Starting a Business
ready to start a business! I have a product/service and I'm sure
that it will fly, so what do I do now? Well there are a number of things that
without proper attention will shoot a hole through your endeavor. Our mission
here is to help you through the startup maze.
The following is a straightforward list of things that will enable you to get your idea off the ground. Simply click on any highlighted text for more information. Remember, this advice does not replace a qualified attorney or CPA's professional opinion on your particular situation.
Developing a Business Plan
First things first - you need to develop a business plan ! Don't feel intimidated by the first step. Here is an outline that will direct you in this process. There are a ton of available resources to help you. The following links give details as to what is expected by the people you need to back your venture. Check here for some tips on putting a business plan together.
Choosing a Legal Structure
What are you going to be? A proprietorship , general partnership , limited liability company , limited liability partnership , or corporation ? Follow these links to decide what will work best for you. Depending on how you set up your business may determine if you need an Employer Identification Number (EIN) or not.
Procedure for Incorporation
Did you check to see if the unique and descriptive name you're using for
your business was taken? However, a unique name is not required for all entities.
(i.e. Sole Proprietors can use his/her name regardless of availability. Try
doing a search to see if your preferred name is available in Alabama!
Alabama Business Name Search
Tax Information--Hold on - the State and Federal Government get some too.
Employer Identification Number
All individuals and businesses are required by the Internal Revenue Service (IRS) to have a Federal Taxpayer Identification Number called an Employer Identification Number. Any business other than a sole proprietor with no employees is required to have an EIN for reporting withholding taxes. If you are a sole proprietor with no employees you have the choice of obtaining an EIN or using your social security number. An EIN is also referred to as a TIN (Taxpayer Identification Number). Although this can create confusion, an EIN and a TIN are the exact same number. Click here for more information and for a checklist to see if your business needs an EIN.
How to obtain an EIN
Businesses must complete Form SS-4 and mail it to the Internal Revenue Serviceâ€™s EIN office. The address is listed below.
Internal Revenue Service
Attn: EIN Operations
Philadelphia, Pennsylvania 19255
You can also fax your completed form to 215-516-3990. An EIN can be obtained immediately by phone by calling 1-800-829-4933. In order to receive an EIN by phone, you need to have Form SS-4 completed and available before you call.[Click here to download Form SS-4 ] or you can apply for an EIN number online by simply Clicking Here.
Obtaining a New EIN
When a business changes forms, for example from a sole proprietor to a corporation, the business must apply for a new EIN. The same rule applies for businesses that are sold. The new owner must apply for a new EIN.
Alabama Income Tax withholding Number
Any business that hires employees and pays wages must file to receive an Alabama income tax withholding number. [Click here to download the state COM101 form. ]
Alabama Sales Tax Number
Anyone who sells tangible personal property to an end user and collects sales tax must have an Alabama Sales Tax Number. For information on obtaining an Alabama Sales Tax Number click here . To learn more about state tax reporting, click here to go to the State of Alabama website.
County Sales Tax
After applying and being issued an Alabama Sales Tax Number, the Tuscaloosa County Tax Board will automatically enter the taxpayer into its system and mail out forms to the taxpayer. Tuscaloosa County uses the same sales tax number as the State of Alabama. The taxpayer then fills out the forms mailed to them and begins paying taxes monthly. For more information contact the Tuscaloosa County Sales Tax Department at 205-349-3870.
City of Tuscaloosa Sales Tax
Currently, the City of Tuscaloosa does not use the State of Alabama tax
number. In order to begin paying sales tax, the taxpayer must go to the revenue office located in City Hall and fill out a Compliance Form. After the appropriate departments have approved the compliance code and signed off on the form, a business license will be issued. Tax forms will start being mailed to the address listed on the business license form. Taxpayers then follow the directions on the tax forms and begin paying taxes. For more information contact the City of Tuscaloosa Revenue Department at 205-349-0220.
Alabama Income Taxes
The following forms may be required for businesses filing Alabama Income Taxes.
Quarterly Return of Income Tax Withheld
A-6 Employer’s Monthly Return of Income Tax Withheld
A-3 Reconciliation of State Income Tax Withheld
A-4 Employee’s Withholding Exemption Certificate
Unemployment Compensation Fund
Most employers must contribute to the Unemployment Compensation Fund. Employers contribute by filing a Report to Determine Domestic Liability (Form SR-2D) and an Employer’s Contribution and Wage Report (Form UCCR-4). Form UCCR-4 must be obtained by calling (205) 254-1250. The amount employer’s must pay is based on their experience rating. This is found by calculating how many of their former employees file unemployment compensation claims against the company.
In addition to the tax requirements that might be imposed by local governments, employers are required to withhold federal income taxes, social security, and Medicare taxes. Four factors determine how much federal income tax a business must withhold. Payroll, employee’s marital status, amount of wages, and number of withholding allowances claimed by the employee all factor in to the total amount of federal taxes a business must withhold. More information can be obtained by reading Circular E, the Employer’s Tax Guide .
Income tax must be withheld if you have employees or if you take a salary yourself. Refer to Circular E, the Employer’s Tax Guide for more information. The following forms are usually required when withholding income tax.
940 Employer’s Annual
Unemployment Tax Return
941 Employer’s Quarterly Federal Income Tax and FICA
W-2 Employer’s Wage and Tax Statement
W-3 Employer’s Withholding Allowance Certificate
1099 Information Return
Social Security and Medicare Taxes (FICA)
Both the employer and employee must pay Social Security (FICA) taxes. All employees must have a valid social security number. Click here to obtain an application for a Social Security Number.
