Tips on opening a new business

Q : My friend and I are planning to start a new business immediately to provide a home delivery service for all those that are sheltering in place. Can you supply some advice for us?

A : The following is a general listing of the basic issues you must address as a new business owner. It is certainly not all-inclusive, and I recommend that you seek professional advice:

You should determine early on your entity type (Sole Proprietorship, C Corporation, S Corporation, Partnership, Limited Liability Company, etc.). The various entity types have specific legal and tax implications.

You may need to register to do business in your locality (city business tax license, county personal property tax, etc.).

You may be required to file and publish a Fictitious Name Statement.

You should register with the State Board of Equalization to receive a resale number and receive forms for remitting sales tax charged and collected. Please note that the Board may require you to remit a deposit or post a sales tax bond to help ensure future payment.

If your business will have payroll, you will need to register with the California Employment Development Department (EDD) using Form DE-1. You will also have to file Form SS-4 with the Internal Revenue Service to acquire a Federal Employer Identification Number.

You should also begin immediately to research the cost/benefit relationship of utilizing an outside payroll service to process your payroll, remit your payroll taxes, and complete the required tax forms.

If your employees will be receiving tips, you will need to educate yourself as to the tip reporting

Starting a business requires an enormous amount of research and forethought. However, you should not be discouraged; you need not have to know everything, you just need to know which questions to ask.

and filing requirements.

As an employer, you will be required to maintain workers’ compensation insurance. You may also need liability insurance, business interruption insurance, and other types of insurance policies.

Early on, you must determine the accounting system you are going to use to track your financial transactions, including sales, inventory, billing and accounts receivable, accounts payable, employee time records, etc.

It is always wise to have a business team of professionals in place, including a CPA, attorney, insurance agent, and perhaps a real estate broker and investment advisor.

Planning note: You may qualify for new hirer tax credits and special deductions for fixed asset purchases — speak to your tax advisor!

As you can see, starting a business requires an enormous amount of research and forethought. However, you should not be discouraged; you need not have to know everything, you just need to know which questions to ask.

Good luck!