GETTING STARTED THE RIGHT WAY: A SMALL BUSINESS CHECKLIST

Transcription

1 The information in this document is provided for informational purposes only and does not constitute legal advice. Please consult a qualified attorney prior to acting upon the information contained in this document. GETTING STARTED THE RIGHT WAY: A SMALL BUSINESS CHECKLIST The Community Development Project of the Legal Aid Society BUSINESS PLAN Create a business plan that includes the following items: A description of the business and how it will be operated. A marketing plan. Identification of staff and their qualifications. Financial projections, including start-up costs, operating costs, expected revenues and expenses, and detailed budgets for the first several years of operations o Please note that many businesses fail because they are underfinanced. State where the startup funds will come from (e.g., savings, investors, loans, etc.) Identification of the roles of professionals, including an attorney, accountant and insurance broker, and line items in the budget for them. If you need to raise money to start your business, lenders will require you to submit a detailed business plan. Even if you already have seed money, a written business plan can help you finetune your concept and spot any trouble areas. FINANCING Do you need financing? Have you investigated traditional (banks) and non-traditional sources (credit unions and micro-finance organizations) to finance your business? Do you have good credit or do you need to establish credit? 1

2 If don t have good credit try an organization like Accion NY or GreenPath to rehabilitate your credit and improve your credit score. Do you have someone with good credit to co-sign a loan? Do you have collateral to put up for a loan? CHOICE OF LEGAL ENTITY Have you considered the different legal forms that your business may take: sole proprietor, partnership, corporation, LLC, etc.? Consult an attorney regarding which form works best for you, taking into account liability, partnership, tax, investment and flexibility issues. BOOKKEEPING AND TAX COMPLIANCE Get an accountant or bookkeeper, or obtain financial software, to trace all business finances and to facilitate tax compliance. If you have employees, get a payroll service to ensure that all appropriate payroll deductions are made. Become familiar with small business taxation issues. There is plenty of useful information on the IRS ( and New York State Department of Taxation and Finance ( websites. COMMERCIAL LEASING Where will you operate your business --- from your home or from a commercial space such as a storefront, office or loft? If you plan to rent space, what are the costs, including rent, additional rent, security deposit, insurance and the costs associated with building out the space, including the architect ( if necessary) and contractor? Has the lease been reviewed by an attorney or real estate attorney and by an insurance broker? Prior to signing a commercial lease, check for the following provisions: o Additional rent provisions, including real estate taxes, maintenance costs, municipal charges, etc. 2

3 The amount of rent stated on the first page of the lease is almost always less than the total amount you will pay after additional costs are added in. o Renewal provision, which gives the tenant the right to renew provided that this right is exercised before the lease expires. o Demolition, which gives the landlord the right to terminate the lease and demolish the building upon notice to the tenant. o A right to sublet or assign the premises. o Good Guy clause, that may permit a tenant to surrender the premises prior to the end of the lease, or to reduce the amount of the security deposit provided that the tenant remains in good standing. o A right to make alterations to the premises Determine whether or not the alterations have to be done by an architect and licensed contractor and approved by the Department of Buildings and factor in the costs sometimes substantial. If you intend to run your business out of your home, does your residential lease contain a provision that prohibits use of the premises for commercial purposes? If you are purchasing an existing business, did you examine carefully all space and equipment leases? How long does the lease have to run? Is it renewable? Is the lease clearly assignable? If not, did you check with the landlord about taking over the lease? Is the location where you conduct business properly zoned for the type of business that is being carried out? Does the certificate of occupancy for the building where you conduct business provide for use of the premises for commercial purposes? Have you planned an exit strategy in the event that you must move or dissolve your business? LICENSES AND PERMITS Determine whether any licenses or permits will be needed to operate your business. Check the Business Solution Wizard ( to learn what licenses and permits you must obtain and where to obtain the applications for them. 3

4 You may also check the New York State, Online, Permit Assistance and Licensing Center (OPAL) to determine what licenses and permits are necessary. WRITTEN AGREEMENTS Will there be more than one person running the business? If so, create a partnership or operating agreement. In the absence of a written agreement, partners share equally in profits and liabilities. Don t be a silent partner unless you want to run the risk of losing your investment in the business. INSURANCE Do you have an insurance agent or broker who has analyzed your business s insurance needs? Have you identified any insurance obligations arising under your lease? Have you examined your business s need for liability, casualty, fire and business interruption insurance? EMPLOYMENT Do you properly classify employees and independent contractors? Do you keep employment records required by law and post required notices for employees? Do you properly withhold employment taxes? Do you have Workers Compensation and Disability Insurance Coverage? INTELLECTUAL PROPERTY Are you familiar with the basic intellectual property concepts: trademarks, copyrights, trade secrets, utility patents and design patents? Do you know how to register and use trademarks and copyrights? 4

5 Do you use written agreements to ensure that intellectual property rights are clearly understood and protected? WEBSITE Have you reviewed your website to ensure that you are in compliance with the law and that you are protecting your intellectual property? Does your website have a privacy policy? Does your website have a terms of use section? Are you linking to other websites in a legal manner? Do you own the code that constitutes your website or is it owned by your web developer? Do you have a written agreement with your web developer? MISCELLANEOUS Immigration status is not necessarily a barrier to owning a business, but consult an attorney regarding the legal implications of immigration status and the impact on choice of legal form for your business. 5