Small Business Kit For Dummies E-Book

Richard D. Harroch

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 382

Veröffentlichungsjahr: 2010

Beschreibung

Get your small business up and running — and keep it running for years to come.

Millions of Americans own their own businesses, and millions more dream of doing the same. But starting your own business is a pretty complicated matter, especially with all the legal issues and paperwork. This updated edition of the top-selling small business resource is chock-full of information, resources, and helpful hints on making the transition from a great idea to a great business.

If you’ve got a great idea for your own business, you need the kind of straightforward advice you’ll find here — the kind of advice you’d normally only get from business schools and MBA courses. Small Business Kit For Dummies, Second Edition covers all the basics on:

• Recent tax law changes
• Balancing your finances
• Hiring and keeping employees
• Effective management strategies
• Accounting fundamentals

In addition to the basics of business, you’ll also find top-class advice on more advanced business basics, like business plans, the ins and outs of contracts, and using the Internet to expand your business. For entrepreneurs large and small, this comprehensive resource offers authoritative guidance on all your biggest business concerns, and offers unbeatable advice on such topics as:

• Choosing your business structure — from LLCs to S corps
• How to develop and write a standard business proposal
• Going public, issuing stock, and keeping a stock ledger
• Raising capital and understanding securities laws
• Bookkeeping standard practices
• Tax basics for small businesses
• Handling the paperwork for new hires
• Designing employee compensation plans
• Working with independent contractors and consultants
• Patent and copyright protections
• Dealing with the Press

In addition, the book includes a CD-ROM full of helpful resources — forms, contracts, and even sample versions of the most popular software for small businesses. With Small Business Kit For Dummies you’ll find all the tools you need to get your small business up and running — and keep it running for years and years to come.

Leseprobe

Small Business Kit For Dummies®, 2nd Edition

by Richard D. Harroch

Small Business Kit For Dummies®, 2nd Edition

Published byWiley Publishing, Inc.111 River St.Hoboken, NJ 07030-5774www.wiley.com

Copyright © 2004 Text and any other Author Created Materials Copyright, Richard D. Harroch

Published by Wiley Publishing, Inc., Indianapolis, Indiana

Published simultaneously in Canada

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Library of Congress Control Number: 2004103168

ISBN: 978-0-7645-5984-6

Manufactured in the United States of America

10 9

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About the Author

Richard D. Harroch is an attorney with over 20 years of experience in representing start-up and emerging companies, entrepreneurs, and venture capitalists. He is listed in Who’s Who in American Law and is a corporate partner in a major law firm in San Francisco. He is a Phi Beta Kappa graduate of U.C. Berkeley and graduated from UCLA Law School, where he was managing editor of the Law Review. He has edited or co-authored a number of legal/business books, including Start-Up and Emerging Companies: Planning, Financing and Operating the Successful Business and Partnership and Joint Venture Agreements.

Richard was the chairman and co-founder of AllBusiness.com, one of the premier Web sites for small businesses. He was also the founder, CEO, and chairman of LawCommerce, Inc., an Internet company dedicated to providing products and sources to the legal profession.

He has lectured extensively before various legal and business organizations, including the American Electronics Association, the Venture Capital Institute, the California Continuing Education of the Bar, Law Journal Seminars-Press, the California State Bar Business Section, the Corporate Counsel Institute, the San Francisco Bar, and the Practicing Law Institute (PLI).

Richard has served as the chairman of the California State Bar Committee on Partnerships, the co-chairman of the Corporations Committee of the San Francisco Bar (Barristers), a member of the Executive Committee of the Business Law Section of the California State Bar, and co-chair of the Law Journal seminar in New York on “Joint Ventures and Strategic Alliances.”

Richard has experience in the following areas: start-up and emerging companies, corporate financings, joint ventures, strategic alliances, venture capital financings, employment agreements, IPOs, leases, loans, online and Internet matters, license agreements, partnerships, preferred stock, confidentiality agreements, stock options, sales contracts, securities laws, and mergers and acquisitions.

Publisher’s Acknowledgments

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Foreword

W hen Richard Harroch asked me to write the foreword for his new book, Small Business Kit For Dummies, 2nd Edition, I was thrilled. I have known Richard for many years, and I have seen him in action as a lawyer and advisor to start-up and emerging businesses. I knew this would be a great volume.

