Florida Trend | Florida's Business Authority

Getting Started

Do you have what it takes to start a business and keep it going? There’s only one way to find out, and the journey starts here.

Q

I’m thinking about starting a business, but I don’t know how. Where do I begin?

AA well-constructed, written plan is essential to forming any new business. But before you can put a plan on paper, you must first:

Select a Legal Structure. Sole proprietorship, partnership, corporation or limited liability company. Your choice depends on the type of business you envision and whether you plan to have employees or go it alone. See dba Florida for details.

Register a Fictitious Business Name (FBN). Fictitious Business Name is the legal term for an assumed name that a business uses instead of the name of its owner, also known as a DBA (short for Doing Business As) name. With a registered FBN, individuals or businesses may use trade names without the expense of creating a separate legal entity.

Choose a Location. Factors to consider: zoning for your type of business; affordability; whether the site is occupant-ready or needs renovation; proximity of complementary or competing businesses; availability of a labor pool you can draw from.

Apply for a Federal Employer Identification Number (EIN). Required, unless you are operating as a sole proprietor with no employees, in order to pay federal, state and local taxes. www.irs.gov/businesses/small

Register to Pay Federal, State and Local Taxes. Taxes include Federal Employment Tax (www.irs.gov), Florida Sales & Use Tax (dor.myflorida.com) and local Business Tax Receipt (Occupational License) and Tangible Personal Property Tax.

Secure the Necessary Permits and Licenses. Requirements vary depending on your business and the city/county in which you operate. For guidance and specifics, visit www.myflorida.com/dbpr and www.sunbiz.org.

Answer provided by Gray Poehler
Business Counselor, SCORE, Naples Chapter

 

How ready are you, really?
So you’ve long dreamed about opening your own business, but what does that mean? What exactly is your dream and how will you pursue it? Now is the time to determine your readiness for business ownership by answering these questions:

  • Why do I want to start a business?
  • What makes me think I can succeed in a business of my own?
  • What kind of business will this be — retail, service, manufacturing?
  • Will it be a brick-and-mortar operation or strictly online?
  • Will I operate from home, a storefront or office space I rent?
  • Will my customers come to me or will I go to them?
  • Do I have the skill/talent/experience to run this business, and if not, how will I acquire it?
  • Will I hire employees or go it alone?
  • How will I pay for this?
  • Where can I find help to get started and, later, to expand?

 

Register your business name online.
Registrations must be renewed every five years and re-registered if ownership of the name changes.
WWW.SUNBIZ.ORG

Your Business Plan

An effective business plan describes the nature of your business, how you plan to achieve specific goals for this business and the profits you expect to gain as a result. Typically, it consists of the following elements:

Executive Summary Highlight key strengths of your plan, including where you want to take your company and why your idea will be successful.

Company Description Make this your extended “elevator pitch” to help readers, especially potential investors, quickly grasp the uniqueness of your business.

Market Analysis Show that you understand your industry, target market, customers, competitors and pricing structure.

Organization and Management Describe your company’s organizational structure; introduce ownership and members of your management team.

Service or Product Line Emphasize the benefits you can provide to current and potential customers.

Marketing and Sales Explain how you plan to promote your product/service, create customers and boost sales.

Funding Request Lay out your current and future funding requirements, the intended use of any funds you may receive and types of funding you would prefer.

Financial Projections Summarize your projected income and expenses, past credit history, intended allocation of resources and other financial details.

Appendix Include supporting information/documents: your credit history; letters of reference; resumes of key managers; leases; licenses, permits and/or patents; list of business consultants (attorney, accountant, etc.); relevant research, magazine articles or book references.

 

Q

I know how to run my business.
Do I really need a written plan?

A

Yes … and I speak from personal experience. I thought I knew what was needed to ensure business success, and whatever I didn’t know, I would learn along the way. I was wrong and had I taken the time to develop a written plan up front, my failures would have been fewer.

The business plan serves as a road map to follow and is especially valuable when seeking outside investment. It’s not enough to say you know how to run your business; potential investors want to see your actual plans on paper, presented concisely and clearly written.

Ideally, your business plan should be no longer than 10 pages, including financial projections.

