Starting your Own Business
Checklist for Starting a Business in Humboldt and Del Norte County
If you are just starting up or been in business less than two years, you may find developing a business model more appropriate and useful than a business plan. Once you have developed your model and have tested it multiple times, then a Business Plan may make more sense.
Develop Your Business Model
A business model isn’t something you build from the ground up. When management-types ask about a business model — as in, “So what’s your business model?” — they really want an answer to a much more direct and basic question: “How do you plan to make money?”
Behind that question is a lineup of other questions:
- Who’s your target customer?
- What customer problem or challenge do you solve?
- What value do you deliver?
- How will you reach, acquire, and keep customers?
- How will you define and differentiate your offering?
- How will you generate revenue?
- What’s your cost structure?
- What’s your profit margin?
Should you start a business? Here’s a quick guide to testing your assumptions:
- Business Idea Validation Check-list (from BPlans.com): Click Here
To learn more Information about Models:
Write a Business Plan
- There are no set rules for drafting your business plan, but for the most success it is best to follow consistent guidelines. Here is our easy Business Planning outline, with resources at the end for building a more detailed plan for lenders and investors.
- Another great resource is the SBA Build Your Business Plan Guide, which can be found at: www.sba.gov/business-plan/1
- To increase your chance of success, take the time up front and before anything else to explore and evaluate your business and personal goals. Then, use this reflection to build a comprehensive and well-thought-out business plan. Your business plan is just as valuable a tool to you as it is to your potential investors.
- Your business plan functions in a number of uses. Committing yourself to writing a business plan is a methodical way to mentally construct your business. Accomplishing the technical aspects of business planning will allow you to better utilize your time and resources with the ultimate goal of establishing a realizable business. Additionally, a detailed business plan will often be your best resource in obtaining funding, as investors will want to understand how they will earn back their investment.
Legal Business Structure
- There are several forms of legal entities of businesses, each with their own advantages and disadvantages.
- Learn more about the various business structures at: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Business-Structures.
- All new businesses that are not a sole proprietorship must file formation documents with the Secretary of State, the required forms can be found at: www.sos.ca.gov/business/be/forms.htm.
- Any contracts between owners of a partnership should be drawn up before beginning business.
- Information about the tax implications of each business structure can be found here: https://www.sba.gov/business-guide/launch-your-business/choose-business-structure.
- It is best to thoroughly research the structures and settle on the one that best fits your needs and goals. No classification is any “better” than another, they are only different.
Fictitious Business Name Statement
- A licensed business name is necessary if the company name differs from your own, a filing of a fictitious business name statement is also required before you can open a business checking account in the title of the business.
- This statement is filed with the county government. Your local county website should have a section specifically designed for the filing of fictitious name statements. Counties will vary, but most require a small fee. Usually for an additional fee a notice will run in the local newspaper announcing the creation of your fictitious business name.
- Register your fictitious business name at the Humboldt County Recorders Office – (707) 445-7593
- It is imperative to determine zoning regulations and requirements prior to signing any lease or contract. The intended location of your business must have the proper zoning for your planned use of the site.
- Zoning maps can usually be found at your city or county website.
- If you will be operating out of your home you must follow the requirements for home occupants, if any, in your municipality.
- In order to operate your business you must comply with a range of city, state, and federal rules and regulations. www.sba.gov/licenses-and-permits offers a search tool for discovering which licenses are necessary for your business based on your industry and location.
- Business licenses can typically be purchased at City Hall and the price typically ranges $40 and up, depending on the number of persons you intend to employ.
- Required before business can begin.
- If you intend to run your business out of your home, it may also be necessary to obtain a Home Occupation Permit. Additionally, you should check with your homeowner’s association as some neighborhoods prohibit the running of businesses out of the domicile.
Special Licenses and Permits
- The licenses and permits necessary to run your business legally are determined by the type of business you wish to establish.
- The CalGOLD database (www.calgold.ca.gov) provides detailed information on business permit, license, and registration requirements from all levels of government. Here you can find detailed information including a description of the requirement, contact information for the supervising agency, and a direct link to the agencies’ website.