Why do you need a business kit like this one? Starting a business can be a daunting process. As the Executive Director of the Lester Center for Entrepreneurship at the University of California, Berkeley, I get plenty of proof. Many would-be entrepreneurs with great ideas just never get to first base. They may have the most important and seemingly most difficult part done: They have identified a market opportunity and a profitable way to fill it. They stumble, however, over the “easy stuff,” like raising funding, getting properly organized, and, moreover, running the business in a “businesslike” manner. Lawyers and accountants are important resources, but unless you do your own homework and learn the “basics,” they can be expensive teachers. This volume gives every entrepreneur quick, straightforward advice and tools to use when approaching a new area of business development.

In my work, I have the privilege to teach the MBA candidates at the Haas School of Business at UC Berkeley. These are undeniably some of the best and brightest young business minds, many of whom are committed to founding their own businesses after graduation. One of the most common complaints I hear about their MBA education is that the faculty don’t teach them the fundamentals of organizing and running a small business. That’s true. But this book can give you what an MBA education cannot: straightforward guidance on the basics of many of the legal, financial, employment, and management hurdles of starting and running your own business. Topics cover the full spectrum, from the basics of business formation, organization, accounting, and tax and financing to tips for putting your business on the Web and tools for dealing with the press. Chock full with sample forms and templates, Small Business Kit For Dummies, 2nd Edition is a treasure chest. The CD-ROM makes everything in the book more directly accessible and customizable for your use.

Starting a business can be the event of a lifetime. The drive of individuals to create new businesses is one of the fundamental engines of our new economy. The oft-quoted statistics are overwhelming: “two-thirds of the net new jobs over the last 25 years have been created by small business. Overall, small business employs one-half of the private workforce.”*

Every new business has to start somewhere, and it’s a good idea to take things one step at a time (the first customer, the first employee, the first bank loan, the first contract, the first financial statement, and so on). But every “first” entails much for the entrepreneur to learn. This book can be both a guide and a shortcut to getting on with the job!

I have had the good fortune to wear a lot of hats in my career, and for the last twenty years, I’ve been immersed in starting and running new ventures. In the ’80s as the Director of the Entrepreneurial Services practice for Ernst & Young in the Bay Area, in the ’90s as Executive Director of the Lester Center for Entrepreneurship and Innovation, and, more recently, as a founding partner in a venture capital firm, I’ve had the privilege to work with literally hundreds of entrepreneurs starting their own businesses (and yes, I’ve founded a few of my own along the way). I can honestly say that in every case, this little volume for us “Dummies” would have come in very handy indeed. I will be referring many of my students to this “Kit” for years to come.

— Jerome S. Engel, Executive Director, Lester Center for Entrepreneurship and Innovation, Haas School of Business, University of California, Berkeley

*Small Business Job Creation: The Findings and Their Critics by William Dennis Jr., Bruce D. Phillips, and Edward Starr.

Contents

Title

Introduction

About This Book

Foolish Assumptions

What You’re Not to Read

How This Book Is Organized

Icons Used in This Book

Where to Go from Here

Part I : Starting Up Your Business

Chapter 1: Choosing Your Business Entity

Setting Up Sole Proprietorships

Creating a Partnership

Corps Is Short for Corporation, Not Corpses

Helpful Hybrids: Limited Liability Companies

Forms on the CD-ROM

Chapter 2: Business Plans

Writing Your Business Plan

The Key Sections of the Business Plan

Writing a Mini Business Plan

Forms on the CD-ROM

Chapter 3: Organizing a Corporation

A Corp Is Born

Corporate Actions

Capitalizing the Corporation

Forms on the CD-ROM

Part II : Money Matters

Chapter 4: Raising Capital for Your Business

Borrowing from Peter to Pay Paul

Putting Your Equipment on a Tight Lease

Placing Your Stock on the Auction Block

Romancing a Venture Capitalist

Forms on the CD-ROM

Chapter 5: Bookkeeping and Accounting Basics

Choosing Your Accounting Method: Cash or Accrual

Keeping Records and Books

The Accounting Toolkit

Forms on the CD-ROM

Chapter 6: Small Business Tax Basics

Thinking about Taxes from the Ground Up

The Tax Tool Kit

A Tax for All Reasons

Elementary, My Dear: Deductions for Your Business

Where to Go for More Help

Forms on the CD-ROM

Part III : Employee and Consultant Issues

Chapter 7: Employee Hiring Tools

Finding the Cream of the Crop

Parlez-Vous Interview?

