|
 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1. | What are your location needs? |
| 2. | What kind of space will you need? |
| 3. | Why is the area desirable? Why is the building desirable? |
| 4. | Is it easily accessible? Is public transportation available? |
| 5. | Is street lighting adequate? |
| 6. | Are market shifts or demographic shifts occurring? |
Legal Structure of a business
Before starting a new business, you must decide which legal structure is best for you and your business. If you are already in business, you should periodically review your business form to see if it is still the best choice.
| LEGAL STRUCTURE | Sole Proprietorship | Partnership | Regular Corporation | S Corporation | Limited Liability Company |
| Legal Liability | Unlimited | Unlimited for general partners Limited for limited partners | Limited | Limited | Limited |
| Continuity of Entity | Limited to life of proprietor | Limited unless provided for in partnership agreement | Unlimited | Unlimited | Varies; can affect tax status of the entity |
| Transfer of Interest | Difficult | Difficult unless provided for in partnership agreement | Readily accomplished through stock transfer | Readily accomplished through stock transfer | Varies; can affect tax status of the entity |
| Acquisition of Capital | Limited to what proprietor can secure | Easier than sole proprietorship since shared by partners | Acquired by issuing stock or bonds | Acquired by issuing stock | Shared by members |
| Tax Filing Required | Schedule C with Form 1040 | Form 1065; distributes K-1s to partners | Form 1120 | Form 1120S; distributes K-1s to shareholders | Depends on classification of LLC |
| Taxation of Income | Directly to owner | Directly to partners in proportions agreed upon by partners | Taxed once at corporate level, again at shareholder level when distributed (usually as individuals) | Tqxed directly to shareholders (no double taxation) | Generally taxed as a partnership (though classification may result in corporate taxation) |
| Administrative and Legal Costs | Lowest | Medium | Highest | Highest | Similar to corporation |
| Fringe Benefits | Generally not deductible | Generally not deductible for partners | Deductible, but subject to many rules (mainly non discrimination) | Generally not deductible for over 2%shareholders | Depends on tax status |
| Recommended Pension Plans | IRA (within limits), Keogh, SEP | IRA (within limits), Keogh, SEP | Qualified plans | Qualified Plans | Depends on tax status |
| Major Advantage(s) | Independence, flexibility, minimum red tape | Chance of business success enhanced if right combination of partners | Limited Liability | Limited liability without double taxation of regular corporation | Limited liability with partnership tax treatment; fewer ownership restrictions than S corporation |
| Major Drawback(s) | Unlimited liability-a problem if business has financial difficulties | Unlimited liability; frequent changes in partners can be difficult | Greater cost, government regulations, and red tape; double taxation of income | Not every corporation qualifies for S status; more limits on fringe benefits | Inconsistent state tax treatment |
Trade name registration
All businesses that use trade names and all general partnerships must register with the Clerk of the Circuit Court. A small fee is required to register a trade name. A sole proprietor who does not have a trade name is not required to register.
Business License, Occupancy Permit and other requirements
Certificate of Occupancy
The first and most important legal step to starting a business is to obtain a Certificate of Occupancy (CO). The CO ensures that the premises for your business complies with all
provisions of the law. An inspection of the premise is required, regardless of whether the use changes.
Before applying for a business license, you must show proof that you have and/or have applied for a CO. To obtain a CO, complete an Application for Certificate of Occupancy and pay the appropriate fees. Fees vary according to the
intended uses and type of structure. The Community Inspections Division will make arrangements for an inspection of the premises by appropriate County agencies.
Applications for a CO should be filed only when the premises is ready for
inspections. Compliance is ultimately your responsibility. Before finalizing any purchase or lease contract, it is important to determine what repairs and alterations to the property are needed and to agree on which party will pay for them.
Business License
A new business must obtain a business license. To obtain a business license, an applicant must show evidence that he or she has applied for a Certificate of Occupancy or a Home Occupation Permit, and has
either registered the business as a corporation or partnership, or has registered a trade name, if applicable.
If business license tax is due, it must be paid as part of the applicaiton. The tax rate varies depending on the type of business. Most businesses pay a tax based on gross
receipts earned in the previous calendar year. A few categories of business pay a flat fee. A new business must estimate its gross receipts in order for its tax to be calculated. The tax will be adjusted the following year to reflect actual gross receipts for the estimated year.
