BRIAN L. FRIEDMAN, C.P.A., P.C.

STARTING A NEW BUSINESS

WHAT YOU NEED TO KNOW

1. INTRODUCTION

2. STARTING QUESTIONS

3. FUNDING & BUSINESS LOCATIONS

4. FINANCIAL PROJECTIONS

5. TYPE OF BUSINESS FORMATION

6. BUSINESS PLAN

7. GOVERNMENT RULES, REGULATIONS & OTHER REQUIREMENTS

8. WEBSITES

9. DISCLAIMER

1. INTRODUCTION

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2. STARTING QUESTIONS

Are you starting a business or purchasing a current operating business?

Selling the Product or Service:
- Product
  - Resale Product
  - Manufactured Product
- Service
  - Office Based Service
- Outside Service

Do you have any experience selling your product or service?

Is your product or service provided by other companies? (Who is your competition?)

To whom are you selling your product and service?
- Consumer
- Business

What is the selling price range?

Target Market
- Define Target Market
- How to reach Target Market
- How large is the Target Market?

Purchasing, Manufacturing, and Related Costs of Your Product or Service.

Resale Product

Who are your suppliers and what are the financial arrangements for payment?
Do you have the space to hold inventory?
How would the product be delivered to customers?
Can your product become obsolete, worthless, spoiled?

Manufactured Product

Will you need to obtain a Patent?
Will you manufacture the product or sub-contract the manufacturing?
Do you have the space to hold inventory?
How would the product be delivered to customers?
What are your direct and indirect manufacturing costs?
Can your product become obsolete, worthless, spoiled?

Cost of Goods Sold

Product for Sale
- Raw Materials
- Resale Products
- Freight-In
- Packaging Supplies
- Factory Labor & Related Payroll Taxes & Employee Costs
- Factory Overhead
  - Rent
  - Electric
  - Insurance
  - Factory Expenses – Cleaning Services & Supplies, Alarm Contracts, Repairs, etc.

General, Administrative and Selling Expenses

Salaries
Pension Plan
Insurance - Medical
Insurance - Long Term Care
Employee Benefits - Other
Fica & Medicare Tax
Federal and State Unemployment Insurance Tax
Dbl Insurance
Workers Compensation Insurance
Rent
Electric
Rent - Storage
Telephone
Internet Services
Office & Stat, & Comp. Supp
Postage & Messenger Service
R & M - Office Equipment
Office Repairs & Maint.
Equip. Maint. Contracts
Computer Consulting
Accounting, Legal, Computer Fees
Professional Publications
Professional Seminars
Dues & Subscriptions
Licenses & Permits
Auto & Truck Rental
Auto & Truck Expenses
Parking & Tolls
Trains, Taxis & Buses
Travel
Advertising & Promotions
Entertainment & Meals
Gifts & Holidays
Insurance – Business, Liability, etc.
Interest
Bank Charges
Moving Costs
Federal Corporation Tax
State Corporation Tax
NYC Corporation Tax
New Jersey Corporation Tax

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3. FUNDING & BUSINESS LOCATIONS

Capital Expenditures & Security Deposits:
- Office Furniture and Equipment
- Computers
- Manufacturing Equipment
- Packaging Equipment
- Transportation: Automobiles and Trucks
- Factory & Warehouse: Storage Shelving & Forklifts
- Leasehold Improvements – Walls, Electrical Etc.
- Security Deposits – Rent, Telephone, Electric, Insurance Etc.

Capital/Investment:
- Initial Investment into the business
- Additional Investments into the business during startup period & cash shortages

Where is the Business Going to be Located?
- Location of
  - Administration Offices
  - Manufacturing Facilities, Warehouse/Shipping
  - Selling Offices

How far is the business location from where you live?

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4. FINANCIAL PROJECTIONS

Income Statement Projection
- Cash Basis or Accrual Basis
- Monthly & Yearly Reports
- Narrative regarding how and why income and expense items are computed

Cash Flow Projection
- Initial Investment
- Startup Costs
- Monthly & Yearly Reports
- Narrative regarding how and why receipts & disbursements are computed

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5. TYPE OF BUSINESS FORMATION

Sole Proprietorship
- County Registration with Doing Business As (DBA)
- Unlimited Liability

Single member Limited Liability Company
- State Formation with required advertising notices.
- Limited Liability
- Taxed as Sole Proprietorship

Partnership
- County Registration with Doing Business As (DBA)
- Unlimited Liability
- Partnership Agreement
- Income/Losses Pass Directly to Partners

Limited Liability Company (LLC)
- State Formation with required advertising notices.
- Limited Liability
- LLC Operating Agreement for Members
- Taxed as Partnership upon election

Corporation
- State Formation
- Shareholders Agreement
- Limited Liability
- “C” Corporation
- “S” Corporation
- Must have employees

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6. BUSINESS PLAN

Nature of the Business
Business Objectives
Marketing Plan
Financial Plan
Organizational Plan
Owners’ Biography regarding experience in this business

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7. GOVERNMENT RULES, REGULATIONS & OTHER REQUIREMENTS

Name of Business Entity and DBA Names

Registration with Government Agencies

Federal Government: Internal Revenue Service

Form SS-4: Application for Federal Identification Number
Form 2553: Election by a Small Business Corporation
W-4: Employer’s Withholding Allowance Certificate
Immigration Services - I-9 Employment, Eligibility, Verification

New York State:

Employer – NYS–100 NYS Employer Registration for

Unemployment Insurance, Withholding & Wage Reporting

Sales Tax Authority – DTF-17 Application for Registration

as a Sales Tax Vendor

CT-6: Election by a Federal S Corporation to be treated as a New York S Corp

Payroll Taxes

Employee Withholding Taxes – Fiduciary Responsibility of employer who makes decision on business bills to be paid. Personal liability.

Federal:

FICA Tax (Social Security and Medicare Tax) – Employer Cost 7.65% per employee wages up to maximum calendar yearly wages as defined by the government yearly.
FUTA Tax: (Federal Unemployment Tax) – Employer cost .8% per employee wages up to a maximum per calendar yearly wages of $ 7,000.

New York State
- State Unemployment Tax – Employer cost of .1% up to 9% per employee wages up to a maximum calendar yearly wages of $ 8,500.
Required Insurance coverage:
- Workers Compensation Insurance – rates vary depending on industry
- Disability Insurance – Short Term