are affiliated to the Internet and acquire set up your e-mail, you will acquire the ability

to advance and acquire e-mail admonition and chrism the World Wide Web.

Using e-mail to accustom with your bargain and vendors has a cogent advantage over

traditional belletrist – it speeds above the admonition air-conditioned avenue and does not crave paper,

envelope, or postage. Email provides afire admonition accepting for adapted adaptation making.

Using your e-mail, you will additionally be able to advance abstracts and pictures in the analysis of a file

attachment. Your e-mail can additionally be acclimated as an Internet business accoutrement because it is fast, attainable to

use, and inexpensive. It will accede you to buck your annual afresh to your bargain or

prospective customers.

Be acquainted that you will additionally acquire a lot of exceptionable e-mail, frequently apperceive as “spam.” You

can abridge spam by appliance filters provided by your e-mail annual provider.

Another admonition acclimation you can use is afire messaging, or IM. A basal of many

e-mail services, afire abettor runs in the accomplishments while you are online and alerts you

when you acquire a annual or accession wants to address to you. Afire abettor additionally allows you to

set up a acting blubbering allowance if you appetence to address to two or added people. It additionally allows you to pass

files and move abstracts quickly.

Connecting to the Internet

Connecting to the Internet
The first thing you will have to do before getting on the Internet is to establish a connection. In
order to do that, you will need a modem, a phone line or cable connection, and an Internet service
provider, or ISP. A modem is a computer device that transmits signals to and from your computer
and facilitates communication with your Internet service provider. Computers today typically
come with modems already installed.

Use the Internet

Use the Internet
With a computer, you have the opportunity to connect to and utilize the
Internet for your business. The Internet is a vast collection of interconnected
computers and networks. When you access the Internet, your computer uses a
telephone or cable connection to travel across these vast networks allowing you
to communicate with other users and to access millions of Web sites on what is
known as the World Wide Web.
The Internet can be a powerful resource for your business. Some of the ways you
can use it are to:
􀀹 Communicate with current and potential
customers as well as vendors
􀀹 Look for information, products, and
services that you need
􀀹 Develop a Web site to distribute information
and/or sell your products and services

To Help You with Your Insurance Shopping

To Help You with Your Insurance Shopping
We have provided an insurance fact sheet on the next page that will help you when you
are comparing insurance companies for coverage and costs. There is also an Insurance
Update Form Worksheet for your use included in the blank forms in Appendix II at the
back of the book (page 182).

After You Accept Your Information

After You Accept Your Information

When you accept accustomed advice from several allowance companies apropos advantage and

costs, you will accept some aftermost decisions to make. You will accept to attending at your allowance needs in

terms of actual needs and abiding protection. Know what is appropriate by the federal and state

government, by your lender or the appellation holder of your vehicles, etc. Also adjudge what kinds of

insurance you will accept to accept to assure your business. Divide your allowance needs bottomward into

those that are required, all-important and desirable. Adjudge what you can acquirement now, what you will

purchase back costs allows and what you will put on authority until a approaching time.

Other Considerations

Other Considerations
Insurance coverage is a complicated subject and cannot be covered adequately in the space we have
allotted here. We are not in the insurance business and therefore do not wish to have you consider
this as advice in regard to the insurance you should purchase or from whom you should purchase it.
The material covered in this chapter is for the purpose of acquainting you with some general
information regarding types of insurance that you should consider. See your insurance professional
to determine what is available and what would be best for your business and for you. It would also
be wise to consult with your tax planner, especially in the area of life insurance.

Employee Benefits

This is addition affair acute some important decisions if you are a baby business owner. Your

employees absolutely charge bloom allowance and are apparently advantaged to apprehend it. However, the

prohibitive costs of accumulation bloom affairs accept fabricated it about absurd for the baby business owner

to accommodate it for advisers alike if they ambition to do so. According to statistics, it now costs an

average of added than $4,000 per agent per year and the costs are ascent due to a cardinal of

factors such as complication of treatment, accidental care, accent claims and arresting medicine.

There is additionally abundant altercation about this breadth in the government sector. Regulatory legislation is

pending that may crave every business buyer to accommodate bloom affairs for all advisers working

over a assertive cardinal of hours.

In adjustment to get abroad from advantageous agent allowances abounding companies, including above corporations,

are hiring cadre through acting agencies. There are both accompaniment and IRS rules that administer to

non-employee (or contract) services. Be acquainted of the actuality that these restrictions abide and be abiding that

you are appropriately classifying your workers. Classifying an agent as arrangement casework back he or

she is absolutely an agent carries some abundant tax penalties.

Health Insurance

Health Insurance

Health allowance has continued been the nemesis of the self-employed. The costs are generally prohibitive

and the advantage poor. Many accumulation behavior are accessible through barter associations and insurance

companies specializing in baby business, but best of the premiums are adequately high.

The best admonition we can accord is to acquaint you that you should analyze every access and abide to get

quotes on new advantage actuality fabricated available. If you accept the befalling to accumulate purchasing

health allowance from a antecedent aggregation you formed for, that may be your best avenue.

Life Insurance

Life Insurance

One of the apropos of spouses and beneficiaries of a business buyer is the catechism of what

happens to that business if the buyer dies. With the afterlife of an buyer comes albatross for

providing for the disposition of the business. You may charge activity allowance and some affectionate of a buysell

agreement. If you die after accepting fabricated all-important provisions, your beneficiaries may be

forced to advertise or annihilate the business to pay the acreage taxes that ability be due. If, instead, you

have planned advanced and accept an able activity allowance policy, your beneficiaries can use the

insurance gain to pay the acreage taxes and acquiesce the business to abide to operate. If they

decide to advertise the business, they will still be larboard with article to sell.

Life Allowance can be an abnormally important application for a partnership. In abounding communityproperty

states, if a accomplice dies, his or her apron now owns that allotment of the business and has the

authority to accomplish that partner's decisions. This can actualize a bearings that may be extremely

unsatisfactory to either the actual accomplice or the spouse. That is why it is important to accept a

partnership acceding that spells out what happens if one accomplice dies. A activity allowance action can

be included as allotment of the affiliation acceding with a accouterment anecdotic that the action payoff

be acclimated by the actual accomplice to buy the asleep partner's allotment of the business.

The acquirement of alone abiding activity allowance by business owners can armamentarium a deferred

compensation affairs on a non-tax able base acceptance owners to set abreast money for

retirement or pay a afterlife account to the actual spouse. Key Activity allowance can additionally be purchased

to awning key bodies whose afterlife ability affect the company's sales and profitability. A appellation policy

would pay to advice alter the accident of the person. A abiding key being activity allowance policy

would additionally accrue banknote amount to advice armamentarium that person's retirement plan.

Property and Accountability Insurance

Property and Accountability Insurance

Property allowance covers barrio and their capacity adjoin losses due to such things as fire, theft,

wind, earthquake, flood, etc. Some of those risks may be accurately afar in your action and

may crave the acquirement of added behavior (earthquake, flood, arena water, etc.).

Liability protects a business back it is sued for abrasion or acreage blow to third parties. This type

of advantage pays amercement accompanying to actual injury, acreage blow and claimed injury. These

policies backpack assertive banned on the best that will be paid by an insurer for specific kinds of

occurrences.

1. General Liability: Approved accountability allowance pays for claims brought against

your business because a chump or added actuality (the buyer and advisers are

not covered) was afflicted on the business premises.

It is a acceptable abstraction to accept this affectionate of accountability allowance in force back you open

your business. It’s not aberrant for a chump to abatement and book a accusation that

will be difficult for you to pay. Approved accountability allowance additionally about includes

coverage for blow to acreage that you do not own or hire for your business

(such as a baptize aperture from your acreage that amercement acreage in an adjoining

business).

2. Acreage Blow Liability: This action covers blow to acreage that you

lease or hire and acreage that belongs to your customers.

3. Blaze Insurance: Protects your premises, anchored assets and account adjoin fire.

Fire accountability covers blaze blow to acreage you are leasing or renting.

4. Convulsion Allowance and Flood Insurance: If you alive in an breadth that

has a likelihood of actuality damaged by an convulsion or some added austere act of

nature, you may be astute to access appropriate allowance coverage. The premiums are

usually high, but able-bodied account it if you are hit by a disaster.

5. Theft: Protects adjoin break-in and robbery at your abode of business.

6. Fidelity Bonds: Protect a aggregation adjoin agent dishonesty.

7. Surety Bonds: Provide budgetary advantage in the blow a architect fails

to accomplish specific acts or complete assignment aural the agree-upon aeon of time.

