Frequently Asked Questions
The following questions and answers are meant to provide basic
information and should not be relied upon or considered legal advice
with respect to any particular situation. If you have questions
about your business or if you plan to open a business, please seek
the advice of an attorney who practices business law in your location.
Q. I am interested in starting a business. Where do I begin?
A. Conduct research on your industry, target market, and know
your competition. Investigate all start-up procedures
specific to your industry. Develop a business plan that clearly
your vision of all the details of the business. Determine
the costs associated with starting your business and project
costs. Depending on the type of business, there may be
licensing and/or registration requirements at the federal,
Q. What is a business plan?
A. A business plan defines your business, identifies your
goals and serves as your firm's resume. It describes the products
and services you will sell, the customers to whom you will
sell them, production, management and marketing activities
needed to produce your products or services, and the projected
profit or loss that will result from your efforts. The business
plan should provide answers to: Who are you? What are you going
to do? Where are you going? How are you going to get there?
Completing a business plan forces you to examine all decisions
of management, marketing, personnel and finance issues in an
objective and organized way. Another important benefit of the
planning process is that you will project the amount of financing
needed for start-up and the early stages of your business.
Q. Why do I need a business plan?
A. Although the preparation of a business plan can be time
consuming, it is essential to business success. Completing
the plan provides an opportunity to examine management, marketing,
personnel and finance issues in an objective and organized
way. The business plan becomes a useful tool in securing capital
before start-up because it includes projections of the amount
of financing needed for start-up and the early stages of a
business. Later, the plan becomes your owner's manual guiding
your daily operation and activities. Business planning is an
Q. Is it mandatory that I incorporate my business?
A. No. There are many different types of entities that you
can choose from when starting up a business, including a Sole
Proprietorship, Partnership, Limited Partnership, "S" corporation, "C" corporation,
Professional Association, and the Limited Liability Company.
There are certain advantages and disadvantages to each entity.
You should consult with a competent attorney to decide which
entity is right for you and your new business. Once you have
chosen the appropriate entity, the attorney can assist you
with the necessary filings and complete the organization of
Q. How can I finance my new company?
A. Future Entrepreneurs have many options for financing a
business. Some individuals rely on loans; others rely on investors
and equity financing. Some utilize both debt and equity financing.
Sources of capital include financial institutions, federal
and state government sources, or private investors. SBA guaranteed
loans are common for small business owners seeking financing.
Q. What kind of licenses and permits do I need for my business?
A. This depends on the type of business you plan to operate.
There are State and local laws that govern certain services.
Consult your attorney who can help determine which licenses
will apply to your business.
Q. What if I want to hire employees?
A. If you plan to hire employees, there are many federal and
state regulations with which you must comply. These include,
but are not limited to, tax withholding requirements, unemployment
compensation, worker's compensation, and wage and hour regulations.
It is very important that you consult with an attorney before
hiring employees to ensure compliance with such regulations.
You should discuss with your attorney additional items that
you will need if you hire employees including job applications,
employment contracts, employee handbooks, written policies
relating to sexual harassment, employment benefit packages,
or other documents that relate to employees.
Q. What is a Federal Employer Identification Number (FEIN)?
A. A FEIN, also referred to as EIN, is a federal tax identification
number that is used to identify a business entity. Every employer
subject to employment taxes is required to have a FEIN to identify
the business with the Internal Revenue Service (IRS) and the
Social Security Administration.