Some key questions to answer as you create the plan:

  • Do I have the necessary funds to cover startup costs and monthly operating expenses until I reach the point where income matches or exceeds outgo?
  • Who is my target customer and what value can I deliver to him or her? What customer needs or wants will I satisfy?
  • How will I reach my customers? What is my marketing strategy?
  • How much are my customers willing to pay? What are my pricing tactics?
  • What resources do I need to produce my product/service, deliver it to market and make a profit? What kind of infrastructure will that require?
  • What role will e-commerce play in my business? How will I generate online sales and deliver the goods?
  • Who is my competition and what advantages do they offer that I can’t?
  • Do I have a competent team in place — an attorney, accountant, insurance agent, etc.?

The process of creating a business plan causes you to think about all of these issues and formulate solutions to potential problems in advance. If you’re not sure how to write a plan, seek help from an experienced entrepreneur such as a counselor at SCORE or the Florida SBDC.

Answer provided by Gray Poehler
Business Counselor, SCORE, Naples Chapter

 

Tips for Creating a Better Business Plan

1. Package your plan in a loose-leaf binder. It’s easy to make revisions as conditions change.

2. Be thorough but concise. Tell your story with hard facts, not flowery language.

3. Do your homework. Identify your target market and address potential obstacles up front.

4. Use concrete facts to back up claims. “By pricing my product 20% below my competitor XYZ, I’ll recoup costs within six months.”

5. Make it personal. Introduce your management team and stress the specific talents each brings to this new venture.

I’m getting ready to hire staff for the first time, and I want to be sure that I comply with the laws pertaining to new hires. What forms do I need to fill out and what should I do first?

A

Before tackling the specifics of your question, let’s look at the big picture. One of your primary responsibilities as an employer is to pay each employee properly, according to his or her individual position and responsibilities. Federal law requires that most employees in the U.S. be paid at least the federal minimum wage (or the state-mandated minimum wage if higher, as it is in Florida) for all hours worked, and overtime pay at one and one-half the regular rate for all hours worked over 40 in a workweek. One other thing to remember: This law may apply to salaried staff as well as hourly workers depending on their specific job duties … which brings us back to your original question. Here’s a list of things you should do first:

Decide on the positions you need to fill. Set salaries and/or hourly pay rates for each, then determine who is/is not eligible for overtime. For guidelines, visit www.dol.gov/whd/ to download Fact Sheet #17A.

Create written job descriptions for every position. Spell out all job duties/responsibilities on paper and always include the phrase “other duties as assigned.” Require an employee signature on each document to protect against claims of “I didn’t know I was supposed to do that!”

Get your paperwork in order. First day on the job, new employees should complete the following forms: I-9 (Employment Eligibility Verification), W-4 (Employee’s Withholding Allowance Certificate). And within 20 days of hire, employers must complete a Florida New Hire Reporting Form at newhire.floridarevenue.com.

Hire out for payroll services. Don’t burden yourself with administrative chores. Find a professional to handle the nitty-gritty details of paying your employees, filing taxes, verifying eligibility for work, etc., so you can pursue the passion that drew you to open your business in the first place. It will be money well spent.

Answer provided by Christina Brown
Consultant, Florida SBDC at Florida Agricultural & Mechanical University

 

Labor Law: The Basics

Employment eligibility verification is just one of many state and federal laws business owners must abide by. The list below summarizes several others with websites for additional information.

Federal Labor Laws
Federal Minimum Wage Requires employers nationwide to pay a minimum wage of $7.25 per hour and overtime pay of not less than one-and-one-half times the regular pay rate after 40 hours of work per week. (www.dol.gov)

Occupational Safety and Health Act Requires businesses to protect their workers from health and safety hazards on the job. (www.osha.gov)

The Americans with Disabilities Act Prohibits employment discrimination against qualified individuals with disabilities; requires public accommodations and commercial facilities to comply with specified accessibility standards. (www.ada.gov)

Family and Medical Leave Requires businesses employing 50 or more to give certain employees up to 12 weeks of unpaid, job-protected leave per year (26 weeks for qualifying military caregivers) while preserving their health benefits. (www.dol.gov/whd/fmla)

Equal Pay Act Prohibits wage discrimination between men and women performing substantially equal work within the same workplace. (www.eeoc.gov)

state Labor Laws
Florida Minimum Wage Requires employers in Florida to pay a minimum wage of $8.46 per hour; for tipped employees, the minimum wage is $5.44 per hour.