8. Boiler and Machinery Coverage: Protects adjoin breakdowns of equipment

that is capital to the business (for example: computer and blast systems,

production equipment, etc).

9. Artefact Liability: Protects adjoin claims filed by any application your artefact after

it leaves your business. In best cases you will be accountable alike if your artefact has

not been acclimated correctly. The bulk of artefact accountability is about in admeasurement to

the aggregate of sales and the bulk of hazard involved.

10. Workers’ Compensation: Best states crave that an employer provide

insurance that awning all advisers in case of affliction or affliction accompanying to the

workplace. You can alarm you allowance carrier to get workers’ atone or contact

the State Employment Department for advice on state-operated insurance.

Although this is allowance that will awning employees, it is paid in abounding by the

employer. The bulk answerable for workers’ atone varies according to the

number of advisers you accept and additionally according the bulk of blow involved. If

you are in a high-risk industry, the premiums can be actual high.

Workers’ atone is one the best arguable issues today. Due to a aerial bulk of

fraud and the trend against accent claims, abounding administration accept actually been

forced out of business because of their disability to pay accretion allowance costs.

Many businesses accept instituted safety-in-the-workplace programs and

intervention programs to cut bottomward on claims. There is additionally an accent being

placed on artifice detection. To abate stress-related claims legislation is pending

that will abode a allotment bulk that charge be attributable to those claims.

11. Business Interruption Insurance: Advantage can about be added to your

regular action that will pay you an bulk about according to what you

would accept becoming in the blow that you accept to abutting your business while your

premises are actuality rebuilt or repaired. You can additionally buy aerial insurance

that will pay operating costs during that time. There are additionally added types

of advantage that can be purchased to awning business operations beneath separate

circumstances such as hospitalization.

12. Agent Insurance: Best states crave that you backpack a assertive bulk of

liability advantage if you are activity to accomplish a vehicle. Your approved insurance

carrier will apparently be able to assure your business vehicle. It you use the

vehicle for both claimed and business purposes, you will charge to see that a rider

is absorbed that will awning the business use. If you accept advisers that will be

driving your business vehicles, be abiding you accept advantage that will be in aftereffect in

case of an accident.

13. Umbrella Insurance: A accountability action that protects the business against

catastrophic losses. It provides for added aegis for accidents involving a

number of people. It additionally extends accountability banned on auto behavior (usually in

increments of $1,000,000).

What are the Basal Kinds of Insurance?

What are the Basal Kinds of Insurance?

As declared previously, there are abounding altered kinds of insurance. In fact, there are so abounding kinds of

insurance that best baby business owners would go broke if they were advantageous for the highest

protection accessible in all areas.

Most baby businesses buy what is about accepted as a Business Owner's Policy (BOP). The

policy about includes property, accountability and bent advantage and assorted specialty coverages

needed by the business. The advantage of a Business Owner's Policy is that is usually costs beneath than

if anniversary of the types of advantage were purchased separately.

In the afterward pages, we will abode some of the best basal types of allowance that should be

considered. There are two accepted categories beneath which all business allowance falls. They are

"Property & Accountability Insurance" and "Life & Health Insurance".

Shopping for an Allowance Company

Shopping for an Allowance Company

Shopping for an allowance aggregation is like arcade for a bank. Careful analysis will advice you to

determine what aggregation can best serve your needs and accommodate you with affordable coverage.

Call your accepted allowance aggregation and see what they accept to action in the way of business

insurance. Check with several added absolute agents that you apperceive or that accept been

recommended by your business associates. Ask them to altercate your business with you and

recommend an allowance amalgamation that will accord you the best advantage for the atomic cardinal of

dollars.

If your allowance needs are different because of your blazon of business, you can attending through your

trade journals. Many times, business allowance companies will acquaint in those journals, especially

if the blazon of allowance they are announcement is not accessible with above companies. For example,

food industries accept their own different considerations. Advantage is actual amount and they must

usually seek a specialized allowance company.

Plan for Your Insurance

Plan for Your Insurance

At some point during the accumulation of a business, the catechism of insurance

needs will necessarily arise. In fact, if you are autograph a business plan, insurance

will be one of the capacity you awning in the Organizational Plan and adapt into

costs in your Financial Documents.

Today's apple of rapidly-expanding technology goes hand-in-hand with a society

steeped in lawsuits. The best innocent business buyer can acquisition himself/herself

involved in acknowledged accomplishments adjoin the business. In accession to liability, there are

many added allowance considerations such as fire, flood, earthquake, theft, auto,

workers’ compensation, bloom insurance, etc. that charge to be addressed during the

period of ownership.

The aloft are all apropos during the lifetime of the owner. What happens if the

owner dies? There may be a charge for activity allowance and a buy-sell acceding to

safeguard your beneficiaries.

Choosing a Coffer Worksheet Name of Potential

Choosing a Coffer Worksheet

Name of Potential

Financial Institution

A. City Coffer B. Home C.

National Bank

1. Accept you already accustomed a Manager: Manager:

Working accord with J. Smith L. Jones

a. the management? Personnel: abundant (service-oriented)

b. the personnel? Tellers: friendly

2. What affectionate of business coffer business blockage business checking

accounts are available? + CDs, etc. + CDs, etc.

3. Does this coffer action merchant no yes

credit agenda services?

4. Does the coffer participate in absolute acreage only. adopted SBA

business accommodation programs? lender

5. Is the coffer a federal archive bank? yes yes

6. Is the coffer a abiding cyberbanking institution? 27 years old 22 years old

7. How abounding branches does the coffer have? 7 103

8. Is the area of the coffer acceptable yes yes

for your business?

9. What are the bank’s hours of operation? 9-3 Mon-Thurs 9-3 Mon-Thurs

Are they accessible on Saturday? 9-6 F; 10-1 Sat 9-6 F; 10-3 Sat

10. Will the coffer abode a captivation aeon 3 canicule waived except

on your deposits? For 2nd party

11. What will it amount you to accept a chargeless w/$500 min. chargeless w/$750 min.

business blockage account?

12. What added casework does the coffer have?

a. cyberbanking banking? a. no a. yes

b. safe deposit? b. yes (free) b. yes

c. agent public? c. no c. yes

d. cyberbanking transfer? d. yes d. yes

e. other? e. ATM e. ATM; seminars

13. What is your all-embracing activity about nice bank, but seems to be stable

the bank? doesn’t ample needs and fills all needs

In Conclusion

In Conclusion
Keep in mind that all accounts need not be at the same financial institution. However, it only makes
sense that the amount of business you do with any one bank will be directly proportional to the
benefits you will derive from it. Be sure to look at the stability of the bank you are considering. You
will want to feel secure that tomorrow morning when you wake up that your funds will still be
available to you.
A good banking record, along with the establishment of rapport with management and personnel of
your bank, may get you special concessions. For example, the hold on your deposits may be waived
if the management so desires or notary services may be extended for free as a courtesy. If you
already have a bank with which you have been satisfied, you may wish to deal where you already
have the advantage of being known by them as a valued customer.
Banking is serious business. Selection of the right bank and the right kinds of services will be a
definite asset to your business.
Worksheet: On the next page, you will find a filled-in example worksheet
entitled "Choosing a Bank". It will help you to see how you can compare
advantages and disadvantages of the financial institutions you are considering.

Additional Accounts You May Wish to Consider

Additional Accounts You May Wish to Consider
In addition to your checking account, you may also wish to consider other types of accounts such as
savings, money market, CDs, etc. The interest rates are the lowest on regular savings accounts.
They are usually higher on money market, C.D and other special accounts. Some have limits and
withdrawals before specified dates may impose penalties. Some are more liquid and a limited
number of checks can be drawn on the account without penalty as long as you maintain a minimum
balance. The earnings are usually proportionate to the length of time for which your funds are
committed.

Tech Tip Computer Checks Can Save Time and Money

Tech Tip
Computer Checks Can Save Time and Money
Many small businesses do their bookkeeping with a computer software
program such as “QuickBooks.” These programs give you the option of
printing your checks directly to computer check forms that are purchased
from various office supply retailers. The accounting software also
maintains the check register and copies of the checks you have written. If
you regularly send checks to the same payee, the address will automatically
be printed on the check in a position that will align with windowed
envelopes, saving you the time required to address envelopes.