Do you have a business license? Depending on the type of
business, you may need multiple business licenses and permits. You may need:
City of Tuscaloosa, City of Northport or Tuscaloosa County/Alabama licenses,
or all of the above! Look here to determine what licenses and permits will
work for you.
Downloadable Business Forms
Show me the money! How will you finance this idea? Here is a list of tips from a banker to help you with this process.You will need to have an adequate source of reliable financing. To calculate your true estimated starting costs and forecast your first year's cash flow click here .
Four things you nay need to remember are:
- Assess your present financial situation.
- Identify the capital that will be required to finance your business. Click here for information on financing your business.
- Obtain additional funds: you might need to talk to some local banks or lending institutions.
- Set up an accounting system: it might be helpful to obtain a local CPA to assist you.
Insurance is another important factor to consider. You may need insurance for fire and flood, accident, theft, tornado. Getting assistance from a firm or broker could help you to identify possible liability risks and how to deal with worker's compensation.
Market Research - Location and Demographics
Location, location, location…this constant of the real-estate industry definitely applies to your potential business. Before you settle on a primary spot, make sure you are allowed to be there. Zoning can make or break an idea before it gets off the ground. It is important to conduct the necessary market research . Another thing to look at could be the population demographics of the area to see if there is a market for your business. Also, observing traffic patterns on state highways and pedestrian movement during operating hours could help determine if your new store is in the best possible location. [ download traffic patterns ]
In your new business, are you going to need employees? Employees are more than just paid help; they are one of the most important assets to your company. Wisely staffing your new business will give you a competitive edge over most small businesses that fill their positions haphazardly. Finding qualified employees is a time consuming, but imperative task to starting a successful business. You also need to check on the following:
- Check labor laws
- Obtain Employer Identification Number (EIN)
- Obtain system for Employee ID numbers
- Be familiar with any EEOC or ADA issues or compliance's
In addition to all the forms and permits, it is a good idea to be aware of any regulations that apply to your type of business or even to the area in which you will be working. Below are some of the regulations you may need to be aware of when starting a business.
Occupational Safety and Health Administration (OSHA)
OSHA’s regulations may apply to any business that hires employees. This does not include individuals that are self-employed and have no other employees. If employers have fewer than 10 full-time employees, are in retail trade, finance, insurance, or real estate, or have a service business OSHA usually does not hold them to the occupational safety and health regulations. All other businesses are held under OSHA regulations and are required to seek information on exactly what regulations apply to their particular industry. For more information on OSHA’s regulations click here to visit the OSHA website. Click here to download the OSHA Handbook for small businesses.
Americans with Disabilities Act (ADA)
Title 1 of the ADA prohibits discrimination on the basis of disability when hiring employees. The ADA requires employers with 15 or more employees to follow the Americans with Disabilities Act. Click here for more information on the ADA.
Equal Employment Opportunities Commission (EEOC)
Employers are responsible for being aware of equal opportunity regulations. For more information about the regulations that pertain to your area of business and industry click here .
Other regulations that may affect small businesses include:
There are additional regulations for specific products/services other than those listed above. Before starting your business, research other regulations that are specific to your line of business.
Protect Your Ideas
Starting your business can be an exciting endeavor, but make sure no on else gets your idea. You need to protect your business ideas with the Trademark/Patent Office and with Copyright Registration.
- Trademark : names or symbols pointing distinctly to the orgin or ownership of merchandise to which it is applied and legally reserved to the exclusive use of the owner or seller.
- Copyright: the exclusive legal right to reproduce, publish, and sell the matter and form (as of a literary, musical, or artistic work). Click here for answers to some Frequently Asked Questions regarding copyrights.
- Patent: a writing securing to an inventor for a term of years the exclusive right to make, use, or sell an invention.
In general it's a good idea to retain an attorney and/or a CPA to help
your new business. This link will take you to The Chamber's membership
directory to find an attorney and CPA that can meet your needs.
Register your Business
Once you begin work on your big idea, you need to make sure to register your business. In doing so, you will also obtain a business number.
In addition to the regular business licenses and permits, some businesses need additional business forms. Some of these forms include contracts, bills of sales, family, real-estate, and more. For additional business forms go to www.uslegalforms.com.
Web Site Design
With the growth of technology, a business needs to consider the advantages the internet can have. A business web site would even help in the marketing plan. To start your own web site, you must consider:
- Registering a Domain Name
- Obtaining an Internet Service Provider
- Consider High Speed Internet Access
- Designing and Creating the Site (or hiring someone else to do it for you)
- Obtaining an E-mail address
Once everything else is done and the business is ready to begin operation, you need to think about advertising . Think of ways to publicize information about your business in different trade magazines or newsletters. You can promote your new business by offering grand opening specials and sales. A large advantage is to set up advertisements that serve to put your name before the public in places such as the Yellow Pages and various newspapers.
Join Your Local Chamber of Commerce
Finally, one important step in developing your business rapport in the community is to join your local Chamber of Commerce. You may also consider joining your businesses trade associations. These groups can aide you in the marketing and development of your new business.
Starting a Business
- Startup Checklist
- Business Plan
- Financial Decisions
- Market Research
- Insurance Checklist
- Protecting Your Ideas
- Business Structures
- The Chamber
- Area Demographics
- Commercial Real Estate
- Taxes & Incentives
- Wages & Benefits
- Workforce Information