The State of Virginia regulates certain businesses, occupations, and professions by requiring licensure before beginning operations in the state. Persons entering the businesses or occupations listed below should contact the identified State of Virginia agency for licensing information.
| Department of Commerce licenses the following occupations and businesses | |||
| Architects | Asbestos Occupations | Auctioneer | Barber |
| Boxer | Branch Pilot | Certified Interior Designer | Certified Public Accountant |
| Contractor | Cosmetologist | Engineer, Professional | Geologist |
| Hearing Aid Specialist | Land Suveyor | Landfill Operator | Optician |
| Polygraph Examiner | Real Estate Appraiser | Real Estate Agent | Soil Scientist | Water / Wastewater Works Operator | Wrestler |
| Department of Health Professions licenses the following profession | |||
| Audiology | Speech pathology | Dentistry | Funeral directors/embalmers |
| Medicine | Nursing | Nursing home administrators | Optometry |
| Department of Education accredits, licenses or regulates the following | |||
| Private Schools | |||
| Elementary | Secondary | Nursery Schools | Trade |
| Technical | Business | Correspondence | Schools for handicapped |
| Education Occupations | |||
| Public school Administrator | Teacher | Guidance Counselor | |
Tax Issues
Virginia's major state taxes include the corporate income tax and the sales and use tax. The major local taxes include the real estate tax, the machinery and tools tax, and the tangible personal property tax. Many communities levy a modest consumer's tax on utility purchases. Consult your tax advisor to see if any of the following taxes would apply to you.
| Corporate Income Tax | Noncorporate Business Income Taxes |
| Sales and Use Tax | Intangible Personal Property Tax |
| Real Estate Tax | Tangible Personal Property Tax |
| Merchants' Capital Tax | License Tax |
| Utility Tax | Personal Taxes |
Types of Insurance to Consider
| Liability | Business may incur various forms of liability in conducting their normal activities. One of the most common types of liability is product liability, which may be incurred when a customer suffers harm when using the business product. There are many other types of liability which are frequently related to specific industries. Liability law is constantly changing. An analysis of your liability insurance needs is vital in determining an adequate and appropriate level of protection for your business. |
| Property | There is many different types of property insurance and levels of coverage available. It is important to determine the property you need to insurance for the continuation of your business and the level of insurance you need to replace or rebuild. You must also understand the terms of the insurance, including any limitations or waivers of coverage. |
| Business Interruption | While property insurance may pay enough to replace damage or destroyed equipment or buildings, how will you pay costs such as taxes, utilities and other continuing expenses during the period between when the damage occurs and when the property is replaced? Business interruption (or ¡°business income¡±) insurance can provide sufficient funds to pay your fixed expenses during period of time when your business is not operational. |
| ¡°Key Man¡± | If you (and /or any other individual) are so critical to the operation of your business that it cannot continue in the event of your illness or death, you should consider ¡°Key Man¡± insurance. This type of insurance is frequently required by banks or government loan programs. It can also be used to provide continuity in operation during a period of ownership transition caused by the death or incapacitation of an owner or other ¡°Key¡± employee. |
| Automobile | It is obvious that a vehicle owned by your business should be insured for both liability and replacement purposes. What is less obvious is that you may need special insurance (called ¡°non-owned automobile coverage¡±) if you use your personal vehicle on company business. This policy covers the business liability for any damage which may result for such usage. |
| Officer and Director | Under the circumstances, officers and directors of a corporation may become personally liable for their actions on behalf of the company. This type of policy covers this liability. |
| Home Office | If you establish an office in your home, it is a good idea to contact your homeowners insurance company to update your policy to include coverage for office equipment. This coverage is not automatically included in a standard homeowner¡¯s policy. |
Marketing Strategy
Marketing plays a vital role in successful business ventures. How well you market your business, along with a few other considerations,
will ultimately determine your degree of success or failure. The key element of a successful marketing plan is to know your customers; their likes, dislikes and expectations.
By identifying these factors, you can develop a marketing strategy that will allow you to arouse and fulfill their needs.
Identify your customers by their age, sex,
income / educational level and residence. At first, target only those customers who are more likely to purchase your product or service. As your customer base expands, you may need
to consider modifying the marketing plan to include other customers.
Develop a marketing plan for your business by answering these questions. Your marketing plan should be
included in your business plan, and contain answers to the questions outlined below.