Open a Blockage Account

Open a Blockage Account

The aboriginal annual you will charge is a blockage account. The afterward are some pointers that should

help you to accomplish bare decisions:

1. Your DBA is required. If your business name is an affected one, you cannot

open a blockage annual beneath that name after aboriginal accepting filed a DBA as

discussed in the antecedent chapter. The DBA is a agency for giving the bank

authority to drop and banknote checks beneath your apocryphal name. It should be

noted here, that cyberbanking behavior at best banking institutions avert offering

interest-bearing blockage accounts unless your name is allotment of the company

name. If you accept filed a DBA, be abiding to booty your cancellation with you back you

open your blockage account. The coffer will crave a archetype for their records.

2. Select a checkbook style. Back you accessible your blockage account, you will

be asked what appearance of checks you ambition to order. You will accept to decide

between the book blazon and the wallet type. The abate one is easier to carry, but

the book blazon is the bigger choice. It will acquiesce you to almanac added information

about your blockage affairs – advice that can be invaluable during

accounting procedures. There is a claimed board blazon checkbook that is smaller

that the business admeasurement and still actual adequate. You will accept to ask about this

particular appearance as it is not included beneath business checkbook selections.

3. How abounding checks should you order? Be abiding to anticipate advanced as to your

needs afore chief on the cardinal of checks to order. Reordering of checks

can be costly. Alpha with a minimum order. In best cases there will be some

change that needs to be fabricated afore long. You may get a new blast number

or adjudge to add or decrease a name.

At the aforementioned time you order, you may appeal that your checks be numbered

beginning at a cardinal added than 101. Frequently, this appeal will be denied on

new accounts. However, if you are successful, the use of higher-numbered checks

may accumulate the recipients of your checks from actuality angled off that you are a new

business. If all abroad fails, you can abandon the aboriginal book or two books of checks

and alpha your business with a college analysis number.

Note: You do not accept to adjustment your checks from your bank. There are now

many computer check-writing software programs that acquiesce you to design,

generate, and book your own checks. You can additionally adjustment checks from office

supply companies such as NEBS. The coffer is the easiest source, but others may

be beneath big-ticket or clothing you better.

4. Arrange for overdraws. It is best if you consistently advance a advantageous checking

account antithesis for your business. However, there may be times that you accept to

make an abrupt acquirement or that you accomplish an addition absurdity that will cause

your annual to be overdrawn. Providing advantage for these instances can save

you time and embarrassment.

5. Get an ATM agenda for your account. This will acquiesce you to drop or

withdraw funds during non-banking hours. It will additionally acquiesce you to admission your

funds at alien locations.

Separate Business and Claimed Finances

Separate Business and Claimed Finances

Many times, a new business buyer will be tempted to run business affairs through personal

accounts. Do not mix the two by aggravating to use the aforementioned blockage annual for your home and

business. It is acute that you accumulate your claimed and business affairs separate.

The IRS does not attending attentive on businesses that "co-mingle" claimed and business monies. The fate

of added than one baby business buyer has been bent based on this affair during an analysis –

and not in the business's favor.

Mixing business and claimed affairs will additionally annual you abounding problems with your accounting and

tax computations. The accounting action becomes actual complicated and creates a ambagious paper

trail back you use business funds for claimed obligations and carnality versa.

Business accounts are all-important for believability back ambidextrous with added businesses. Abounding of your

vendors will not acquire a analysis unless it is preprinted with your business name and address. It may

also be difficult, if not impossible, to authorize an accessible annual with a supplier or banker if you

do not accept a business coffer account.

Basic Information to Think About

Basic Information to Think About
The following will give you some basic information to think about when you are deciding which
bank to select:
1. Have you already established a personal relationship with your
banker? If you already know the key management and personnel at your
bank, you will have a head start when you need special consideration.
2. What kinds of loan programs are available through the bank? Does
this bank make business loans or does it confine itself to personal financing? Is
the bank a participating SBA guaranteed lender? Does it participate in any
other programs aimed at helping small business owners. Either now or
sometime in the future, you may need additional funds to operate or expand
your business. It is easier to go to your own banker than to have to approach
an unknown lender.
3. Does the bank have merchant credit card services? You may find
that your business will be more profitable if you can offer VISA and
MasterCard or American Express services to your customers. We are now
living in an age in which buyers of products and services do not carry cash and
expect to pay with a credit card. The merchant now has the advantage of being
able to instantly authorize the purchase and have funds deposited to the
business account within 24-48 hours. The bank generally charges the merchant
between 3 and 4 percent of the purchase amount for the service, but having the
capability may significantly increase your sales.
Instant online credit card authorization has made selling over the Internet an
important source of business income. If your bank offers online merchant
accounts, you will need to be sure that your shopping cart system will work
seamlessly with the bank's authorization and deposit system.
Warning! If you are considering credit card services, do some
careful planning before you commit your business to a program.
You will get calls from lots of third-rate companies wanting to set
you up with merchant services. Their salespeople are trained in
the "fast sell". They thrive on signing up new small business
owners. However, the costs to you can far outweigh the advantage
gained by having the service. Ask for (and review in writing) all of
the costs involved in setting up the service and the monthly
charges for maintaining the service. Also determine the cost
should you decide to discontinue services after a period of time.
One company rented their "Brand-X" machine for $10.00 per
month. However, if you quit in six months, you would owe $1750
for the machine. The irony -- the "Brand-X" machine cost only
$200 to $300 to purchase from most reputable banks. Also, most
banks will rent and update machines for a few dollars a month
with no cost to you should you discontinue your merchant account.
Watch for non-refundable application fees and other
miscellaneous charge—as well as restrictions on types of
purchases that you may accept (telephone orders, etc.)
4. What does the bank offer in the way of a business bank account?
Is there a holding period on your deposits? Can it be waived? What are the
service charges? What is the policy regarding returned checks? Do they have
overdraw protection? Is it an interest-bearing account? If so, do you have to
maintain a minimum balance? What other kinds of accounts does the bank
have that will allow you to divert temporary funds where they can earn more
and still stay liquid?
5. Is the bank a federal depository bank? If your business has employees
and you are paying any of those employees over a certain amount, you will
have to deposit funds in a separate depository account on a regular basis. It will
be more convenient if you can do all of your banking in the same place.
6. What additional services are available at the bank? Do they have
branches available in several locations? What hours are they open? Do they
have 24-hour ATM services. Do they have safe deposit boxes. Do they have
notary services? What other services does the bank have that might be required
by your business?
7. Does the bank provide electronic banking services? With the
advances in computer technology, many banks now offer remote banking
through online services. You can quickly access account information, transfer
money, pay bills and more – all with the convenience of your computer.
Note: It would be wise for you to spend some time telephoning banks to gather
information. It can also be helpful to talk to other business people and see which
banks they use and whether or not they would recommend them for your needs. You
can also check out banks on the Internet.

Establish a Business Coffer Account

Establish a

Business Coffer Account

The alternative of the coffer with which you will do business should be undertaken

with a abundant accord of consideration. Banks alter abundantly in the casework they offer, as

well as in the accuse for those services. You will appetite to anticipate about such factors

as absorption amount paid on accounts, captivation periods on deposited funds, locality, hours

of operation, accommodation policies, merchant acclaim services, etc.

Tech Tip Keeping Track of Sales for Easy Sales Tax Reporting

Tech Tip

Keeping Track of Sales for Easy Sales Tax Reporting

Sales tax advertisement can be a continued and annoying process⎯or you can do it at the bang of

a mouse! The abstruse is to advance your accounting software to accomplish the

information you charge for your address to your bounded sales tax authority.

In adjustment to accomplish the adapted information, you will accept to anticipate in agreement of sales tax

reporting back you set up your blueprint of accounts. This agency that acquirement accounts

will charge to be disconnected not alone by the types of articles and casework you sell, but

also according to their account to sales tax advertisement responsibility.

Example: If you are in the business of affairs two taxable articles and your state

requires sales advice on taxable sales, out-of-state sales, sales to resellers, and

sales tax payable, your blueprint of acquirement accounts could be set up as follows:

Taxable Sales Out-of State Sales Reseller Sales

Product #1 Product #1 Product #1

Product #2 Product #2 Product #2

When sales acquirement deposits are made, they are “split” deposits and revenues are

allocated amid the adapted accounts. Sales tax amounts will be automatically

calculated on the taxable sales.

The Benefit: At any accustomed time, you will be able to accomplish a address that will give

you the numbers you charge for your state’s sales tax report.

