Making life better in disadvantaged communities - our thoughts on everything - from Spirit Lake Consulting, Inc.
You are not logged in.
If a person has a business they would like to start or have been thinking about starting what is the first step in applying for Federal recognition. Does it make a difference if they want to apply for non-profit status or not.
How does the IRS get involved in my business, etc.
Can anyone help me?
Offline
Yes, it does make a difference if you want to apply for non-profit status or not.
There is a two page article here in the Business Briefs section
http://www.spiritlakeconsulting.com/leaders/briefs.html
that can give you a lot of information on how to start a new business.
Offline
I have read really varying statistics. The most quoted one is that 80% of small businesses fail in the first five years. I recently read an article that said this was not true because more than 80% of the small business on a registry kept by the U.S. Department of Commerce were in business five years later. I think that study really overestimates how many businesses succeed, though, because I know many, many businesses that come and go without the Department of Commerce ever being aware they exist - someone starts a babysitting business and does not make enough money and goes back to work, someone else sells beadwork or handmade dolls at swap meets or pow-wows. I see businesses open up and close a couple of months later because they did not know they needed to get a health inspection, a liquor license, are in an area not zoned for commercial businesses or some other reason.
You are smart to be thinking about the IRS. I think one thing that can really hit small businesses up side the head is if they have not set aside money for corporate taxes, self-employment tax for an individual, or payroll taxes if you employ people. You also have to pay sales taxes. I can see a small business ending up owing the IRS tens of thousands of dollars if they are not aware of their tax obligations. My recommendation would be to hire a good accountant. If your business is really small, it probably won't cost you more than a few hundred dollars a year, that you would save over and over in tax penalties you won't have to pay. Also, you can then spend your time running your business and not doing the books, not to mention the extra peace of mind.
Offline
I have seen really hard-working people fail in business because they had not thought it all the way through. They didn't have enough money to live on until the business started making money. Or they opened a business in a place where there weren't that many customers. I knew someone who rented a place for their store because the rent was really cheap but it was really out of the way for anyone to go. They had almost no customers and they ended up going out of business.
Another person I knew opened a cafe and she was a really good cook but she didn't get many customers. I think she just did not spend money on advertising so not that many people knew about her place. She thought people would tell their friends and that would bring people in. That might have worked after a while but she was losing money and had to close.
From watching my friends, I would say it is really important to have it thought all the way through before you start.
Since I read this yesterday, I started noticing the businesses I drive by and thinking how long they have been there. A lot of the businesses, like KFC or McDonalds or the bars have been there a long time. They might be owned by different people who replaced ones who went out of business. I really wouldn't know. When I think about the businesses I drive by all the time it seems like some come and go but most of the same ones have been there for years. More like 80% of them have been there for years. I don't know about business like plumbers or mechanics working out of their backyard or people like that. More of them might go out of business.
Of the few people I know who started businesses, about half did okay and the rest went out of business and got another job or just didn't do anything after that.
I think being professional is important as well. Not just with your clients, but in the way you handle the day-to-day. A lot of people think they will go into business for themselves and it will be easy. But you have to put the same amount of work into the business- actually more- than you do at any other job.
I run a small business out of my home and while it's tempting, you can't sleep in until noon just because you are home. You can't let yourself get distracted by the things that need to get done around the house when you are working. It took me a few months but learned to separate "home time" from "work time" and don't let myself be distracted just because I am at home.
Another thing is you have to sometimes start out offering incentives for people to try to do business with you. By this, I mean, sometimes when I am doing a project for the first time for a new client, I will do it for a lower rate than I might have charged at my old job. I have learned that this does, however, pay off. In all of those cases, I have done a good job and then gotten repeat business and been able to slowly up my rates as I went along. I do this because being a start-up home business, I have to give people a reason to try my services. If I charged the exact same rate as an established business, they would likely go to the established company because they have been around longer. If I will do it for a little less, but can then prove that I can do it as well as anyone else, then it at least gets people to look at your business. Another note with this though is that I tell clients up front that I will give them a break initially and then will offer my services at competitive rates and will negotiate with them about prices. Otherwise, they'll use you the first time and then feel like you are running up the rates on them without telling them and they might get upset.
Those are just some of my thoughts on what I do in the early stages of my business as I am getting it off the ground.
The reason people fail in business is simple, people. Ask yourself how good you are with people. Are you going to think that you will be the big boss and you will just have other people around you do the work. A plumber or carpenter might by good at the job but then he goes and hires a couple of workers and he isn't getting up and seeing the customers anymore. He is staying oyt at the bar late at night thinking aw my workers can take care of the work in the morning. After a while the business goes down hill or thew workers quit and he's wondering what happened.
Starting a small business includes so many different responsibilities. That is what keeps it interesting for me but it is also a challenge I was not really thinking about when I went into business. It's like an article I read on a small business website the other day. The person said that when they worked for a big company there was someone who ordered office supplies. He never had to do it himself. He never had to set up a business account to have office supplies delivered, get on the computer, pick what he wanted and order it. He just went to a supply desk, filled out a form and they handed him whatever he wanted. He didn't have to buy a computer, a copy machine, copy things himself, get insurance and 1,000 other things. Running your own business can be exciting and even fun but it is sure a lot more work than most people realize they are signing up for.
As far as starting a small business, does anyone know how to apply for goverment grants particularly if you are a woman looking to open your own business?
Offline
I don't think there are really any grants out there to start up your own small business. I think it is a big fake like everything else you see on TV at 3 in the morning. Free government money waiting for you my a$$. I don't know anybody who has gotten any grants to start a business. Does anyone else out there?
Another thing, am I the only one who thinks that disadvantaged business thing from SBA is a huge pain in the a$$ What a bunch of crooks. I don't see how anyone could ever get that application done without paying someone who that is all they do all day. I bet that is what people from the SBA do after they retire.
I agree with Joe. I see these ads frequently on 'free money' and government grants that are unclaimed. For over 20 years I have been involved in grantwriting and been in business and I know of very few grants that go unclaimed. In those very rare cases it is because what the agency wants for the amount of the grant is outrageous, e.g., you need to fill out 20 pages of forms to get $500 which you only get after you have done some enormous project on which you spent $10,000 and after you send them all the receipts and ask for it 11 times on the appropriate forms they send you a check for $500 two years later. You'd get the money quicker working at McDonalds.
All of the grants that I have ever seen for any noticeable amount of money require a lot of work to get. On top of that, I don't know of ANY grants to start a business. There are loans available to start a business, but more often you won't qualify for a loan unless you have been in business for a while. Remember, banks are interested in loaning money to people who seem likely to be able to pay it back.
Offline