- The State Department of Consumer Affairs lists more than 200 regulated occupations and professional services. Their website, www.dca.ca.gov, offers valuable licensing information.
- Police Regulated Businesses are businesses within an industry that have a history of being associated with illegal activities. These businesses often include, but aren’t limited to, pawn shops, massage parlors, tattoo and piercing parlors, and card rooms, although it differs by county . A full list of police regulated businesses can be found at your local police station. If your business falls into the category of a police regulated business then your business will be subject to investigation and review prior to the granting of licenses.
- In order to buy goods at wholesale prices to be resold, all retailers must obtain a Retail Sellers Permit. Visit www.boe.ca.gov to learn more, or call (707) 576-2100.
Federal Business Tax
- For federal tax information and a copy of the “Tax Guide for Small Businesses”, an invaluable resource to help understand how to properly file federal taxes, visit: www.irs.gov/pub/irs-pdf/p334.pdf
- Everything you need to know about Employer ID Numbers (EIN) can be found at: www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Do-You-Need-an-EIN%3F
State Business Tax & Becoming an Employer
- California State Tax information can be found at: www.taxes.ca.gov
- Your Federal Tax ID number, otherwise known as the Employer Identification Number (EIN), is comparable to a Social Security number for your business. One can be obtained by filling out Form SS-4 which is available online at: www.irs.gov
- The Employment Development Department (EDD) is a department within the California State Government that promotes California businesses as well as aids employees and employers. They release yearly editions of their handbook, “California Employer’s Guide”, which covers broad topics concerning how to succeed in business. The most recent edition can be found at: https://www.edd.ca.gov/pdf_pub_ctr/de44.pdf
- It is a legal obligation to invest in Workers Comp Insurance prior to the hiring of any employees. This can be done with your insurance agent or broker, but CA State also has established a State Fund. This fund is the largest supplier of Workers Comp Insurance in the state and grants many opportunities to low-income startups.
- There are different kinds of employment and knowing the difference between an employee and a contractor, and the classifications and legal obligations that accompany each, is an important part of running a business. Visit the IRS.gov website in order to learn more.
- An important distinction when hiring employees, especially for tax purposes, is classifying their employment status appropriately. The IRS has a helpful publication for understanding the different classifications and rights of certain employees, this can be found at: www.irs.gov/publications/p15a/ar02.html
- Along with many other resources, the SBDC offers this simple, easy to use step-by-step guide to hiring and maintaining employees, visit: www.northcoastsbdc.org/hiring
- Businesses are major investments; sometimes a life’s work can go into opening a business. Unfortunately, the truth is that it’s not uncommon for businesses to be robbed, vandalized, or otherwise destroyed. It’s incredibly important for all business owners to invest in Liability and Property Insurance, to protect your building, inventory, and equipment.
- Many insurance companies offer Business Insurance and most will work with you to create a policy that best fits your needs. Contact your insurance agent or shop around before settling on a policy.
- All expenses and income needs to be well-tracked. One of the most common factors in the failure of new businesses is the mismanagement of funds. It’s important to establish bookkeeping procedures and deal with all expenditures and revenues similarly, this will make income reporting and cash management easier and more realistic.
- There are a number of easy-to-use accounting programs, the most popular being QuickBooks software, which is utilized by approximately 85% of all small business owners. There are advantages and disadvantages to all accounting software so it’s important to compare/contrast various programs before settling on a program.
- For most small businesses, a simple, inexpensive program will suffice for needs. While there are many extremely expensive, extremely complicated programs that exist, programs like a basic QuickBooks is designed to be used by entrepreneurs with no formal accounting training. Additionally, there are a number of free and open-source programs with growing communities, a list of these free small business accounting programs can be found at: www.en.wikipedia.org/wiki/Comparison_of_accounting_software
- Many small business owners outsource their preparation of financial statements to private accounting firms. Even if you decide to not have an accountant, it’s a good idea to have an accountant prepare your year-end tax accounting. Many firms will offer this service for relatively cheap and this will prevent inconsistencies on your tax forms, which could otherwise lead to tax audits.
