Are You Considering Starting a New Business?

My brother, Craig, is starting a new business and since I am a small business consultant and his sister (i.e., free), he has asked for my help. He asked a lot of good questions and didn't ask some that are also key to getting started on the right track. Following are some of the important things for Craig to consider:

• What is the best structure for his new business? Is he going to be a sole proprietor or have business partners? There are a number of possibilities including forming a C corporation, an S corporation, a limited liability company or a limited partnership. These are decisions he should discuss with an attorney or CPA to make sure he understands the implications, both from a legal and a tax perspective.

• After coming up with a great idea for a business and mustering the nerve to make the jump, one of the first things Craig will need is an accounting software program to maintain the financial records of the business. He is planning to have inventory so, although an off-the-shelf program should be sufficient, choosing the right one is important. This is one example where a small business consultant can be really helpful. A consultant can help him with the selection and setup of the software as well as providing on-going software support after he is up and running.

• Craig plans to hire people to work with him in his new venture. They may be classified as employees or as independent contractors, which basically will depend on how much control Craig has over their work performance. If they are classified as employees, there are numerous forms that have to be filed with the IRS and the Georgia Department of Labor. A consultant can help him apply for the proper identification numbers and educate him on the implications of paying payroll and withholding payroll taxes. The penalties for not doing these things correctly can be substantial.

• The other registrations and requirements that new businesses often overlook include applying for a business license, registering with the Secretary of State's office and filing annual business personal property tax returns.

As you can see, the business side of starting a business can be complicated. I hope that each person reading this who is considering such a venture will seek the same professional advice that my brother is lucky enough to get from his sister.

~ Pam, Small Business Department