Checking ’Em Out

Hiring Tool Kit

Forms on the CD-ROM

Chapter 8: Motivating and Retaining Employees

Motivating Employees in Good Form

Digging through the Employee Incentive Tool Kit

Forms on the CD-ROM

Chapter 9: Avoiding Employee Problems

Going by the Handbook

Appraising Can Be Up-Raising

Firing Employees

Conducting Exit Interviews

Forms on the CD-ROM

Chapter 10: Independent Contractor and Consultant Agreements

Forming Relationships with Independent Contractors and Consultants

Tiptoe through the Tax Forms

Forms on the CD-ROM

Part IV : Bulletproofing Your Business

Chapter 11: Key Contracts

Understanding Contracts

Writing and Negotiating Good Contracts

License Agreements

Joint Venture Adventures

Distribution Agreements

The Skinny on Boilerplate Text

Amending a Contract

Forms on the CD-ROM

Chapter 12: Legal Issues

Avoiding Legal Wrangles

Going Down with the Ship (Not!)

Checking into State and Local Laws

Forms on the CD-ROM

Chapter 13: Protecting Your Ideas and Inventions

Pondering Patents

Copyrights and Copycats

Tricks of the Trademark

Can You Keep a Trade Secret?

Speaking Confidentially . . .

Forms on the CD-ROM

Chapter 14: Avoiding Customer Problems

Doing Preventative Maintenance

Giving Credit Where Credit’s Due

Getting Your Money the Hard Way

Forms on the CD-ROM

Chapter 15: Real Estate Leases for Your Business

Negotiating an Office Lease

Offering an Offer Letter

Forms on the CD-ROM

Part V : Spreading the Word

Chapter 16: Web Sites, Your Business, and You

Determining a Domain Name

The Web Site Development Contract

The Web Site Legal Kit

Forms on the CD-ROM

Chapter 17: Press Releases and Dealing with the Press

Drafting Good Press Releases

Checking Out Some Sample Press Releases

Meeting the Press

Forms on the CD-ROM

Part VI : The Part of Tens

Chapter 18: Ten Ideas to Make Your Business More Successful

Team Up with Another Company

Get Advice

Send Gifts to Your Key Customers

Seek Financing When You Don’t Need It

Try Different Ideas

Motivate and Reward Employees

Research Your Competition

Get Favorable Publicity

Ask Your Employees

Build a Great Company Web Site

Chapter 19: Ten Great Web Sites for Small Businesses

AllBusiness

Business Week

The Small Business Administration

The Internal Revenue Service

Entrepreneur

CBS Marketwatch

American Express — Small Business

Newspaper Web Sites

Wells Fargo

Yahoo!

Chapter 20: (Almost) Ten Great Publications for Small Businesses

The Wall Street Journal

Inc.

Business Week

Entrepreneur

Fortune

Fast Company

Forbes

Built to Last: Successful Habits of Visionary Companies

Business Contracts Kit For Dummies

Appendix: What’s on the CD-ROM

System Requirements

Using the CD

Adobe Reader

Forms, Forms, and More Forms

Troubleshooting CD Problems

: Wiley Publishing, Inc. End-User License Agreement

Agreement With Respect to the Small Business Kit For Dummies, 2nd Edition Book and Accompanying Software:

Introduction

Wouldn’t it be great if all it took to run a business was a great idea or service? You’d just need to satisfy your customers. Wouldn’t it be wonderful not to have to worry about things like contracts, taxes, employees, bookkeeping, and liability issues? Sure, it’d be terrific, right up to the time that you woke up.

In the real world, if you want to be the captain of your own ship rather than the first mate on someone else’s freighter, you have to remember a ton of legal and financial obligations, filings, and issues. With so much to keep in mind, however, you may have trouble figuring out where to start. Often, the problem boils down to not knowing how much you don’t know. And don’t try to plead ignorance as an excuse, either. If you fail to do the things the law requires of you, it’s your problem.

