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Frequently Asked Questions

Q. What are the costs for SBDC services offered through Palm Beach State College?
A. All services and seminars are free!

How do I incorporate?
"Articles of Incorporation" must be filed with the Florida Secretary of State/Division of Corporations. Several options are available for incorporating a business. Individuals can prepare the necessary paperwork on their own pay or pay a professional to assist in the process. The minimum filing fee is $70.00. The Department of State website www.sunbiz.org provides additional information.

How do I get my tax identification number?
There are two commonly referred to "tax identification numbers". In most cases, both identification numbers are required. One is the federal tax identification number (EIN Employer Identification Number) which can be obtained by filing form SS4 with the IRS. The Florida sales tax identification number is obtained by filing form DR-1 with the Florida Department of Revenue with a $5.00 filing fee. (This number also serves as a "reseller's certificate number")

What is a "hot" business in Florida?
"Hot" businesses are only hot if they work for the individual. Choosing to open a business is a personal decision that requires hard work and long hours. Part of the decision making process should include a self assessment to determine interests, hobbies, experience, resources available, profitability potential, etc... Choosing a business because it was successful for someone else is risky business.

Are home-based businesses legal?
Local city and county regulations closely regulate which activities can be carried out at residential locations. Home-based businesses have increased significantly in the past decade representing a cost-effective alternative to leased, rented or owned office/retail space. Inquiries regarding the legality of home-based business should be directed to local business tax licensing department of your county of city.

What is a "sub chapter S" corporation?
A sub-chapter S corporation is the legal equivalent of a regular "C" corporation under state law. Once a corporation is formed, the owners may have the option to elect to have corporate profits taxed under "sub-chapter S" of the Internal Revenue Code. The result of this election is that corporate profits are taxed directly to the owners (on their Form 1040) at the Federal level. Owners escape double taxation of distributions and, in the state of Florida, state corporate taxes levied on "C" corporations.

What licenses are required to start and operate my business?
All businesses need occupational licenses. At least one license for each city in which the business has a physical location and at least one for each county in which the business has a physical presence.

How do I start my business?
The first recommended step is to carefully conceive your business by developing a comprehensive business plan. If financing is needed for the business, most lenders will require some form of a business plan. The business plan will also serve as a "road map" to success. It is advised that no legal documents be filed for the business (i.e. Articles of Incorporation % occupational licenses) prior to writing a sound business plan and identifying financial resources. Opening a business is easy; closing a business for lack of planning is painful and costly.

Do I need to advertise my intention to register a fictitious name for my business?
In accordance with 15.16(6), Florida Statute, effective June 9, 2001, it is no longer a requirement to advertise the intention to register a fictitious name prior to registration. The application for new fictitious names can now be completed and paid for by credit card online by visiting Website www.sunbiz.org Renewals are still handled in the traditional fashion.

Where do I go to get money for my business?
There are many sources for business financing including bank loans, SBA guaranteed loans, private money and collateral money, just to name a few.

If I apply for a bank loan, what are the basic requirements of the bank?
There are six C's banks looks at: Credit worthiness of the owner/owners, Cash investment of the owner(s), Collateral, Capacity to repay, Character and Commitment. It is very important to understand the details of each of these before you speak to a banker. The SBDC can help you to understand and hence be better prepared.

What effect would a bankruptcy have on bank financing?
Any bankruptcy within the past 10 years could be a major negative for bank financing. There are some exceptions under extreme circumstances.

Do I need a formal Business Plan?
Yes, the SBA and most banks require a Business Plan. A Business Plan explains the business's goals and objectives as well as illustrating the ability to repay the loan. The SBDC can help you write a business plan if you do not already have one.

What is the difference between a bank loan and an SBA loan?
There is no difference between a bank loan and an SBA loan. The SBA does not loan money directly to the business or owner. They guarantee the loan given to you by the bank in order to reduce the bank's risk. It is up to the discretion of the bank to ask for an SBA guarantee and only participating banks are involved.

What if the bank says no? (Alternatives to bank financing)
Banks fund less than 50% of all money for small business ventures. The balance comes from friends, family, equity in assets (a home) owned by the owner(s), credit cards and venture capital.

What is the difference between Venture Capitalists and Business Angels?
Venture Capitalists are usually equity investors in a business. They typically seek to invest over a million dollars in companies with a potential for significant growth, such as those in the high technology industry. A Business Angel is usually an individual who loans money to a business with the expectation of being repaid.