| 1. | Who are your customers? Define your target market(s). |
| 2. | Are your markets growing? Steady? Declining? |
| 3. | Is your market share growing? Steady? Declining? |
| 4. | If a franchise, how is your market segmented? |
| 5. | Are your markets large enough to expand? |
| 6. | How will you attract, hold and increase your market share? |
| 7. | If a franchise, will the franchisor provide assistance in this area? |
| 8. | How will you promote your sales? |
| 9. | What pricing strategy have you devised? |
Cash Flow Analysis and Balance Sheet
This is an example of a balance Sheet
| Business Name: __________________ Date: ___________________ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TOTAL LIABILITIES $__________ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TOTAL ASSETS $___________ | TOTAL NET WORTH $___________ Assets - Liabilites = Net Worth Liabilities + Equity = Total Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
This is an example of a monthly cash flow projection
| Name of Business:__________________ Address:__________________ Owner:__________ | |||||||||||||||||||||||||||||||||
| Year | Pre-Start-up Position | Month 1 | Month 2 | Month 3.... | |||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||
Financing Options
| 7(A)Loan Guaranty | The 7(a) Loan Guaranty Program is one of SBA's primary lending programs. It provides loan to small businesses unable to secure financing on reasonable terms through normal lending channels. | 
|
| SBA LowDoc Loan | SBA LowDoc further streamlines the making of small business loans and business is usually eligible if the purpose of the loan is to start or grow a business. The maximum loan is $150,000. |
|
| SBA Express Loan | SBA Express makes it easier and faster for lenders to provide small business loans of $150,000 or less. SBA Express loans help small businesses start, build or grow. To qualify for the programs, a business must meet the SBA's size standards. |
|
| Community Express Loan | Similar to SBA Express, but focuses primarily on low and moderate income areas and SBA's New Markets. The program also includes technical and management assistance, which is designed to help increase the loan applicant's chances of success. |
|
| CAIP Loan | CAIP Loan Program promotes economic implementation of the adjustment by increasing the availability and flow of credit and encourages business development and expansion in impacted areas. Through the CAIP, credit is available to businesses in eligible communities to create new, sustainable jobs or to preserve existing jobs. |
|
| Certified Development Company(504) Loan | Certified Development Company (504) Loan Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. Certified Loan Development Company is a nonprofit corporation set up to contribute to the economic development of its community. |
|
| International Trade Loan | If your business is preparing to engage in or is already engaged in international trade, or is adversely affected by competition from imports, the International Trade Loan Program is designed for you. |
|
| CAIP Lines | CAIP Lines is the umbrella program under which the SBA helps small businesses meet their short-term and cyclical working-capital needs. |
|
| Defense Loan and Technical Assistance (DELTA) | DELTA is a joint effort of the United States Small Business Administration and the Department of Defense. It provides financial and technical assistance to defense-dependent small businesses adversely affected by defense reductions. |
|
| Microloan | Microloan provides very small loans to start-up, newly established, or growing small business concerns. SBA makes funds available to nonprofit community based lenders which, in turn, make loans to eligible borrowers in amounts up to a maximum of $35,000. |
|
| Prequalification Pilot Loan | The program currently serves eligible borrowers who meet size and eligibility standards. The program targets low moderate income, new market customers, disabled, new and emerging businesses, veterans, and exporters, rural and specialized industries. |
|
Doing Business with Government
| Federal | Small Business Administration | The federal government is the largest buyer of goods and services in the world. While small businesses are often at a disadvantage when trying to win federal contracts, the U.S. Small Business Administratoin can help overcome the barriers. | or contact 800-827-5722 |
State | eVA | eVA is Virginia's business-to-government web site that opens the door to endless business possibilities. It will provide a round-the-clock venue for buyers and vendors. | or contact 804-786-3842 |
Local | City of Alexandria | The government of the City of Alexandria consists of 31 departments with an annual budget of nearly $400 million. To be added to the City of Alexandria mailing list of prospective bidders, complete the Bidder's Mailing List Application form. | or contact 703-838-4944 |
Arlington County | The first step to becoming a registered bidder is completing a Bidder List Application. Once your application has been processed, you will be added to a computerized Bidders List. This list is used by the Purchasing Office in mailing notices of solicitations for goods or services. | or contact 703-228-3410 |
Fairfax County | The county procures more than $380 million annually in goods and services and manages over 1700 term contracts. First step is to complete a Procurement Opportunities List application. When the Department of Purchasing and Supply Management office receives your application, your information will be entered into an automated system. | or contact 703-324-3201 |
2. One-on-One Business Counseling
Business counseling is provided upon request and by appointment to help business owners or future owners on specific business issues. One of the features of BDAG's business counseling program is that it can be provided in different languages to accommodate individuals with limited proficiency. Call us and set up an appointment if you have specific business issues(s) you want to discuss with one of our counselors.
3. Business Training Workshops
Go to "What's new?" and the training calendar to see a list of available training classes or seminars. You can also go to "FAQ" section to see links to other training classes offered by other economic development service providers.
4. Business Translation Services
BDAG has some basic business materials in Spanish, Vietnamese, Korean, and Chinese and internet links to some Webster that provide business information in different languages. For a list of these organizations, please go to our "Publication" to see a directory. Major translation of business materials can be arranged through BDAG for a fee.
5. Community Business Revitalization
BDAG's staff has worked with local government planners, real estate developers, and community based organizations (CBO) to plan and develop guidelines for local commercial revitalization projects. BDAG's focus is to preserve affordable retail spaces for small businesses. BDAG's most recent projects include the Buckingham Revitalization Project (Arlington, Virginia) and the Economic Development Initiative for Bailey's Crossroad/Seven Corners Revitalization Area project (Fairfax County, Virginia).
