Frequently Asked Questions
Q: I have a business idea. What should be my first step?
A: Start by asking yourself why you want start your own business – what are your goals and expectations from self-employment? Also consider the personal and financial demands that running a small business makes – are you prepared to deal with these now? By working with an SBDC counselor, you can objectively examine these issues, conduct a personal and financial assessment of your readiness to undertake this endeavor and identify any obstacles that need to be overcome.
Q: What kind of small business should I start?
A: We can’t make this decision for you, but we can help by supporting your examination of different alternatives. Working with you to perform this initial research, the SBDC can provide help you develop critical information on start-up capital required, skills needed, competitive challenges and the potential for income for the different business options in which you have an interest. This will lead you to make a better choice, one that fits not only your personal profile but your economic requirements as well.
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Q: I’ve heard that government grants exist to help people start businesses. How can I get one?
A: There are very few grants to assist for-profit businesses. Occasionally, there are grant programs for businesses in high-priority social need situations (day care), or that are performing research the government may find useful (SBIR) or for specialized populations (disabled). If your business fits one of these categories, the SBDC may be able to help you identify the grantors and initiate any required paperwork. go to www.grants.gov
Q: Can I operate my business out of my home?
A: Many small businesses can and do operate successfully from a home-based location. But make sure that your home is properly zoned for what you want to do before undertaking anything. Also, your homeowners insurance will likely not cover you for business related losses, so check with your insurance carrier. Finally, the IRS rules for taking deductions for business use of your home are strictly defined, so don’t assume you will be able to claim these until you investigate their applicability to your situation.
Q: What legal form should my business have? Can I change it later?
A: The legal form your business takes is determined by many things: your potential exposure to liability; your need to eventually transfer the business; your unique tax situation; the ability to raise capital; and several other considerations as well. Each form of organization has its’ pros and cons with regard to these issues. We recommend that, in addition to taking one of our Business Start-Up classes (link to class), you consult an attorney familiar with your business and with small business issues to help you make the proper choice.
Once the business is up and running, it’s certainly possible to change the legal form should the business’ needs change. But it’s best to minimize this type of disruption as much as possible by choosing the most adequate entity from the start.
Q: Will I need special licenses and permits?
A: This depends on your business and its location. All businesses file at least some basic paperwork to get started like a DBA, a state sales tax vendor collection form or a Federal ID number application. Other more specialized licenses or permits might apply to your business depending on how it’s regulated by Federal, State or local governments. A good place to start getting information on this issues is the State’s Online Permit Assistance and Licensing website. Your SBDC counselor can also help you determine your need for other types of regulatory compliance, such as zoning.
Q: What if I want to hire employees?
A: You will first need a Federal Employer Identification Number (EIN). If you are liable for unemployment Insurance and withholding, you will need to register with the State Department of Labor and recieve a Employer Registration Number. Additionally, you will want to start a Workman Compensation Insurance Policy to cover your employees - your business insurer maybe able to write that policy for you.
Q: Do I need other types of insurance to run my business? What about health insurance for myself?
A: Not having insurance, or having inadequate coverage, can cost you your business just as surely as not having any customers. Business insurance protects against economic losses caused by damage to the business’ property and by legal liability to others for personal injury and property damage involving the business. While not required, its protection you should nonetheless have in place. SBDC counselors can help you define your insurance needs and direct you to insurance resources.
In a small business or a one-person shop, your health is extremely important to the business’ survival. Many new self-employed individuals find themselves without health coverage after they leave their jobs. There are many options, such as New York State’s Healthy New York Program to consider in replacing this important coverage. Let us help you explore the alternatives.
Q: How can I get a bank loan for my business?
A: Any lender will want to see a strong business proposal backed up by a good credit history, adequate collateral and an owner's investment in the business. As a start-up or small business, you must often rely your own personal credit standing, personal or family assets and injections of your own cash to meet these standards. The good news is that programs exist, like the SBA 7(a) Loan Guarantee Program, to help the small business person improve their chances of securing the needed funding. SBDC counselors are experienced in the commercial loan process and can provide valuable guidance if you're seeking a bank loan.
Q: Do I have to have a business plan?
A: Most lenders will require a plan to support the loan request but you don’t Have to write one just to get a loan! Having a researched and realistic plan can be the difference between the success and failure of your business. A business plan can help you assess your business’ market potential and relate this to your personal financial goals. It can support your promotional and operational strategies, help define your target customers and analyze your competitors. And writing one is not as hard as you might think.
Q: How can I get certified as a minority or woman-owned business?
A: There are several federal, state and municipal programs for which M/WBE certification is necessary. Most involve government procurement opportunities in which the certified entrepreneur is given preference. The Federal 8(a) program and New York State’s Minority- and Women-Owned Business Enterprise state certification program are the best known of these. Each has different requirements, time frames and application processes.