How can I market my business?
There are numerous ways to market a product or service. Among the most commonly used methods are: brochures/leaflets/flyers, merchandising displays, print media (newspapers, magazines, industry publications) broadcast media (television, radio) phone directories, advertising specialties, direct mail, trade shows, signs, billboards, coupons, telemarketing, internet marketing, press releases and networking.

Do I need a formal marketing plan?
Small businesses often use a hit-or-miss approach to advertising, trying a local newspaper one week and a direct mail flyer the next. Pretty soon, without ever establishing a focus to their efforts, they've spend enough to have paid for a well-thought-out targeted plan. A carefully developed marketing plan will help achieve goals in a measurable controlled environment.

How do I build a marketing plan?
Rule number one for any marketing effort is to know your customer. Customer demographics, (age, income, sex, education, marital status, occupation, place of residence) drive marketing decisions. Choosing an effective media mix will depend on the extent of market research conducted. To obtain useful information for future marketing efforts, a survey may be helpful in determining what brought customers to your business, how they learned about the business, and who the closest competition is including their prices and policies.

How much do I have to budget for promotion?
Creating a budget for marketing and promotion should be an important component to your overall business plan. There's no set formula for preparing a marketing budget. However experts often use advertising ratios as a yardstick for planning. Advertising budgets are often considered as a percentage of sales. Uncovering what competitors are spending on advertising may provide a guideline for spending.

What results can I expect?
Marketers suggest using a special offer, a salesperson's name, or a code number to help track the success of failure of a certain promotion. Different marketing tools will command different results. For direct mail, a 2-4 percent return is considered a good response.

What are the key elements to a marketing piece?
Memory association is an important consideration when creating a marketing piece. Effective marketing provides the consumer a means to remember your business. In other words you must identify your product or service. Image advertising promotes a businesses name, concept, or message. It's useful when trying to establish or retain a market presence, or convincing customers to send in a coupon or make a call requesting more information.

What are some unique and creative methods of promotion that others have used successfully?
Unusual approaches to marketing, such as including a shiny penny in a direct mail piece with a headline "A penny for your thoughts" attracts attention. An arborist putting a company flyer in a plastic bag filled with small rocks and delivered to residences as if it were a newspaper may reach consumers in ways that traditional media does not.

Do I need an export license?
You can export most commodities freely and without an export license, because they are "NLR" - No License Required. Fundamentally, goods needing a validated license are: weapons, high-tech products that can be used against the United States or its allies, goods in short supply in the United States, possibly strategic goods, which are restricted, perhaps on a temporary basis.

What are some of the advantages of exporting?
Besides the basic profit motive, there are two other major reasons for exporting: 1) It takes some of the peaks and valleys out of the business cycle. One country may have an economic downturn while another country is enjoying relative prosperity. With customers in the United States and several other countries simultaneously, you'll be able to maintain more consistent business projection from year to year. 2) It postpones the end of the product cycle. By the time the U.S. market for a product is saturated, the product can be introduced in new countries.

Where can I find the products for resale?
If you choose to be a middle agent, buying U.S. products for resale abroad (Export Trading Company) or collecting a commission on your sales (Export Management Company), one of your best sources for products is the Thomas Register of Industrial Corporations. It should be available at your public library. Also, you can go the Internet www.thomasregister.com

What's the difference between ETC (export trading companies) and EMC (export management companies)?
An ETC takes title to goods and then resells them. An EMC sells products abroad for another company, and ordinarily arranges the transportation and financial transactions, usually on a commission basis.

What is a foreign trade zone?
A foreign trade zone is a specific place designated by the U.S. Customs Service to be outside the customs territory of the United States, permitting duty-free storage, display, and manipulation of imported goods.

Who is a custom broker agent?
A custom broker agent is an individual of a firm licensed by the government to undertake customs clearance and other services for the importing party.

What is a tariff?
A tariff is a schedule of rates published by the carrier; this also can refer to the Harmonized Tariff Schedule of the United States, which covers customs duties.

Where should I look for resources if I want to import products?

  • Foreign consulates
  • Directories of importers
  • Trade organizations<
  • Trade journals
  • Trade shows
  • Trade leads published in business publications.

I heard that it is easy to make a lot of money in international trade. Is this true?
Those who get involved in international trade expecting to make an easy (and quick) dollar usually end up losing money. First, you should in for the long haul, not to sell any customer once, but to sell many customers repeatedly over the years. That's where the real profits are. Second, if the product doesn't sell in the domestic market, don't expect to make millions selling it to foreign importers. Many products are available at discounted, liquidated prices because nobody wants them.