Well, now you can rest a little easier. Small Business Kit For Dummies, 2nd Edition, gives you the practical advice that you need to start a business and find a path through a maze of business laws. It also provides you with the sample forms, agreements, policies, checklists, and letters that you need to turn the legal and business jungle to your advantage.

About This Book

Whether you expect your business to operate on a small scale or plan for your business to be the next Microsoft, this book is for you. Small Business Kit For Dummies, 2nd Edition, and its accompanying CD-ROM provide advice and sample forms to businesses ranging from raw start-ups to rapidly-growing companies.

This book is not a murder mystery. You don’t have to start at page one, and if you turn to the last chapter, you don’t necessarily find out whether the butler did it. This book is set up more like an encyclopedia. In an encyclopedia, you don’t have to read through all the A’s before you can read the B’s. When you need a certain bit of information, you find what you’re looking for, use the information, put the book back on a shelf, and go back to growing your business.

Suppose that you want to find a piece of information that allows you to take an extra business deduction, meaning you and the kids get to go to Disney World. You can use a couple of strategies to find the information that you want. First, you can go to the table of contents and locate the topic. In this case, Chapter 6 — “Small Business Tax Basics.” Then you can scan the headings until you find where the information you want is hiding. Second, if you know exactly what kind of information you’re looking for, you can go directly to the index and find it there.

Inside the back cover of this book, you can find a CD-ROM chock-full of sample forms and agreements that you can modify for use with your business. If you ask an attorney to draft these forms, you may spend many thousands of dollars.

Remember, however, that the law is a funny thing. An agreement or a discussion about an agreement that applies to most businesses may not apply in your particular case or location. Always check with your attorney in cases dealing with a large sum of money or potential exposure. (In fact, it never hurts to check with your attorney about any business form or agreement.)

Foolish Assumptions

This book assumes a basic understanding of business practices and concepts. Because this book is primarily focused on providing a wide variety of tools for businesses, I give as much coverage as possible to the forms and their uses. I provide only a limited amount of coverage of general business concepts (though I do my best to explain the background to each topic briefly). If you feel like you need more background business information, check out www.AllBusiness.com, one of the premier small business sites on the Web.

What You’re Not to Read

Some of the topics that you have to be familiar with as a business owner are, by their very nature, technical (for example, taxes, accounting, and contracts). But from time to time, I mark technical explanations that you generally don’t need to understand to get the big picture with a Technical Stuff icon (check out the section “Icons Used in This Book” later in the Introduction to find out more about icons). Feel free to skip these discussions — no one’s going to get mad.

How This Book Is Organized

This book is organized roughly along the pattern of first things first. Part I covers starting your business, Part II talks about money, Part III moves into getting people to work for you, Part IV gives you information about avoiding legal hassles, and Part V moves into methods for increasing the exposure of your business. The final two parts are the Part of Tens, which appear in any For Dummies book, and the Appendix.

Part I: Starting Up Your Business

Every business has to start somewhere. In Part I, you can find information that you have to think about as you get your business off the ground. Chapter 1 gives you information on choosing the business entity for your business (such as corporation, partnership, or limited liability company). Chapter 2 gives you pointers on writing an effective business plan to use as a tool to gauge your business’s success and to attract capital. Chapter 3 covers essential information for setting up a corporation to protect yourself from the business’s financial and legal liabilities.

Part II: Money Matters

Money makes businesses go ’round, and Part II puts you right in orbit with the big boys. Chapter 4 is an important one, providing tools for infusing capital into your business, including loans agreements, filings necessary to sell stock, and venture capital financing. In Chapter 5, you can find forms and strategies for keeping your books, including accounting methods, cash flow comparisons, and methods of figuring balances and budgets. The tax laws are another set of issues that really affect your business, and Chapter 6 provides tax basics for your business, including discussions of business deductions and IRS filings.