Workers’ Compensation Requires employers with four or more employees (full- or part-time) to carry workers’ compensation coverage for their employees; different requirements apply for construction and agriculture. (www.myfloridacfo.com/division/wc)

Child Labor Workers under age 18 cannot work in certain hazardous occupations, including excavation, electrical work, roofing and mining, or around explosives, toxic or radioactive substances or dangerous equipment. Additional occupations are banned for children ages 14-15. Minors cannot work during school hours without an exemption.

Background Checks Private citizens or companies may request a state-only criminal history record check of an individual through the Florida Department of Law Enforcement website for a fee of $24 per case.
(www.fdle.state.fl.us)

Know Your Tax Liability

Big or small, every new business must pay state and federal taxes.

Florida
Corporate Income Tax Corporations and limited liability companies classified as corporations are subject to a 5.5% corporate income tax and must file a return annually (Form F-1120) even if no tax is due. Limited liability companies classified as partnerships must file a Florida Partnership Information Return (Form F-1065) if they are doing business in Florida and one or more owners is a corporation. Also required to file: the corporate owner of an LLC that is classified as a partnership for Florida and federal income tax purposes. S-corporations usually do not have to file a Florida corporate income tax return unless there is federal taxable income.

Reemployment Tax Floridians who paid at least $1,500 in wages within a calendar quarter, have employed one person for any portion of a day in 20 different weeks during the calendar year or are liable for federal unemployment tax must pay reemployment tax quarterly using Form RT-6.

Sales and Use Tax Businesses engaged in taxable transactions must register using Form DR-1 or at the Florida Department of Revenue’s e-file site. Businesses having $1,000 or less per year to report may file quarterly; $500 or less, semiannually; $100 or less, annually using Form DR-15.

Use Tax on Out-of-State Purchases When out-of-state sellers fail to collect Florida sales tax, buyers must make the payment on their own using Form DR-15MO. Applies to items purchased out of state from internet sites, mail order catalogs, auctions, shopping networks or toll-free shopping services, and to items physically purchased out of state when the merchandise is shipped to a Florida address.

Tangible Personal Property Tax An annual tax on personal property used for commercial purposes that is not included in the assessed value of the real property, excluding business inventory and state-registered vehicles; paid on Form DR-405 to the county property appraiser. All new businesses must file their first year; no additional filing is required thereafter if the amount of tangible property is less than $25,000.

Federal
Personal Income Tax For sole proprietorships and partnerships, profits and losses from the business are typically passed through to the owners and reported on their individual income tax returns. Beginning in 2018, some small business owners may be eligible for a 20% pass-through deduction. Officially known as the Section 199A deduction, this provision allows qualified small business owners to deduct up to 20% of business income from their personal income taxes. The requirements to qualify for this deduction are quite specific. Consult the IRS or a tax professional to determine if you are eligible.

Self-Employment Tax All net profits derived from doing business as either a sole proprietorship or partnership with no employees are subject to federal self-employment tax, which is equivalent to the Medicare and Social Security taxes employers withhold from their employees’ paychecks.

Q

I know I’ll need some money just to get up and running, but for what exactly, and how much should I allot?

AThe money you will need to get your business up and running falls into two general categories: startup costs and working capital. Startup costs are self-explanatory — simply the amount of money you will need to cover every expense required to open your business on day one. The exact costs you will need to plan for depend on the type of business you intend to start and on your business model; typically, however, they include: licenses, permits, site rental deposits, initial inventory, supplies and site buildout.

Working capital is the amount of money you will need to help cover expenses until your business reaches “breakeven” on a cash basis or, more simply stated, until total monthly sales pay for total monthly expenses. Since it usually takes several months for a startup business to reach breakeven, you will need to keep enough cash on hand to pay your monthly bills. Having enough working capital at your disposal gives your business the time it needs to grow and gain traction with your target market.

Before creating a business plan for your startup, you’ll want to create a financial plan. This will help you determine if your business can be financially viable and whether you will be able to access the money you need to get up and running. Strive to be as accurate as possible while still allowing for the unexpected. Your Florida SBDC consultant can help you right-size your expectations and guide you through the financial planning process to give your startup its greatest chance of success

Answer provided by Eddie Hill
Area Manager, Florida SBDC at the University of Central Florida

 

Get Your Free EIN

Every federal tax form must include the filer’s official federal ID number. Sole proprietors without employees may use their Social Security number; all others will need an Employer Identification Number. Get your EIN online at no charge from the IRS. www.irs.gov/businesses/small