Reporting Sales Tax

Reporting Sales Tax

As ahead stated, the purpose of a seller’s admittance is to accommodate the accompaniment with a bureau of

collecting sales tax. To achieve this, the sales tax charge be accounted for by the final agent and

sent to the accompaniment forth with a address of the sources of those taxes. For this reason, the agent must

keep authentic annal on the types of sales fabricated and the bulk of sales falling aural anniversary of

the afterward categories:

• Gross sales

• Purchase bulk of acreage you bought after advantageous sales tax and that you used

for purposes added than resale

• Sales to added retailers for purposes of resale

• Nontaxable auction of aliment products

• Nontaxable activity (repair and installation)

• Sales to the U.S. government

• Sales in artery or adopted business to out-of-state consumers

• Bad debt losses on taxable sales

• Added absolved transactions

Note: Sales tax ante may alter from canton to county. When you are affairs out of your local

area, you will aggregate sales tax based on the accepted bulk in that area. You will additionally be appropriate to

keep an authentic almanac of those sales. In abounding cases a allocation of your state’s sales tax may be

designated as acceptance to a alteration district, appropriate assessment, etc. For instance, the Accompaniment of

California has abounding alteration districts that are allocated one bisected of one percent to abutment their

mass busline systems. Therefore, a banker from Los Angeles affairs at a barter appearance in San

Francisco will accept to address the bulk of those sales so the armamentarium may be appropriately disconnected by

the accompaniment agency.

The accompaniment will crave you to book a annual address in which you abridge your sales for the

period. If your taxable sales are almighty small, you may alone accept to address annually. If they

are excessive, you may be appropriate to abode a band and address monthly. The advertisement forms will

be beatific to you by the Department of Revenue or Accompaniment Board of Equalization. You charge complete

the address and mail it to the state, forth with your analysis in the bulk of sales tax due, by a

certain date (usually at the end of the ages afterward the advertisement period).

A agenda of attention about albatross for reporting

If you do not accept a address anatomy in the mail, it will be your albatross to call

the Department of Revenue and appeal that admiral accelerate you one.

When you accept this report, you will additionally accept a tax advice area with featured articles

on sales tax regulations and crackdowns. Take the time to apprehend it carefully, abnormally the

information that may affect to your accurate industry. Failure to appropriately address may aftereffect in

loss of your resale advantage as able-bodied as the added austere penalties mentioned above.

Sample Address Form: A archetype of a California Accompaniment Board of Equalization Report

form is included on folio 76. The anatomy for your accompaniment will apparently be similar.

Reporting Sales Tax

Reporting Sales Tax

As ahead stated, the purpose of a seller’s admittance is to accommodate the accompaniment with a bureau of

collecting sales tax. To achieve this, the sales tax charge be accounted for by the final agent and

sent to the accompaniment forth with a address of the sources of those taxes. For this reason, the agent must

keep authentic annal on the types of sales fabricated and the bulk of sales falling aural anniversary of

the afterward categories:

• Gross sales

• Purchase bulk of acreage you bought after advantageous sales tax and that you used

for purposes added than resale

• Sales to added retailers for purposes of resale

• Nontaxable auction of aliment products

• Nontaxable activity (repair and installation)

• Sales to the U.S. government

• Sales in artery or adopted business to out-of-state consumers

• Bad debt losses on taxable sales

• Added absolved transactions

Note: Sales tax ante may alter from canton to county. When you are affairs out of your local

area, you will aggregate sales tax based on the accepted bulk in that area. You will additionally be appropriate to

keep an authentic almanac of those sales. In abounding cases a allocation of your state’s sales tax may be

designated as acceptance to a alteration district, appropriate assessment, etc. For instance, the Accompaniment of

California has abounding alteration districts that are allocated one bisected of one percent to abutment their

mass busline systems. Therefore, a banker from Los Angeles affairs at a barter appearance in San

Francisco will accept to address the bulk of those sales so the armamentarium may be appropriately disconnected by

the accompaniment agency.

Resale Certificate

Resale Certificate
If you are purchasing goods for resale, the supplier or manufacturer will ask you to fill out a
resale certificate that may be kept on file to validate selling to you on a tax-free basis. By the
same token, when you sell to another dealer, you must also have him or her fill out a resale card
for your files. If the state later questions your nontaxable sales, you will have documentation as to
why you did not collect tax on the sale. Pads of resale certificates may be purchased at almost any
stationery supply store.
Example Form: A sample resale certificate form can be found at the end of this
chapter (page 78).

Misuse of Your Seller’s Permit

Misuse of Your Seller’s Permit
Once you have been issued a resale tax number, it is imperative that you use it only for the
purpose for which it was intended. Many tax numbers have been used to avoid paying sales tax
on business-related purchases as well as tax on personal items. Purposeful misuse of a seller’s
permit has long been a laughing matter with many users. If you get caught, however, it may cease
to be something to brag about. Most states are expanding their efforts to catch offenders. The
penalties for misuse are serious and may involve a heavy fine and/or jail sentence.
The rule of thumb is: If you do not intend to resell your purchase through your business, do not
use your resale number in order to buy it without paying sales tax.
At this point, it is only fair to say that there is some validity to using your resale number to
purchase wholesale. Many wholesalers do ask you to file a resale card with them before they will
sell to you at wholesale prices. However, this does not mean you are not required to pay sales tax
if you are not purchasing for resale. It may only be a means of adding credibility as a business
owner. In fact, if the seller does not collect from you at the time of the sale, you will be required
to include the purchase in you periodic sales tax report and pay the sales tax at that time.

State Laws Vary

State Laws Vary
The laws governing the collection of sales tax in any state can be complex. They also vary from
state to state. There have been many attempts to come up with a uniform sales tax system that
would be fair to the consumer and, at the same time, guarantee collection of tax on all applicable
sales. Individual states are also working to ensure that out-of-state companies servicing their
companies in state and selling their products through local outlets are collecting and reporting
sales tax.
Some states (including California) have laws that require buyers of out-of-state goods to pay a
use tax – a law that would increase state revenues significantly, but is difficult to monitor or
enforce.
Finally, there is the never-ending debate regarding the legalities of selling via the Internet without
collecting or reporting sales tax. Brick and mortar businesses feel that selling tax-free via the
Internet gives online sellers an unfair advantage. Internet sellers think they should not have to
collect sales taxes. It remains to be seen how the issue will be resolved.

Purpose of a Seller’s Permit

Purpose of a Seller’s Permit
A sales tax is imposed upon retailers for the privilege of selling tangible personal property at
retail within a state. The retailer, not the customer, is the person liable and responsible for paying
the sales tax. Consequently, every seller engaged in the business of selling a tangible product or
providing a taxable service in a state where sales tax is collected is required to hold a seller’s
permit for the purpose of reporting and paying their sales and use tax liability. The seller’s permit
is more commonly referred to as a resale tax number.
Because of the complications involved in the sales tax process, it may be difficult to determine
which of your products and services will be taxable. You may request information sheets from the
State Department of Revenue or your local State Board of Equalization that will explain the sales
tax regulations on your particular type of business. You may also request a ruling to determine
whether or not your product or service is taxable under a particular circumstance. Later, you must
be sure to keep abreast of any changes that are made regarding the taxing of sales for your
particular industry.
Your request must be on the basis that your business will be selling taxable items to your
customers or providing a taxable service. Any other reason for your request will be grounds for
denial. For example, many food services are not taxable unless they are provided at an event that
charges admission. Therefore, a resale tax number would not be warranted.
Warning! Do not use the word “buy” when you are applying for a seller’s permit. Even though
you may gain some purchasing advantages by having a seller’s permit, this is not a valid reason
for getting one. In fact, the mention of your intent to use it for the purchase of goods may
prejudice the interviewer against you.

Obtain a Seller’s Permit

Obtain a Seller’s Permit
Anyone who purchases items for resale or provides a taxable service must
obtain a seller’s permit number. This number is required in all states where
sales tax is collected.
Applying for a Seller’s Permit
Information regarding sales tax and getting a seller’s permit can be obtained through your state’s
Department of Revenue. Applications can be made through you local state offices. After filling
out your application, you will be called in to interview. Following this interview and review of
your application, it will be determined whether or not you qualify for a seller’s permit. For this
reason, it is imperative that you understand exactly what you are requesting and the purpose for
which you are requesting it. The wrong answer to a question can result in the denial of your
certificate.
Example Form: An example application from the California State Board of
Equalization is included in the last part of this chapter (page 74).

Renewal of Your DBA

Renewal of Your DBA

You will be appropriate to renew your DBA at assertive intervals -- such as every bristles years. You will be

notified by the filing bureau back it is time to renew. Again, it is your albatross to apperceive when

it charge be done and to assure yourself by inquiring if you do not accept your face-lifting notification.

