Starting Business Secrets will help you to start your own business successfully.
The
American Dream is, and always will be, to come up with an idea, start a
business and become rich from your own efforts. Based upon this
motivation, thousands of businesses fail each year, due primarily to not
being familiar with the basics involved in running a business.
This
report will enlighten you, and give you a number of suggestions you can
use to better guarantee your chances for success. This report is
written with the warning that any and every business venture contains
certain inherent risks, and any number of alternatives. We do not
espouse that any one way is the right way or that our suggestions are
the only way. On the contrary, we advise that before investing any money
in a business venture, you seek counselling and help from a qualified
accountant and/or attorney.
Just about the first thing you should
consider before deciding to start or purchase a business is the legal
form you'll be operating under. There are basically four choices: sole
proprietorship, partnership, limited partnership, and/or corporation.
Each has a number of advantages and disadvantages. We'll try to enumerate some of them for you.
As
much as anything else, for many people starting a business is a form of
ego-gratification, and they form a corporation for some sort of
prestige gain - just to say, "I own a corporation."
With just a
little bit of observation, you'll find that one of the major causes of
business failures is due to the founder wasting start-up capital on
frills, such as an impressive store- front office, expensive
furnishings, and corporate legal costs.
One of the basic traits
you must develop it you're going to be successful in business, is a
tight hold on your expenditures. In fact, a good rule of thumb is that
anything that does not make money for yo or protect your investment,
should not be purchased at this time. Very definitely, this applies to
the expense of setting up your own corporation.
Unless you have a
partnership and start your business as such, the only real advantage to
forming a corporation would appear to be that a corporate structure will
semi-protect the property you personally own.
As an example, you
own a home and car. You form a corporation to protect these possessions
from business losses. Yet, if you can be found guilty of misusing
corporate funds, your business creditors can pierce the corporate shield
and come after your possessions.
Basically, if you invest
everything you have in your business, as most newcomers do, you don't
usually need a corporation because you have nothing to protect. Your
household possessions, personal belongings, generally your car, and even
a portion of the equity in your home is protected by the homestead
provision of the Federal Bankruptcy Act, and cannot be taken away from
you.
As a sole proprietor or partner of a business you'll be
paying taxes on your overall earnings, much the same as if you were
holding down a salaried or hourly paid job. Whether you do or don't take
out money as a salary will have no bearing on the earnings of your
business and tax return.
The often advertised advantage of
incorporating, that you can manipulate your salary in order to save on
tax dollars, is real because of corporation laws. However, the IRS
frowns on this practice. When your business is successful and making a
lot of money, definitely check with your accountant on the advantages of
incorporating.
As a corporation, you'll be subject to a number of
other drawbacks as well: generally higher state taxes, stricter laws
concerning the operation of your business, more elaborate accounting
procedures, and legal papers that are required just about every time you
make a major move or sign almost any contract. Thus, your legal and
accounting fees will be much higher as a corporation than will those
required for a sole proprietorship type of business.
As a sole
proprietor or partnership, you'll find many areas require the
registration of your business name. The cost however, is minimal,
ranging from $5 to $100. About the best way to find out what laws apply
in your area, is to call your bank and ask if they need a fictitious
name registration card or certificate in order for you to open a
business account.
Selecting a name for your business is quite
important to you and particularly relative to advertising. Your business
name should describe the product or services you offer. Fancy names
such as, Linda's Clipping Service will lose potential "walk-in and
passing" customers to the beauty shop across the street that calls
itself, Patti's Beauty Salon or Jane's Hair Styling Shop.
The
advantage of using your full name in the title of your business, such as
Johnny Jones' Meat Lockers, has the advantage of making credit somewhat
easier to come by - provided you pay your bills on time - but it also
includes the disadvantage of confining your services to a local or at
most, a regional area.
Should you buy, lease, or rent a space for
your business? think twice before you make any decision along these
lines. Most businesses tend to grow quickly or they never get off the
ground.
