can save yourself time and effort if you use one insurance agent for all your insurance needs. As well, discounts are available if you go through one company. Every two years or so sit down with your agent and go through your coverages. Are you paying too much? Has the value of your business or property gone up? Are you not properly covered for certain risks? Do a risk assessment review with him or her to make sure your business (and personal) needs are being met.
Attorneys
For all the lawyer jokes (and I tell a few myself), please remember that a good attorney can be a lifesaver for your business. From discussing the right entity choice and checking on name availability to handling the formation of the company and filing the required paperwork, your attorney is going to be a big help when you are starting out. You can use your attorneys to help you prepare the documents you will use when running a day-to-day business, including the contracts and agreements you’ll have with vendors and suppliers or customers. Your attorneys can assist you with proprietary information and intellectual property, protecting your ideas and filing for patents or copyrights and trademarks. If you have the misfortune of having a run-in with the government (as we’ll discuss ahead) an attorney specializing in such issues can be a very big help. As an overall strategy, for specialized advice, the attorney you choose should be well versed in the field or industry in which your business will operate.
Starting out, as with choosing an accountant, you’re going to want to ask friends and family and other business owners for recommendations and referrals, and interview attorneys to find one who will be right for you and your business. Your current banker, accountant or insurance agent, if you already have such professionals on your team, may be able to refer you to an attorney who’s right for you.
You also need to keep in mind the business license requirements for the type of business you’re starting up. (Recall our last case where Bobo and Morton weren’t properly licensed and were assessed large fees and penalties.) Almost every business you can operate requires a business license in the city in which you’ll be working. In some locations, you may also need to have a county and/or state business license. Each license requires an annual fee and some paperwork. Your attorney can help you with these requirements.
Accountants
Your accountant works with your books, with the finances of your business and your livelihood, so you definitely want to hire someone whose skills and judgment you trust. While you’re still starting up, your accountant can help you:
• set up your books and bookkeeping system.
• prepare the balance sheet and projected profit and loss statements needed for a business plan.
• advise you on quarterly tax requirements.
• help you set up financial timelines to assist with startup costs.
After startup, your accountant may continue to assist you with bookkeeping, payroll and financial management. At all times you want your accountant (and all your professional team members) to maintain matters in confidence. In the case of Bobo and Morton where the CPA’s assistant dubbed them the Hobby Loss Twins and spread word of their misadventures around town you have a serious breach of confidentiality. The assistant and his CPA firm could be sued for such behavior. I have many clients in smaller towns and rural areas who do not trust their local professionals to keep a secret. In many cases they end up using professionals in a larger metropolitan area.
With all your professionals make certain that confidences are maintained. Of course, a good professional will not have to be told this basic principle.
Your Business Name
Before incorporating you should check to see if the business name you want to use is available. There are three searches you must do.
1. Corporate Name
Whether you are forming a corporation, LLC or LP you will need to check and see if the name is available for use as an entity name. This involves visiting the website of the Secretary of State in the state you want to incorporate in and searching for name availability. (You should search for name availability for any state you want to qualify to do business in as well, as we will discuss ahead.) Also know that some states won’t allow certain words such as ‘financial’ or ‘insurance’ in the corporate name without having a special license in the field involved.
Be careful on this part of the search. States are very lenient in name availability, which is understandable since they want as many formations and filing fees to be sent in as possible. If the name is not a direct match, they’ll let it through.
So, for example, you may find that the proposed business name of your new computer consulting firm – Xcel Computing, Inc. – is available with the state. But what if there is another computer consulting business in your area named Xcel Consulting, Inc.? The state won’t mind. They want the fees. But will Xcel Consulting have a problem with your new name? Of course they will. There will be confusion in the marketplace and they will stand to lose business with you operating under a similar name. (Of course, you may benefit initially from the confusion. But if Xcel Consulting is not good at what they do eventually the negative word of mouth will be confused with your company, too.)
Xcel Consulting may have the right to send a cease and desist letter stopping you from using Xcel Computing. What if this arrives after you have spent $20,000 on a logo and signage and printing? You may be out that money. The point here is that you can’t rely only on the Secretary of State’s website for name availability. While they won’t allow you to form as Xcel Consulting because it is already directly taken, they will let you form Xcel Computing, even though that name will get you in trouble on several different levels. So we have to do some more searches.
But first, there is the issue of forming in a good state, like Nevada, and then qualifying to do business in another state like California. You should see if the name is available in both states. If it is not you have two choices for proceeding. One way, in our example, is to use another name in California. So if Nevada allowed Xcel Computing, Inc. but the name was taken in California you could qualify the company to do business in California under a different name. But technically your official corporate name in California would be fairly unwieldy: Xcel Computing, Inc. doing business in California as Xcel Consulting, Inc. Do you want to put that on every check and document? The second method is much easier: Find a name that works in both states.
2. Domain Name
Almost every business has a website nowadays. It is the new business card. It is a way for the public to review and gauge you. And in terms of building business credit many lenders will require that you have a website as an indicator of your seriousness towards business.
It is best if your domain name is identical to or at least very similar to your business name. As you probably already know, it is very easy to see if a domain is taken. Just type in
www.__________.com, with the blank space representing the name you are considering. With so many domain names taken, if it is clean and the exact name you want, it may make sense to buy it right then. Even if you change the name later you have only spent $20 or so to tie it up.
3. Trademark Search
The trademark search is the most important search you will conduct. This is because a trademark trumps a corporate name and a domain name. A trademark is king of the hill here.
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