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Starting a business

4/18/2003 11:15 PM
R.G.	Starting a business The following reflects my opinion, nothing more. Your opinion, like your mileage may vary. ================================================== 1. Get yourself set up as an LLC in your state; use another state if you live in one of the abusively expensive states for LLC's. It can be done for $100. People who own businesses are targets. 2. Get yourself a tax number in your state, ditto for any local licenses. In some places, you can go to jail if they catch you without these. In some states they can probably grab your house, car, ox, and ass by civil forfeiture for violations. 3. Get prepared to do quarterly tax returns. 4. Go do some searching in the USPTO site to make sure your company and product names don't infringe. You can better spend the $10K legal fees on investments. While you're at it, register your own mark. Maybe someone else will infringe you and you will have your lottery ticket punched. 5. Think about your personal rate of return on your labor. Include that in the calculations on whether you're making a profit or not. 6. Be prepared to think of everything in terms of whether it's a business expense or not. It makes a huge difference. 7. Know ahead of time what local homeowner's associations and zoning ordinances say about running a business in your home. 8. The jump from spare time business to full time business is a big one. The next big jump is the jump from no employees to the first one. Jumps after that are determined by the number of employees that let you stay under federal and state law exemptions for small businesses. Stay under the ADA and OSHA's radar, for instance. 9. Get realistic about how fast you can grow. Many new businesses are wildly successful, and overrun their housing, funding, energy reserves, marriage, or other limits and die of their own success. There are limits on how fast you can grow. Your hours is one of them. Continuing to have a minimal life is another. Investment dollars is another. 10. How are you going to finance this? You have to kick in real money to get money back out. You're not likely to get venture capitalists to write you a million dollar check these days, and not ever for an effects business that doesn't already exist. Are you financing this from your bank account, your 401K, your checking account, your credit card (at 18% interest???). Your take is limited by your investment. The average rate of return for American businesses runs to about 10% a year over inflation. If you've got $1000 invested, you have to have some very healthy returns to double your money in a year. Doing this with other people's money is going to be working for them. I'm guessing we won't see too many sucessful business starters posting here. R.G.

4/18/2003 11:15 PM

R.G.

Starting a business

The following reflects my opinion, nothing more. Your opinion, like your mileage may vary.
==================================================
1. Get yourself set up as an LLC in your state; use another state if you live in one of the abusively expensive states for LLC's. It can be done for $100. People who own businesses are targets.

2. Get yourself a tax number in your state, ditto for any local licenses. In some places, you can go to jail if they catch you without these. In some states they can probably grab your house, car, ox, and ass by civil forfeiture for violations.

3. Get prepared to do quarterly tax returns.

4. Go do some searching in the USPTO site to make sure your company and product names don't infringe. You can better spend the $10K legal fees on investments. While you're at it, register your own mark. Maybe someone else will infringe you and you will have your lottery ticket punched.

5. Think about your personal rate of return on your labor. Include that in the calculations on whether you're making a profit or not.

6. Be prepared to think of everything in terms of whether it's a business expense or not. It makes a huge difference.

7. Know ahead of time what local homeowner's associations and zoning ordinances say about running a business in your home.

8. The jump from spare time business to full time business is a big one. The next big jump is the jump from no employees to the first one. Jumps after that are determined by the number of employees that let you stay under federal and state law exemptions for small businesses. Stay under the ADA and OSHA's radar, for instance.

9. Get realistic about how fast you can grow. Many new businesses are wildly successful, and overrun their housing, funding, energy reserves, marriage, or other limits and die of their own success. There are limits on how fast you can grow. Your hours is one of them. Continuing to have a minimal life is another. Investment dollars is another.

10. How are you going to finance this? You have to kick in real money to get money back out. You're not likely to get venture capitalists to write you a million dollar check these days, and not ever for an effects business that doesn't already exist. Are you financing this from your bank account, your 401K, your checking account, your credit card (at 18% interest???). Your take is limited by your investment. The average rate of return for American businesses runs to about 10% a year over inflation. If you've got $1000 invested, you have to have some very healthy returns to double your money in a year. Doing this with other people's money is going to be working for them.

I'm guessing we won't see too many sucessful business starters posting here.

R.G.

4/19/2003 2:02 AM
LFOscalator	You made a good list. The only thing I would add is that I personally would choose a regular corporation over an LLC because an LLC does not protect you from liability to my understanding if you are sued in Federal court. Of course, don't listen to me because I don't claim to know very much about the law. It's just an issue to research or to bring up with your attorney. LFO

4/20/2003 12:20 AM

R.G.

quote:
"The only thing I would add is that I personally would choose a regular corporation over an LLC because an LLC does not protect you from liability to my understanding if you are sued in Federal court."

Hmmm... the reading I've done has them exactly equal. There are no federal corporations, either. They're all done under state law, just like LLC's. I do believe the Feds encouraged enabling legislation to get the states to set up LLC's.

But you're right in paraphrasing my favorite legal advice: do NOT listen to anyone except an attorney you have personally hired if you're about to do anything that may need an attorney. I'm not an attorney, don't even play one on TV. 8-)

R.G.

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