- “It takes money to make money” and all businesses need capital to first settle then expand. Typically this capital will come from savings, home equity, or friends and family.
- The next most frequent source of funding is some kind of business loan. If you are considering a business loan, it is a good practice to contact multiple lenders, and to do so early.
- The U.S. Small Business Association (SBA) guarantees small business loans through local lenders. These loans are particularly helpful for minorities, persons with low-income, and persons with questionable credit.
- You can learn more about California’s guaranteed loan fund at: https://cacapital.org/business-loans/state-loan-guarantee-program/
- Lenders will want you to be successful, as a loan is, in many senses, an investment in you and your business. Lenders will be very clear about their requirements and timelines.
- Begin your search for the appropriate lender at your own bank or credit union. If they don’t offer commercial business loans, chances are they will be able to recommend lenders within the community who will be able to help you.
- A directory of non-profit organizations offering small business loans can be found at: www.businessloanfunds.com/california
- When applying for a business loan, lenders will want to see a copy of your business plan. Generally, lenders will be very clear and upfront about the information they require, and your application won’t be affected by a frank discussion about the presentation of your business plan. The SBA offers tools and tips on how to write a concise and well-thought-out business plan at: www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/writing-business-plan
- Crowd-funding has become a popular method for small companies to get off the ground while gaining exposure. Sites like www.kickstarter.com offer entrepreneurs, inventors, and artists a platform for raising capital to fund their various projects. Usually, a service or product will be offered in exchange for donations.
- The first step in obtaining funding is to write a business plan. No organization will invest in a company without first reading their business plan. Additionally, your business plan will be an invaluable tool in helping you to decide the appropriate amount of capital to borrow.
- Prospective companies with a focus on developing environmentally efficient products and procedures have many resources available to them in terms of funding and development.
- The California Innovation Hub Initiative (iHub) serves to assist in stimulating partnerships, economic development, and job creation through specific research clusters at state-designated iHub locations. Information about the program can be found at www.business.ca.gov/Programs/Innovation.aspx
- California offers incentives to corporations working to produce energy efficient products, a database of those incentives available can be found at the Database of State Incentives for Renewable & Efficiency (DSIRE) at https://www.dsireusa.org/
- Other rebates and incentives can be found at www.coolcalifornia.org/small-business-financial-resources
Resources for Veterans
- There are many state programs and incentives available to veterans, including priority counseling, more access to funding, and priority in procuring government contracts.
- The SBA gives special privilege to veterans, more information about how the SBA can help veterans can be found at www.sba.gov/content/veteran-service-disabled-veteran-owned
- California’s main designated program for connecting veteran business owners with government contracts is the website www.calvet.ca.gov
- The Veterans Business Outreach Center has support and information for veterans starting businesses in California, their website is http://vboc.org/
Resources for Women
- The Women’s Business Enterprise National Council (WBENC), www.wbenc.org, is a nationwide non-profit organization dedicated to advocating women-owned businesses. Their main focus is developing relationships between major corporations and women-owned small business.
- The National Association of Women Business Owners (NAWBO), www.nawbo.org, is a community of professional women entrepreneurs that promote economic development within the entrepreneurial community.
North Coast Small Business Development Center
Humboldt: (707) 445-9720
Del Norte: (707) 464-2168
Free one-on-one business consulting and mentoring for qualified entrepreneurs, as well as a variety of low-cost and free business skills workshops.
Redwood Region Economic Development Commission
Business lending organization that started in 1977 to support the growth of local businesses and organizations, and to provide leadership in regional economic development.
Arcata Economic Development Corporation
A non-profit organization that offers small business lending to Humboldt County entrepreneurs
Arcata Community Development Department
Eureka Redevelopment Agency
Humboldt Independent Business Alliance
The Job Market
Jeffson Economic Development Institute