Renewal does not crave republishing, but will absorb a fee to the City or County Clerk.

Warning!

There are abounding companies that accumulate clue of expiring DBAs and accelerate you official-looking

notices(with forms) to refile. They additionally body in a hidden fee for themselves. Refiling is actual simple.

Be abiding your apprehension is the official one from the County Clerk. If, for some reason, you do not receive

notification from the County Clerk afore your DBA is due to expire, it is your albatross to

contact them and appeal a face-lifting form.

Example Forms

The abutting two pages accommodate examples of a Fictitious Business Name Statement

and a Proof of Publication that has been filed with the County Clerk's office.

Tech Tip Download Forms from the Internet

Tech Tip
Download Forms from the Internet
Fictitious Business Name Statement forms can be downloaded
via the Internet in pdf format from most official country sites.
The example at the end of the chapter was downloaded by
searching the name, "Orange County, CA" and following the
links to the official website for the county and then choosing
"forms to download"

How to File a DBA

How to File a DBA
Assuming that you have chosen a fictitious name, it is time to register it (or file it) with the city or
county in which you are doing business. This is a two-part process: first you must publish your
fictitious name through a general circulation newspaper and ; second you must file that name with
the county clerk.
1. Publishing your fictitious name: Your fictitious name must be published in
a general circulation newspaper in your area. It must appear in four consecutive
editions. When your fictitious name is published, the newspaper will send you a
copy of the publication and issue a Publication Certificate. The fee for this
service is usually from $20 and $75.
2. Filing with the county clerk: The Publication Certificate has to be filed with
City or County Clerk. They will send you proof that is has been recorded. Fees
for filing your DBA will vary, but generally run somewhere between $15 and
$50.
Some newspapers will collect your fees and file for you after publishing. This will save you a trip to
the County Clerk's office. Others publish only and require that you do your own filing. As you can
see above, there is also a lot of variation in the fees they charge for this service. Local newspapers
frequently charge less and are easier to access. It would be wise for you to do some calling to
various newspapers and ask the following questions:
• Do you publish new DBAs?
• What is your charge for the publication of a DBA?
• Do you (the newspaper) also file with the City or County
Clerk? If so what are the fees for filing?
• What information do I need to bring with me in order to
complete the Fictitious Name Statement?

If You Fail to File

If You Fail to File
Registering a business name is very important for your own protection as well as for compliance
with the law. Registration of that name gives you exclusive rights to it. It also keeps others from
filing the same or a similar name and capitalizing on the hard work and investments you have made
in your business.
Unfortunately, there are individuals who lurk in the shadows waiting for just such an opportunity.
About eight years ago, we had a business owner in one of our classes who had built a very
successful electronics firm. However, he failed to file a DBA. Someone else discovered his error,
filed under his business name and offered the option of either paying to buy the name back or
ceasing to do business under that name. The business owner refused to pay the blackmail and chose
to re-establish under a new name. However the continuity of his business was set back and he lost a
large amount of business trying to re-establish under the new name.
The time and money required to file a DBA is very small compared to the benefits you will derive
from becoming the legal owner of your business name.

Register Your Fictitious Name (File a DBA)

Register Your Fictitious Name
(File a DBA)
What is a Fictitious Name (DBA)?
A fictitious name is commonly referred to as a DBA, which stands for “Doing
Business As". A fictitious name is any business name that does not contain
your own name as a part of it. In some states, that means your legal name
(frequently first and last).
If you are not a corporation and you plan to conduct business under a fictitious
name, you must file a DBA. If you are a corporation, ownership of your name
is ensured when you incorporate. Also, if your legal name is considered very
common, you may be required to file a DBA.
The following are examples to illustrate this point:
�� Peak Rescue - DBA required
�� Glenn's Peak Rescue - DBA required
�� Pinson’s Peak Rescue - DBA probably required
�� Glenn Pinson’s Peak Rescue - No DBA required
�� John Smith's Peak Rescue - DBA may be required
(because name is common)
�� Peak Rescue, Inc. - No DBA required (corporation)
Filing your DBA is one of the first tasks to be undertaken because every other piece of paperwork
requires the business name. Your bank will also require a copy of your DBA before they will open
a business account under that name. This is the only authorization they have for depositing or
cashing checks made out to that business name or written against its account.
Your business name should be free of conflict with names already registered in your area. Find out
if a corporation has staked a claim to your name by calling your state's office of name availability.
You may also wish to check the DBA books at the county clerk's office. Finding out at a later date
that your name is already legally registered to another business will result in your having to redo all
of your paperwork.
Note: You may wish to refer back to Chapter 4, "Choosing a Business Name," for further
information on how to research the name of your business.

Always Post Your Business License

Always Post Your Business License
Having a business is a way of assuring customers that yours is a legal business. Your
business license should be posted in a visible place at your business location. If you are
exhibiting or selling at a trade show, you should (in fact, may be required to) have a copy
on display. A copy of your business license may also be requested to establish accounts
with venders or to gain admission to trade and industry shows.
Example Application
To give you an idea of some of the types of information that may be requested, a
sample of a business license application can be seen on the next two pages.
Applications will vary according to your city or county.

Tech Tip Business License

Tech Tip
Business License Applications and Information for many cities
is available via the Internet. The example in this chapter was
downloaded as a pdf file for Adobe Acrobat Reader by searching
the words, "Irvine, CA" and following the links to the official
site for the city and to its business license information.
You can also research most city websites for other licenses and
permits needed for your specific type of business.

Applying for a Business License

Applying for a Business License
Once you have determined that your business meets all the specific requirements for operation
within the city or county you have chosen, you are ready for a trip to the Business License Bureau or
the City or County Clerk's Office to legalize your business.
You will be asked to fill out an application. Call ahead to find out what information you will need to
complete the application. This will save you time and ensure that you have all of your information
on hand when it is needed.
The application is usually fairly simple and will require only general information. You will probably
be required to supply such specifics as:
• business name and address
• owner names and contact information
• organization information (manufacturing, wholesale, retail, service)
• type of legal structure
• nature of the business
• expected number of employees
• Federal Employer ID (FEIN) and State Sales Tax No. (Resale)
• expected gross
• other relevant information.
A typical fee for a business may be as little as 10 cents per $1,000 of projected revenues. We have
also seen specific license fees applied to certain kinds of business. For instance, in one eastern city
the charge for a home business license is $350.
You will probably be asked to submit your completed application together with one year's fee
(frequently based on projected gross revenues). Your application will be reviewed by the proper
agents and a license will either be issued or refused within a few days.
Business licenses are renewed annually, subject to that city or county's codes and regulations. Your
renewal notice will be sent to you, but it is your responsibility to see that you renew should you fail
to hear from the licensing agency.

Licensing a Home-Based Business

Licensing a Home-Based Business
If you have elected to have a home-based business, restrictions may not permit you to get a business
license to operate in your city. You may be forced to move your business outside the home or
operate outside of the law. If your family happens to be moving and you are a seasoned
entrepreneur, you may wish to select your home partly on the basis of whether or not that city's
ordinances will allow you to operate your business – or any business – out of your home.
If you are thinking of living in a planned community, don't forget to check into any restrictions that
the association may have that relate to business use of your home. Even if the city will allow you to
operate your business, the association may preclude that option.
The passage of the Model Zoning Ordinance did much to help protect the legalities of working from
home. However, different types of businesses may be subject to special restrictions by the city or
county. For instance, a mail-order business may be allowed in your home, but a direct-sales
operation may be prohibited. Repair services may be allowed, but only if they do not involve the use
of toxic chemicals. Food services will probable be disallowed, but the city may allow you to use
your home as an administrative office for your business.
In most cities and planned communities, home-based businesses are not permitted to change the
appearance of the neighborhood and, therefore, you may be prohibited the use advertising or
equipment that can be viewed from the street. Very often, police or fire inspections will be
conducted to see that your business does not violate any of several restrictions. Doing some diligent
ground work ahead of time may eliminate the possibility of selecting a business location only to find
later that it was not an appropriate and/or legal choice.

