This course will cover a step by step process for starting a small business. These basic procedures generally apply to sole proprietorships and partnership entities. It covers licensing for state, county, and city. Also covered are brief notes about opening storefronts, signs, and advertising. This course will also cover a step by step process for starting a small business. These basic procedures generally apply to sole proprietorships and partnership entities. Later on, we speak about licensing for state, county, and city. Also covered are brief notes about opening storefronts, signs, and advertising.
It is necessary in some states to obtain a resale license number. This number is usually issued by a state board of equalization. The number is issued for the purpose of purchasing and reselling of items to the final consumer. The first step is applying to the state for a SELLER’S PERMIT or RESALE NUMBER. This permit aids the sate to govern sales tax collected on certain items sold. The other purpose of SELLER’S PERMIT is to allow a business to purchase items within their specific trade without paying sales tax on those items.
For example: A print shop is issued a resale license for purpose of purchasing printing supplies at wholesale-less sales tax pricing. A print shop would not be able to purchase pool supplies for wholesale pricing from a pool products provider. The license issued is trade specific. It is a good idea to have a website for the business showing your intended business practices. Companies that will be selling you wholesale goods will require some proof your business exists as well as the resale number. Additional proof may be a business license issued by the city where your business is to be conducted. The sales tax on items sold will be charged to the end consumer.
If your business sells to another business which sells to the end consumer, you will need their SELLERS PERMIT number to do business with them. The tax collected will be the responsibility of the company dealing with the end consumer.. This tax is usually paid quarterly(every three months). The state boards of equalization have really streamlined this process. Frequent emails will be sent regarding deadlines to be met. It is easy to keep track of these fees by using small business accounting programs such as QUICKBOOKS or MYOB. It is simple to acquire a resale number. This takes about twenty minutes. Do a search for your state board online. Fill out the pertinent information and a certificate is usually issued digitally at no charge. You should be able to download the certificate at this time. If you have a storefront the SELLER’S PERMIT must be displayed in full view. This is the most common permit issued by a state entity. Some businesses dealing with hazardous materials, regulated labor practices or safety concerns may require other permits.
County licensing has different requirements and regulations. Counties are involved in handling:
- FICTITIOUS BUSINESS NAMES HEALTH & SAFETY INSPECTIONS TAX COLLECTION ON ASSETS
- FICTITIOUS NAMING OF YOUR BUSINESS
Counties regulate the names people choose for their businesses. Counties have a database of business names used in the region. This is to make sure two businesses do not use the same name which later might cause a problem within the court system. This defines who is who with regards to liability. A made up name like “The Juice Bar” needs to register for a fictitious name to make sure it not being used. However, if the business is called it Tony Jones Juice Bar, there is no need to register for a fictitious name. Tony Jones is a real person and can be identified quite easily through other county records verifying his legal existence.
There are advantages and disadvantages when using a fictitious name for a business.
A fictitious name has the ability to have flair and draw extra attention. The draw back is it takes more time for a business to open. A fictitious name has to first be applied for online or at the county office. A search on county system is free to check availability of a name. Some counties have an online system to check availability. A name needs to be renewed every few years. If it expires, the name becomes up for grabs. First come first serve. Once you have determined a name is available, then you may apply. There is usually a $50 fee involved. This may vary from county to county. It is required the name must then be advertised in a few different media outlets to give someone else the chance to dispute the name that might be taken. This is usually done through a county recognized newspaper. The county will provide a list of reputable papers. The ad must
be placed for a few weeks. Another drawback to a fictitious name, is banks will not allow you to open a business account under the name until the county has approved you to use that name. As well, a city will not issue a business license without the fictitious name approval certificate.
The use of a real persons name is the simplest and quickest way to open the business. You are able to call yourself “Tom Jones Juice Bar” and get a bank account with no problems same day. A form of identification is need to open your business bank account.
INSPECTIONS REGARDING HEALTH OR HAZARDOUS MATERIALS
The county has jurisdiction over businesses related to these items. If you’re starting a small business, remember that a restaurant requires rigorous inspections and approval by the county health department before opening. Automotive or other businesses related to hazardous materials must pass inspections as well. Hazardous materials must be stored and used in a safe environments.
TAXING USE ON ITEMS OR MACHINERY USED AT A PLACE OF BUSINESS
The county has the right to tax businesses on the equipment or fixtures used at a place of business. For example: furniture, printing equipment, vehicles and many other items will have a property tax applied to them. The percentage may differ from county to county. Be sure to estimate how much your equipment will be worth and what the county will charge as a tax when conducting a business plan.
Cities require that if you open a location or do business within their city limits, you need a business license. If you’re starting a small business in one city and travel to another to do work, both cities require you to have a license. A business license may be obtained at a city hall ranging $25-$350. A schedule is applied based on the amount of income the business generates. The more you make the higher the fee will be.
OPENING A STORE FRONT – RENTING A LOCATION
Most property owners use property managers or leasing agents to rent their properties. The property manager or agent will be in charge of checking the new business owners credit and business viability for the location. Some property locations do not want conflicting businesses in the same shopping center or business complex. Be very selective for a your business location.
Be sure to understand the responsibilities for a lease or rental agreement for the property. Sometimes landlords charge the price of the lease plus triple-net. The triple-net is an additional fee for you to pay. This extra fee is for maintenance as well as property taxes for that location. Also inquire about your sign criteria to ensure the exposure you expect. Before signing a lease make sure the city will allow you to operate the business at this location as well as grant the sign you desire. Also make sure the city doesn’t slap you with a CUP (Conditional Use Permit). These can be a real nightmare. ShopSquawk heard story about City of San Diego telling business owner they were approved to have their business in the building and area they chose. The business owner signed a lease then the city later applied a CUP fee. After that the city charged them with street usage tax and so on. One year later, while they were paying a lease, they still had not opened. They spent over $250,000 in fees. The most horrible thing of it all was the simplicity of the business. It was an indoor dog sitting facility in a commercial zone.
The lesson to be learned is to take your time and BE VERY CAUTIOUS!!! MAKE SURE YOU HAVE YOUR CITY INCIDENTALS AND APPROVALS UNDERSTOOD BEFORE SIGNING A LEASE.
There are a few steps to take before getting a sign. First thing is to ask the landlord for the sign criteria for the building. This is based off the length of the storefront and put into a square footage equation for the face of a building. When you have the criteria, give it to a digital artist who can impose your design on a image of the storefront. Double check the artist produced the right size and scale. Makes 6 copies of this imposed image and and then have the landlord or property manager approve by signing all original copies. Bring 5 copies to the building department of your local city hall. The city will need to approve the design and the safety of the sign. Sometimes the city planning department will have to approve as well. This is why you need to bring several copies. See! Starting a small business has never been so fun… uh… maybe ; )