By: Carl A. Grubb, Esq.

1. PROPER CAPITALIZATION IS KING:

Under capitalization is the biggest and most common factor for a new business failing. Plan on investing or acquiring at least 50 to100% more capital than you think you originally need to get your business started. The type of business entity you choose may also dictate how much and from what source you are able to acquire the necessary capital.

2. CHECK ZONING AND HOMEOWNER RESTRICTIONS:

Many small and home-based business owners fail to ascertain whether there are any restrictions imposed by their homeowner association, homeowner covenants, conditions and restrictions, local and city ordinances for conducting their chosen business.

3. OBTAIN PROPER PERMITS AND LICENSES:

This should become a key step in your business research. Learn and become familiar with the licenses and permits your business requires to lawfully do business in your city, county and state. If you are unsure, seek professional help. Practice 'preventative business maintenance'. Paying for advice up front is usually less costly than paying for the damage done through ignorance.

4. MAKE TIMELY QUARTERLY FEDERAL AND STATE TAX DEPOSITS:

Save your business additional headaches and expense by paying your quarterly federal and state estimated taxes on time and with proper documentation. Many new owners do not know what is required of them to do with regards to paying estimated taxes. If you do not know, contact the Internal Revenue Service, the California Franchise Tax Board, or seek the advice of a qualified accountant or attorney.

5. CHOOSE THE PROPER BUSINESS ENTITY FOR YOUR NEW BUSINESS:

Small business entity forms such as a sole proprietorship, a sub-chapter S corporation or a Limited Liability Company may work for you. It is imperative that you choose the right one for you and your business because your business' success depends on it. If you need advice choosing the proper entity form, GET IT.

6. OBTAIN PROPER ADVICE AND FOLLOW IT:

If you're really intent on starting and building a successful business, you should get an accountant and a lawyer you can trust for sound advice. The most common mistake entrepreneurs make is to assume that all attorneys and accountants are just out to take your money for performing simple tasks that you could easily do yourself. The fact is that there are plenty of attorneys and accountants who are small business owners themselves and have become familiar with the struggles you will encounter each and everyday. They have been through the same things that you are going through and paying for their advice (and guidance) is money well spent.

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