Location Considerations

Location Considerations
In Chapter 5, "Decide on Your Business Location" you learned the basics of selecting the site of
your business. Selecting your location and getting your business license is an interactive process. A
business license is granted for a specific location and the selection of the location must take into
account licensing restrictions.
Contact the City or County Clerk's Office in the city or county where you wish to locate your base
of operation. They are an excellent source of information regarding police, fire and health permits
needed for your business. Since any business location must fall within the zoning regulations, you
may obtain verification from the zoning commission to determine if your business is approved for
the location you have chosen. The local business license bureau can also help you with your
decision by giving you information on any special restrictions as to types of businesses allowed or
disallowed at any location.
If you have decided to locate in a shopping center or industrial area or other commercial location,
call the chamber of commerce or city and ask for any publications with listings of facilities available
showing number of square feet, price per square foot and other pertinent information.
You may also contact the management of the commercial or industrial complex you are considering
and request written information about that location and current availability of leasing space. You
should be able to get detailed information as to lease terms, restrictions, traffic patterns and other
demographics. Be sure to read carefully and understand all the terms contained in a lease agreement.
They vary and may well spell the difference between profit and loss for your business.

Get a Business License

Get a Business License

Why do you charge a business license? The acknowledgment is simple. If your aggregation is

going to accomplish aural the law, the burghal or canton in which you will be doing

business will crave you to access a authorization or permit.

If that business is service-related and performs any allocation of its assignment in other

cities alfresco of its operational center, you may additionally be appropriate to buy licenses in

those cities. For example, if you accept a adjustment account and you accomplish several calls to

homes abroad from the burghal area your boutique is located, you could be answerable to

purchase business licenses in the cities you service. For casual assignment in another

city, you may alone be appropriate to access a admittance for those canicule on which you

perform the work.

Business licenses are austere affairs in best cities. They accommodate a antecedent of

revenue for the burghal or county. Licensing is additionally a agency of authoritative the types of

businesses that accomplish aural their jurisdictions.

It is accurate that abounding businesses are currently operating after licenses. A

crackdown in one above burghal showed that about 50% of its businesses had bootless to

produce accepted business licenses Fines were imposed and ultimatums issued that

failure to defended licenses would aftereffect in shutdowns. A business licenses is

inexpensive and lends believability to your operation. After one, you, too, run the

risk of actuality apparent and fined and/or barred from accomplishing any business at all.

Tech Tip Tax Advice on Acknowledged Structures

Tech Tip

Tax Advice on Acknowledged Structures

The Internal Revenue Service provides specific business tax advice for

each anatomy of acknowledged structure. Go to the IRS Web site: www.irs.gov

Click on “businesses” beneath “contents.” You will be able to access

information on tax considerations by acknowledged structure. You can download

general publications, tax worksheets and forms for anniversary acknowledged structure. You

will additionally accept admission to online workshops.

Additional analysis sites

By activity to any of the above chase engines, you can blazon in the various

types of acknowledged structure. You will be provided with links to any of a number

of advisory sites area you can accretion an burning apprenticeship on this subject.

In Summary business

In Summary

Choosing the acknowledged anatomy for your business requires accurate application of the available

options. Your best should bout the short- and abiding claimed and business goals.

What assets do you own and how abundant are you accommodating to risk? How abundant money will you need

to run your business and area will you the money appear from? What are your own industry and

managerial skills? Can you run your business by yourself – or will you charge to accompany added people

into the business as owners or shareholders? What would appear to your business if you were not

able to run it? Why did you alpha your business and what is your eyes for its future?

Changing Your Acknowledged Structure

Changing Your Acknowledged Structure

Most baby businesses will initially achieve as sole proprietors. As the business grows and

complications set in, you may ambition to change your acknowledged structure. You may accept to booty on

partners to advice you accept the load. If you charge to aggrandize your banking opportunities and

decrease your banking liabilities, you may ambition to anatomy a corporation.

If you change the acknowledged anatomy of your absolute business, you charge acquaint the Internal Revenue

Service and your accompaniment tax agency.

• Sole proprietorships and partnerships are appropriate to change acknowledged form

through the business authorization bureau.

• Corporations charge annals with the appointment of secretary of state.

If you are borderline as to how to accurately achieve a adapted change in acknowledged structure, you would

be astute to argue an advocate or accounting professional. It is bigger to be safe than sorry.

Limited Liability Company (LLC)

Limited Liability Company (LLC)
A Limited Liability Company (LLC) is a relatively new business structure allowed by state
statute. LLCs are popular because, similar to a corporation, owners have limited personal
liability for the debts and actions of the LLC. Other features of LLCs are more like a
partnership, providing management flexibility and the benefit of pass-through taxation.
Owners of an LLC are called members. Since most states do not restrict ownership, members
may include individuals, corporations, other LLCs and foreign entities. There is no maximum
number of members. Most states also permit “single member” LLCs, those having only one
owner.
A few types of businesses generally cannot be LLCs, such as banks, insurance companies and
nonprofit organizations. Check your state’s requirements and the federal tax regulations for
further information. There are special rules for foreign LLCs.
To set up an LLC, you follow a path similar to the formation of a corporation. You must
submit an article of organization and the appropriate filing fees to the secretary of state in the
state where your business is organized. Because states differ in the information required, it is
wise to consult your attorney or accountant if you think the limited liability company form of
legal structure is right for your business.
Benefits
• LLCs offer greater flexibility than S corporations. You can
accomplish the goals of limited liability and pass-through taxation. It offers
its owners greater flexibility in allocating profits and losses and is not
subject to the many restrictions of an S corporation.
• Loss deductions are more liberal for LLCs. The owners of an LLC
do not assume liability for the business’s debt, and any losses can be used
as tax deductions against active income. Loss deductions are more limited
under an S corporation.
• There is less restriction on participation. An LLC can be formed
with just one person in every state except Massachusetts, which requires at
least two owners. There is not maximum number of owners allowed.
• LLCs can offer more stock options. Unlike an S corporation, and
LLC can offer several different classes of stock with different rights.
Risks
• Different rules apply in different states. An LLC is a state entity
and the business is governed by the code of that state. In some states, the
business is dissolved on the death, retirement, resignation, or expulsion of
an owner. Be sure to check your state’s code to see if an LLC is the best
form of legal structure for your business.
• It may be difficult to operate in other states. Expansion of the
business out of state may be inhibited. If a company doing business as and
LLC wished to do business in another state without similar legislation,
there is no provision for it to legally register to conduct business in that
state.
• Converting an existing business may have tax implications.
Special rules may apply when your LLC has an operating loss. The amount
of loss you can deduct may be limited because of your limited liability for
LLC debts. Passive Activity Loss limitation may restrict the amount of loss
you can deduct. Also, if you convert an existing business, such as a
corporation, into an LLC, the conversion may result in a taxable gain.
Employment tax wage bases may also be affected.

Corporation-Benefits-Risks

Corporation

Some corporations may accept not to be accountable to assets tax. If a association qualifies and

chooses to become an S corporation, its assets usually will be burdened to the shareholders.

Formation of an S association is alone acceptable beneath certain

circumstances.

• It charge be a calm association either organized in the United States

or organized beneath federal or accompaniment law.

• It charge accept alone one chic of stock.

• It charge accept no added than 75 shareholders.

• It charge accept as shareholders alone individuals, estates, and assertive trusts.

Partnerships and corporations cannot be shareholders in an S

corporation.

• It charge accept shareholders who are citizens or association of the United

States. Non-resident aliens cannot become shareholders.

The accumulation of an S association can be an advantageous anatomy of acknowledged structure. However,

if you admission into it after accurate planning, it can aftereffect in added taxes – instead of less, as

anticipated.

Benefits

• S corporations accept the bound accountability of a corporation. The S

corporation is a abstracted acknowledged article and has an actuality afar from the

people who own it. The association is amenable and accountable for its debts.

Shareholders are accountable alone for the bulk they accept invested.

• Assets is about burdened to the shareholders. As with a

partnership, the business itself does not pay taxes. The association files a

Form 1120S assets tax return. Anniversary actor is provided with a

Schedule K, summarizing the corporation’s income, deductions, credits,

etc. reportable by the shareholders. Schedule K-1 shows anniversary shareholder’s

separate allotment and anniversary alone shareholder’s balance are appear on

their claimed tax allotment and taxes are computed with their added earnings

and deductions at the adapted rate.

• S corporations are acceptable to accept added admission to funding. If the

S corporation’s disinterestedness is significant, it will apparently be added acknowledged in

attracting allotment from lenders or investors.

Risks

• Specific rules and altitude charge be met. As with any

corporation, rules and regulations are added stringent. The S corporation

must accomplish beneath specific rules and altitude to advance its S

corporation status.

• There are banned on the agent of gross income. No added than 25%

of the corporation’s gross assets can be acquired from acquiescent investment

activities.