How can I get started in international trade?
To get started in international trade, you can take courses and seminars in international trade at your local universities or colleges or visit the Small Business Development Center (SBDC). The SBDC also offers individual counseling on international trade free of charge.

How do I locate the government agency that buys my product/service?
The quickest way is to contact the SBDC's Procurement Technical Assistance office. They have developed a resource of contact points within many government purchasing departments. The list includes agency web sites and phone numbers.

How long must I be in business to sell to government agencies?
Generally, most agencies award contracts based on price and/or technical capabilities. However, there is a current trend for agencies to review potential award winners' past performance. That helps the agency qualify a firm.

Can I find out about pricing information on past purchases by the agency?
Usually the agency will provide a history of past purchases by company name and contract price. Often that information requires interested bidders to send a separate letter requesting the data.

What are the advantages of getting certified?
The major advantage is that a certified company will have the opportunity to bid on jobs that are set-aside, to be bid only by certified businesses.

How much would I have to pay a marketing firm to search for bid opportunities?
There are several private companies that will do bid searches for fees ranging from $500 - $1,200 a year.

What steps should I take to effect a fast payment on a finished contract?
If the product/service has been delivered/performed and accepted by the agency, a submission of a proper invoice will start the payment process. Sometimes an offer of a prompt discount may also expedite payment, but remember you are receiving less of a contract price than you expected.

If I've never written a proposal for government work, how will I know how to present it?
Every proposal submission is different. However, you can attend one of the SBDC/PTAC's workshop to gain insight into how to assemble a proposal and what pitfalls to avoid.

What is Copyright?
A copyright is a form of protection given by the laws of the United States to the authors of literary, dramatic, musical, artistic and other intellectual works. The owner of a copyright is granted by law certain exclusive rights for work such as the right to print, reprint, copy, sell and distribute copies of work.

What is a Trademark?
A trademark is a word, name, symbol or device, or any combination of these adopted and used by manufacturer or merchant to identify his goods and distinguish them from those manufactured or sold by others.

What is a Service Mark?
A service mark is any word, name, symbol, device or any combination, used or intended to be used, in commerce, to identify and distinguish the services of one provider from services provided by others, and to indicate the source of the service. A service mark is the same as a trademark except it identifies a service and the source of service rather than goods or products.

What is a Patent?
A patent is an exclusive property right to an invention and is issued by the Commissioner of Patents, U.S. Department of Commerce. It gives an inventor the right to exclude other from making, using or selling an invention in the United States, its territories and possessions.

What is Trade Secret?
Under common and statutory law, a new product is protected from being copied, produced or sold by anyone than the inventor. Trade secret status ends once the product enters the market place. This protection is often sufficient during the manufacturing, distribution and/or licensing, exploration stages of product development. Only 5% of patent filings are reported to produce revenue for the inventor.

How do I determine the level of protection I need for my new idea?
The cost of attaining a patent should be weighed against potential revenue. Careful analysis should distinguish between realistic and perceived market potential. Trademarks and copyright should be obtained in situations where others could easily use your creations. The cost of trademarks and copyrights is minimal and therefore not usually a major financial consideration.

What taxes will I have to pay on my small business?
Federal and possibly state income taxes must be paid on business net income. Compensation received by owners for services rendered such as salaries, are subject to both federal income tax and social security tax.

When do I have to pay taxes?
Payroll withholding taxes should be deposited to the government's account each time payroll is issued or at least monthly. Taxes on business and personal income are usually required to be paid quarterly.

Do I have to file a tax return if I had a loss?
Generally, businesses are required to file tax returns regardless of profit or loss. Returns are ordinarily due March 15th.

Is there a simple way to organize my paperwork?
Most important, is to keep personal and business records separate including checking accounts. It is advisable to keep records in an easily accessible location with similar items grouped together. Transactions should be reported consistently and financial statements prepared monthly. Software packages are available to facilitate efficiency with bookkeeping and accounting functions.

Do I need to hire an accountant, I'm just getting started?
Probably not for on-going record keeping. Tax return filing may require professional expertise such as an accountant specializing in small business.

What expenses can I ‘write-off' to the business?
Reasonable and normal expenses is the standard used by the IRS in assessing legitimate business write-offs. Expenses which appear to be personal are most susceptible to denial. Significant overstatement of deductions can result in interest and penalties. Incurring an expense simply because it is deductible is not a wise business decision.

© 2009 Small Business Development Center at Palm Beach State College
Phone: (561) 862-4726 | Fax: (561) 862-4727 | sbdc@palmbeachstate.edu

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