Frequently Asked Question About Starting a Business

I want to start a small business – where do I begin?

With all there is to know and do this can certainly be a daunting question. First, make an appointment to receive counseling, free of charge, from your local Small Business Development Center (SBDC). Among other talents, SBDC advisors are adept at helping you write a business plan, the "roadmap" for your venture. Consulting assistance from any SBDC in the U.S. is available at no-cost to anyone interested in beginning a small business for the first time or improving or expanding an existing small business. Your SBDC consultant will also help you determine the most appropriate steps to take to accomplish your business goals.

You can locate your local SBDC office through the nation Association of SBDC’s http://www.asbdc-us.org/

Where should I call for information on permits and licenses?

If your business is or will be located within a city then you should go to the city offices in which your business is located and ask about business license costs and requirements. If your business address is in the un-incorporated part of the county then visit the Business License department of your county.

In the Alliance SBDC service area for example Stanislaus County and City of Modesto business licenses are available at 1010 Tenth Street, Downtown Modesto or call 209.525-6330 for more information. Fictitious Business Name Statement filings can be made through the Stanislaus County Clerk’s office located on the corner of 11th and “I” St. in Modesto. (209) 525-5250. For business licenses in Merced County contact the Merced Co. Dept. Commerce, Aviation and Economic Development 2507 Heritage Drive Atwater, CA 95301 Phone: (209) 385-7686 For Fictitious Business Name Statement filings contact the County Clerk offices at 2222 'M' Street Merced, CA 95340.

What business format should I use? If I decide to incorporate where can I do that?

There are several forms of business organizations: sole proprietor, partnership, corporations, and limited liability companies. Legal liability, income taxes, protection of assets, and ease of transfer are some of the issues affected by the form of business organization. In order to decide upon the best solution for you, you should consult an attorney and a CPA. These professionals can analyze your situation and make the correct recommendation. For a brief overview of the different forms of business organizations, the U.S. SBA has a good description of the forms of business. You can also obtain excellent information and registration forms from the web-site of the California Secretary of State’s office. www.ss.ca.gov Click “business filings” on the business portal link.

Where can I obtain a Federal Employer ID number?

Also called a "Federal Tax Number" or "Federal Employer Identification Number (FEIN)," it is granted upon completing IRS Form SS-4. You can obtain this form in Portable Document Format (PDF) at the IRS web site, or by calling 1-800-829-1040. If you need assistance completing the form contact your local SBDC.

When I hire someone to work in my business do I have to have Workers' Compensation insurance?

All employers in California are required by state law to carry workers’ compensation insurance covering all their employees. This requirement applies regardless of the number of hours worked in any given week. This insurance can be purchased from most insurance agents or brokers who handle business insurance, or through a direct writer of insurance. A Sole Proprietor or Partner in a business is not required to have worker’s compensation insurance on him/herself.

Which business expenses can I deduct for income tax purposes?

Generally, all the expenses you incur to start and operate your business are deductible, however many are subject to various IRS rules; for example, start-up costs, vehicle expense, meals and entertainment, and use of a home office. Start by reading IRS publications (such as the Business Tax Kit) and looking at the tax returns for your form of business. For sole proprietors, that is a Schedule C. You can get IRS materials from the IRS web site at www.irs.ustreas.gov, a CPA’s office, or calling the IRS at 1-800-829-3676. It is very important to set up a good bookkeeping system immediately upon going into business. You can use a manual system like the Dome Bookkeeping Record, a One-Write duplicate check and ledger system, or use a simple computer software package.

I’ve heard about grants to finance the startup of my business. How do I get one?

As a general rule, there are no grant programs that help individuals start or operate for-profit ventures. There may be limited exceptions; for example, individuals with disabilities may qualify for special funding. The Federal Catalog of Domestic Assistance lists all of the federal government's grant programs, including grants where businesses are the beneficiary. There are other web sites that list grant opportunities as well. A review of these listings will demonstrate that most government grant programs to assist businesses are in the form of grants to non-profit organizations, educational institutions or governmental units to assist small businesses, rather than grants to the businesses themselves. Also details about grant funding is available in a short document at the Alliance SBDC web-site in the “Resources” section www.alliancesbdc.com

If Grants are not available, then where can I find money to start my business?

Keep in mind that the SBDC is not a lending institution. However, each SBDC office has cultivated a relationship with their local banking community. While that is no guarantee that your loan will be approved, assistance from an SBDC counselor might better position your company to get the funds you need. The SBDC also can provide detailed information on SBA and State of California loan guarantee programs. Looking for financing for your business is usually a multi-step process that will take significant time, effort, and patience. We recommend the following:

·  Write your business plan first. Most programs and lenders, even those sponsored by the federal or state government, require a detailed business plan that spells out why they should risk their money by investing in your business.

·  Determine what your own resources are. This includes cash, home equity, and other personal assets. Also consider family and friends. Contact your county or city economic development agency. Many offer funding programs to foster business within a certain community or geographic area.

·  Go to your bank first. Then, if needed, call on other local banks in your area. The smaller community banks pride themselves on helping small business owners.

·  Ask the SBDC about any revolving loan fund (RLF) program for which you might qualify. RLFs provide "gap financing" that your bank won't or can't offer. You can also ask your local SBDC about SBA guaranteed loans, which can reduce the risk for a bank providing a business loan to a business with limited assets.

What assistance is available for veterans?

The Alliance SBDC refers inquiries about veteran business assistance services to the Veterans Business Outreach Program. The VBOC office in Sacramento offers training, counseling, and mentoring specifically to help veterans and their businesses.
Sacramento Veterans Business Center (VBOC)
7270 E. Southgate Drive, Sacramento, CA. 95823
Telephone: 916.383.8387 ext. 25
FAX: 916.393.8389

For other business startup, general assistance or expansion related questions a great place to start is the Alliance SBDC serving Stanislaus, Merced, Tuolumne, and Mariposa Counties. You can contact the SBDC at our Modesto Office at (209) 567-4910 or our Merced office at (209) 386-1008. Our visit us on the web at www.alliancesbdc.com.

The Alliance SBDC offers this information without warranty and is not responsible for its use.

Decisions based upon this information are solely the responsibility of the reader.