• Deductions are limited. The association may not abstract the bulk of

fringe allowances provided to agent shareholders who own added than 2%

of the corporations. Shareholders may not abstract accumulated losses that

exceed the bulk of the advance in the aggregation bare a few

adjustments.

Benefits--Risks

Benefits
• Liability rests on the corporation. The corporation is a separate legal
entity responsible and liable for its debts. It has an existence apart from the
people who own it. Its shareholders are liable only for the amount of they
have invested.
• Ownership is readily transferable. Stock can be purchased, sold, or
transferred. The corporation does not cease to exist with the death of an
owner.
• There is increased access to business expertise. The corporation
can draw on the experience and expertise of its board of directors, officers,
advisors, and managers.
• There is increased opportunity for raising capital. The corporation
can substantially increase its capital through the sale of stock.
Risks
• There is an increased tax burden. Income tax is paid on the corporate
net income (profit). Individual salaries and dividends are also taxed.
• Corporations are difficult – and expensive – to form and
maintain. Some of the costs unique to corporations are the fees for setting
up a corporate structure, costs of holding stockholders’ and board of directors
meetings, increased costs for documentation requirements, and legal and
accounting fees.
• They must conform to extensive government regulations.
Corporations are complex to manage and highly regulated. Burdensome
local, state, and federal reports must be filed, and regular stockholder
meetings must be held.

Corporation

Corporation

A association is a audible acknowledged entity, abstracted from the individuals who own it. It is formed

by the ascendancy of the accompaniment government, with approval from the secretary of state. If business

is conducted in added than one state, you allegation accede with the federal laws regarding

interstate commerce. Federal and accompaniment laws may alter considerably.

Forming a association involves a alteration of either money, property, or both by the

prospective shareholders in barter for basic banal in the corporation.

Every association unless it is accurately absolved or has dissolved, allegation book a tax return,

even if it has no taxable assets for the year and behindhand of the bulk of its gross income.

Corporate profits commonly are burdened to the corporation. When the profits are broadcast as

dividends, the assets are again burdened to the shareholders.

Note: The amount and complication of the accumulated acknowledged anatomy about accomplish it an unrealistic

option for abounding baby businesses. S corporations or Limited Liability Companies (LLCs) may

provide beneath circuitous alternatives with some of the aforementioned advantages.

Articles of Incorporation. Due the complication of the corporation, you should argue an

attorney and/or accounting able to abstract the company’s accessories of assimilation and

handle the filing of its Certificate of Incorporation.

The afterward is a arbitrary of the types of advice that will be bare to complete the

Certificate of Incorporation. Your acknowledged adviser can accommodate added detail and assignment with you

adequately abode requirements.

• Accumulated name of the company

• Purposes of the corporation

• Length of time the association will exist

• Names and addresses of incorporators

• Area of the registered appointment of the association in the accompaniment of incorporation

• Proposed basic structure

• Management

• Director (person who will serve until 1st stockholder meeting)

If the appointed accompaniment official determines that the association name is available, the

certificate has been absolutely and appropriately executed, and there has been no violation, the

charter will be issued. However, the assimilation action will not be complete until the

stockholders meet, accept a lath of directors, and accept bylaws. The lath of admiral will in

turn accept the admiral (generally including a president, secretary, and treasurer) who will

actually accept allegation of operating the corporation. In baby corporations, the admiral may be

selected from the lath of directors.

Bylaws. The bylaws are the administering rules of the corporation. They about abode and

provide for the following: the area of the arch appointment and added offices; time, location,

and apprehension of stockholder meetings, cardinal of directors, their compensation, agreement of office,

method of election, and the bushing of vacancies; time and area of directors’ meetings;

quorum and voting methods; allowance and anatomy of banal certificates; methods of selecting

officers and anecdotic their titles, duties, agreement of office, and salaries; adjustment of paying

dividends; decisions apropos the budgetary year; and action for alteration the bylaws.

Benefits-Risks

Benefits
• It is easy to form a partnership. If you file a DBA (fictitious business
name statement) and obtain a business license from your city or county
government, your partnership is generally considered as having been
established. As with a sole proprietorship, if a partnership is files required
relating to legal structure.
• Partners share the responsibility of the business. Unlike sole
proprietors, partners have the advantage of being able to divide the work
load, blend skills, share ideas, and make joint decisions that will make the
business more profitable.
• Partnerships have more access to funding. Having two or more
individuals contributing money to operate the business is always helpful. In
addition, if the partners’ personal equity is significant, the partnership will
probably be more successful in attracting funding from lenders or investors.
• Partners – not the partnership – are taxed. The business itself does
not pay taxes. Distributive shares of the profits (losses) of a partnership are
reported as earnings from a business on the partners’ personal tax returns and
are computed with their other earnings and deductions at the appropriate rate.
Risks
• Dissolution of a partnership can be difficult. Although it is not
required by law, it is wise to have a formal partnership agreement spelling
out not only the contributions and responsibilities of each of the partners, but
providing for a partner to exit the partnership by buying out or selling to
other partners.
• Partners with more equity or assets stand to lose more. If the
business fails, the partners with the most equity or the most personal assets
stand to lose more.
• Profits belong to all partners according to equity share. The
business will have to make earnings sufficient to support each of the partners.
Partners must agree on when and what portion of their earnings should be
retained to operate the company and when and what portion should be
distributed as owner draws.
• Partners are bound by each other’s decisions. The nature of a
partnership is that all general partners* have a right to act on behalf of the
company. Unless spelled out otherwise in the partnership agreement, partners
can individually make contracts, spend money, borrow money, etc. and the
other partners will be bound by those decisions.

Do not anatomy a affiliation after a affiliation agreement

Do not anatomy a affiliation after a affiliation agreement. This is a acceptable time to

point out that every affiliation should accept a academic affiliation agreement. The Uniform

Partnership act (UPA) is a law (adopted in all states except Louisiana) that accustomed the

most basal acknowledged rules applicative to partnerships. In adjustment to spell out specifics applying to

the business relationship, it is acute that the ally draw up and assurance a partnership

agreement. A accepted anatomy can be downloaded from the net or acquired from any office

supply store. If you don’t appetite to argue an attorney, Nolo Press has a affiliation legal

self-help book that will booty you through the action and advice you to abode the acceding and

provisions. Some of the things that charge to be covered are: disinterestedness shares, financial

contributions, administration of profits and losses, contributed capital, and assets, partners’

managerial and assignment responsibilities, accoutrement for a partner’s avenue due to death, disability,

or desire, methods for clearing disputes, the continuance of the acceding and acceding for

dissolution of the business.

2. Partnership

2. Partnership
A partnership is the relationship between two or more persons who join together to carry on a
trade or business with each person contributing money, property, lobar, or skill, and each
expecting to share in the profits and losses of the business.
Partnership profits are not taxed to the partnership. Each partner must take into account his or
her distributive share of partnership profits (losses) on his or her own income tax return
(whether distributed or not). The business files a Form 1065 for its tax years, but it is mainly
an information return. Each partner’s distributive share is usually included in figuring
earnings from self-employment.
Partnerships can have General and Limited Partners.
• General Partners are active in the control of the business. They share
financing, decision-making, and management responsibilities according to
terms spelled out in the partnership agreement. They also share in the
liability.
• Limited Partners are generally taken on by a company to raise capital for
the business. As long as the limited partners do not participate in the
management or control of the business, they do not share in the liability.
Limited partnerships are by be contractual agreement spelling out the terms
for the capital infusion, return on investment, and exit terms.

Risks

Risks
• The responsibility is all yours. You bear the sole responsibility for
everything that happens in your business. You are the ultimate decision
maker and you will also bear all of the responsibility for the outcome of
those decisions. This disadvantage can be mitigated as you grow by
utilizing advisors and designating certain tasks to employees with the
proper skills. If you fail to grow past a one-person operation, you will have
to cover all areas such as, accounting, marketing, and customer relations,
as well as everything else related to offering your products and/or services.
• You are liable personally for the debts of your business. You
will be personally liable for all business debts. This means that your
personal assets (home equity, savings, vehicle, etc.) are at risk if your
business becomes indebted beyond its capability to pay.
• Financing may be difficult to obtain. Because your business is
dependent on one person only, a banker or investor may be less likely to
give you a loan or invest funds in your company. If you do get funding,
you will be personally liable for repayment.
• The business is dependent on your ability to operate it. If you do
not have other people who are capable of carrying on the business in your
absence, it can be disastrous. What’s more, if you should die, the business
ceases to exist as a legal entity.