Part III: Employee and Consultant Issues

As your business grows, at some point, you need to hire people to help you meet your goals. Chapter 7 provides advice and tools for hiring employees, such as employment agreements, applications, and questions to ask and not to ask in interviews. Chapter 8 tells you how to retain and motivate employees after you hire them. Look in this chapter for discussions of employee incentive plans, stock options, and benefit packages. Chapter 9 concentrates on employee problems, including strategies for avoiding them and how and when to fire employees. Finally, Chapter 10 deals with hiring independent contractors and consultants, including forms for backing up the nonemployee status of these workers for the IRS.

Part IV: Bulletproofing Your Business

When you’re in business, bad stuff can be lurking around every corner. Some bad stuff just eats away at your money. Other bad stuff can land you in court or in jail. Chapter 11 opens up this part with a discussion of your key contracts, including sample forms and agreements that you can modify for your own use. Chapter 12 runs down legal issues that you should be aware of as a businessperson. Chapter 13 contains tools for protecting your patents, trademarks, and other intellectual property, which can be the lifeblood of your company. And Chapter 14 gives you some tools for avoiding customer problems (such as nonpayment) and provides tools to solve the problems when they do occur. Finally, Chapter 15 gives you advice on negotiating a lease for your business.

Part V: Spreading the Word

When your business is going well, you want to publicize it as much as possible. Part V gives you two low-cost methods that are available to just about every business. Chapter 16 gives you tools to exploit the World Wide Web for your business, including things to include in contracts for hiring a Web site designer and online contracts for selling your goods on the Web. Chapter 17 tells you how to get great free publicity from the press by simply using press releases.

Part VI: The Part of Tens

No For Dummies book is complete without a Part of Tens. Check out Chapter 18 for ten great tips for making your business more successful. For those readers with Internet access, Chapter 19 provides ten Web sites that apply to small businesses. Chapter 20 provides some publications that small business owners may find useful.

You can also find a useful appendix in this part.The appendix tells you all about the valuable CD-ROM on the inside back cover of this book. Check out the appendix to find an extensive table that outlines the various forms in this book.

Icons Used in This Book

Watch for the following icons that tell where to find particular types of information at a glance:

This icon points out a revenue-generating or cost-cutting measure that directly affects your business’s bottom line.

This icon points out a valuable form, agreement, checklist, or letter that you can find on the CD-ROM.

This icon points out an important issue that you don’t want to forget about.

This icon signals a point of law that you should check at your state or local level.

This icon flags techie legal jargon and technical discussions that you can skip if you want to.

This icon gives you a hint to save time or trouble.

This icon uncovers a trap that can have grave consequences.

Where to Go from Here

You can start this book wherever you want. If you don’t currently have a business, then Chapter 1 is a logical place to start. If you have a small business that you want to grow, check out Chapter 2 on business plans and Chapter 4 on raising capital. If you have a successful business, you may want to start at Chapter 18, where I discuss strategies to make your business even more successful, and work from there.

Part I

Starting Up Your Business

In this part . . .

The decision to start up a business is not to be taken lightly. To give your business the best chance of success, you need to do a good bit of up-front work.

Your first order of business is to decide what form you want your business to take. Do you want a sole proprietorship? A partnership? A corporation? Chapter 1 outlines the pros and cons of each business entity.

After you figure out which business entity best fits your business, you should sit down and write out a sound business plan. Planning is absolutely necessary to keep your business on the right track and to capture the interest of investors. Chapter 2 gives you some hints on creating solid business plans.

Finally, if you decide to set up a corporation to limit your personal liability, you must jump through some hoops to get the job done. Chapter 3 tells you about the filings and formalities you’ll encounter as you incorporate your business.

Chapter 1

Choosing Your Business Entity

In This Chapter

Flying solo: Sole proprietorships

Getting a grip on partnerships

Checking out corporations

Looking into LLCs

When starting a business, you need to decide early on what legal form the business should take. The common choices are sole proprietorships, general partnerships, limited partnerships, C corporations, S corporations, and LLCs (Limited Liability Companies). Each entity has advantages and disadvantages, and the right choice depends on the nature of your proposed business and various tax and liability issues. In this chapter, I outline the key points that you need to know about choosing the right entity for your business.

Form 1-1 on the CD-ROM (and shown later in this chapter) summarizes the key differences between various types of business entities. You need to pay special attention to tax and liability issues.