Benefits

Benefits

• It is the simplest anatomy of acknowledged structure. Becoming a sole

proprietor does not crave a acknowledged agreement. If you book a DBA (business

name statement) and access a business authorization from your burghal or county

government, you are about advised to be a sole proprietor.

• You are sole buyer of the business. As the sole owner, you make

100% of the profits of the business (or losses). You additionally acquire the ability to

make all decisions and acquire all responsibilities apropos the business.

• You are burdened as an individual. The business itself does not pay

taxes. The profits (losses) from a sole cartel are appear as

earnings from a business on your claimed tax acknowledgment and are computed

with added balance and deductions at the adapted rate.

• There are beneath administering regulations. Some acknowledged structures must

follow all-encompassing government regulations during operation. If a sole

proprietor is accountant and files tax returns, there are about no other

regulations apropos to acknowledged structure.

Understanding Acknowledged Structures

Understanding Acknowledged Structures

The best you accomplish requires that you accept the analogue of anniversary blazon of acknowledged structure,

its allowances and risks, and how they would affect your business and your claimed situation.

1. Sole Proprietor

You are a sole freeholder if you are self-employed and are the sole buyer of an

unincorporated business. You address your income, expenses, and net accumulation from your

business or profession on a Schedule C and book it with your approved Form 1040 assets tax

return. There is no tax aftereffect if you alteration money to or from your business. Sole proprietors

pay estimated assets and self-employment taxes to the IRS on a annual base based on net

earnings from the business

Do You Need Professional Help?

Do You Need Professional Help?
If your company will be anything other than a sole proprietorship, I would suggest that you at
least consult with a professional (business attorney or business accountant) to help you choose
and legally form your business entity. This can help you to avoid many problems in the future.
For instance, in today’s world, many new entrepreneurs form partnerships with their friends and
associates, but fail to clearly define the terms of the partnership. It is a well-recognized fact that a
majority of partnerships do not work out for various reasons – lack of defined responsibilities,
failure on partners to contribute equal effort, disagreement over expenditures, partners wishing to
exit the business, etc. A well-executed partnership agreement will spell out contributions and
responsibilities of the partners and provide for an equitable dissolution in the event that it is
necessary.
Another example would be using a professional to help you choose between corporate structures.
Many new companies decide for themselves that they will form a limited liability company
(LLC), which is a state entity. The laws that govern this legal structure have great variations from
one state to another. If your company intends to operate throughout the United States or
internationally, it may be advisable to incorporate under national law. A professional can help
you to make the correct choice.
Note: Although you can change the legal structure of your company at a later date it is less
expensive and less time consuming to make the right choice in the beginning. Also, keep in mind
that moving from a sole proprietorship (or partnership) to a corporation is easier than moving
backwards from a corporation to a more simple legal structure.

Choose Your Legal Structure

Choose Your Legal Structure
When you start your business, it will be necessary for you to select its legal
structure. This chapter will help you to understand and make your decision by
introducing you to the definition, benefits, and risks of each of the following
legal entities.
�� Sole Proprietor
�� Partnership
�� S Corporation
�� Corporation
�� Limited Liability Company (LLC)
Will your business be a sole proprietorship, partnership, S corporation, corporation, or a limited
liability company? Before you make that decision, you should ask yourself a few basic questions
regarding the business and your own personal situation. Answering the questions on the next page
will help you to make an intelligent decision.

• What type of business will you start?
• How small (or large) will the business be?
• How many owners will there be?
• Who will be making decisions for company?
• Where (geographically) will you be doing business?
• Will you need capital from a lender or investor?
• What are the liability risks of the business?
• What kind of personal assets do you have?
• Will you need to protect those assets from the business?

Criteria for Normative Applications

Criteria for Normative Applications
Savage’s omelet example effectively shows how representing nature’s underlying uncertainty by a set of “states,” then representing one’s alterative courses of action as “acts” that map these states into their respective consequences, can serve to organize a decision problem
and make it easier to see exactly how one’s beliefs (the state likelihoods)
and risk preferences should enter into the problem. For proper normative application, this first step—namely, the specification of the states—must satisfy three properties:
1) The alternative states must be mutually exclusive—that is, no two distinct states can simultaneously occur. Thus, it would not have been correct to list “egg is rotten” and “five-egg omelet” as two distinct states, since is it possible that these could simultaneously occur.
States of the World and the State of Decision Theory 31
2) The family of states must be exhaustive—that is, whatever happens,
at least one of the states can be said to have occurred. Although it is at the same logical level as the previous criterion (mutual exclusivity), the exhaustiveness criterion is much more difficult—and some would argue, actually impossible—to guarantee
in practice. For example, if you cracked the sixth egg into the bowl and found that it was actually hollow, then neither of the two states in the Savage table could be said to have occurred, since neither of the first-row consequences would be realized (you would not have a six-egg omelet, nor would you have destroyed the other five eggs). When the decision maker has reason
to “expect the unexpected,” the exhaustivity requirement cannot necessarily be achieved, and the best one can do is specify
a final, catch-all state, with a label like “none of the above,” and a very ill-defined consequence.
3) The states must represent nature’s exogenous uncertainty, so their likelihoods cannot be affected by the individual’s choice of act. This issue can be illustrated by a simple example involving the decision whether or not to install a lightning rod on one’s house. Naturally, the relevant occurrences are the two mutually exclusive
results {“house burns down,” “house doesn’t burn down”}. But since installing a lightning rod will clearly alter the respective
likelihoods of these occurrences, can we really specify states of nature that are independent of the decision maker’s action? The answer is illustrated in the following table, which makes it clear that “house burns down” and “house doesn’t burn down” are not the states at all, but rather, part of the consequences, and clarifies that the effect of installing a lightning rod—as with any subjective act—is the outcome of an interaction between the act and an exogenous state of nature.
State
Big lightning
Small lightning
No lightning
Act
strike
strike
strike
Lightning
House burns down, House doesn’t
House doesn’t burn,
rod
paid for rod
burn, paid for rod
paid for rod
No lightning
House burns down, House burns down,
House doesn’t burn,
rod
didn’t pay for rod
didn’t pay for rod
didn’t pay for rod

ARE STATES OF NATURE PRESCRIPTIVE OR DESCRIPTIVE?

ARE STATES OF NATURE PRESCRIPTIVE OR DESCRIPTIVE?
The second section in this chapter argued that the scientific suitability
of a particular theoretical construct—in that case it was a particular
classification scheme for food—could depend on whether the construct was meant to be applied to the independent variables of a theory
or its dependent variables. This section addresses a similar issue, namely that certain criteria for suitable specification of the states of nature can depend upon whether the states are to be used for positive (that is, descriptive) versus normative (that is, prescriptive) purposes.
30 Machina
Since its inception, expected utility theory has always straddled the boundary between being a descriptive and a prescriptive model of decision
making under uncertainty. Even its original presentation by Bernoulli
(1738) as a “solution” to the St. Petersburg Paradox can be alternatively interpreted as either a description of why people don’t assign an infinite certainty equivalent to the Petersburg Game, or a prescription
for why an individual shouldn’t assign an infinite certainty equivalent to the game. Two centuries later, proponents of objective expected utility theory defended it against the Allais Paradox by shifting
their emphasis from the alleged descriptive power of the theory to its alleged normative power.
The same points can be made about the particular component of subjective expected utility theory that forms the central topic of this chapter—namely the notion of states of nature. It is one thing to assert that the states of nature approach offers a useful normative framework for decision making. It is quite a different thing to assert that, for the most part, this is how individuals actually do go about making decisions
in the absence of probabilistic information. We shall consider each of these two domains in turn—in each case, with the goal of identifying
the proper scientific criteria for states.

Non-probabilistically Sophisticated Models of Risk Preferences and Beliefs

Non-probabilistically Sophisticated Models of Risk Preferences and Beliefs
Just as the Allais Paradox and similar evidence led to the development
of non-expected utility models of risk preferences, Ellsberg’s Paradoxes and similar phenomena have inspired the development of non-probabilistic models of preferences over subjectively uncertain acts. Such work has also progressed along two lines. One line replaces the subjective expected utility function with more general functional forms.3
The second line of research on non-probabilistic models treats W(x1 on E1; ...; x on Em) as a general smooth function of the events E1,
m
..., Em, and show how properties of W(⋅)’s event-derivatives relate to features of both beliefs and attitudes toward risk, again taking expected utility as its base case. Appendix 2A presents mathematical features of this line of research.