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Small Business | SMALL TALK / KAREN E. KLEIN

Who Can Tell You What You Need to Know to Get Started

November 05, 1996|Karen E. Klein

Q What are the agencies and services, public and private, that will help a fledgling business develop a business plan, funding, marketing, promotion, tax strategies, etc.? Needless to say, my question is prompted by my own situation. After 20 years as a construction manager, an injury has necessitated a career change.

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A There are 30 Small Business Development Centers in California, five of them in the Southland. The centers, funded by the Small Business Administration, community colleges and local government agencies, provide regularly scheduled how-to sessions, workshops and one-on-one counseling for small-business owners and entrepreneurs at no or very low cost. Local chambers of commerce also provide help and referrals for business owners.

The Service Corps of Retired Executives, or SCORE, a volunteer group with chapters in Glendale and Santa Ana, provides advisors for small-business owners and low-cost workshops on a variety of topics.

A number of other nonprofit agencies, such as the Long Beach-based American Woman's Economic Development Corp., also operate in Southern California.

For-profit consultants who give marketing or start-up advice to business owners are plentiful. Referrals for business consultants can be obtained through the Small Business Development Centers or local chambers of commerce. For-profit consultants typically charge $75 to $150 an hour for their services.

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Q What do I legally have to do before I can open my own business?

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A First of all, before you apply for a business license or sign a lease, make sure that the proposed use for your property is consistent with city or county zoning. This is particularly true if there is an environmental issue in conjunction with your business, if you need special signage or parking or if you plan to manufacture a product. If you find out after the fact that your business is not permitted at the location you've chosen, it could be very costly to get a variance or special-use permit.

If you plan to use a business name that is different from your own, you must obtain a fictitious-business-name statement, available at the county recorder's office for less than $50. Without such a statement (often called a DBA, for "doing business as"), you cannot open a bank account for your business or cash checks made payable to it.

If you are selling a product rather than a service, you must collect sales tax, and you will need a resale permit from the State Board of Equalization. The permit entitles you to collect sales tax on behalf of the state and then forward it to the state on a regular basis. There is no cost for the resale permit, but once you get one, you will be liable for all the tax money you collect.

--Bill Fallon

Entrepreneurial Training Program manager

Valley Economic Development Center

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Q Do I need a business license?

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A If you are operating a business, you need a license from the city where your business is located. If you want financing from a bank or from a government loan program, or if you do business with any government agency, you must have a license.

In Los Angeles, a business license will cost you $75 to $125 annually. In unincorporated areas of Los Angeles County, you must get a county business license.

Some cities, such as Los Angeles and Burbank, require that if you do any business there, even if you are based elsewhere, you must have a license from that city. This means that if you want to take your goods to a trade show in Los Angeles, even if it's only for a few days, you will need a city of Los Angeles business license.

--Bill Fallon

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Q I'll be working out of a spare bedroom in my home. Do I have to complete all these requirements for my home-based business?

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A If you're working out of your home, zoning considerations are very important. At your local city hall, or at the Los Angeles County courthouse if you live in an unincorporated county area, you can find out what kind of zone your home is in and what kinds of restrictions apply there. For instance, commercial business signs are typically not allowed in a single-family residential zone. Some kinds of home businesses are not legal in residential zones.

We recommend that you obtain a business license even if you are starting a consulting firm or a typing service in your home. After all, a business is a business. Research shows you are more likely to be successful if you take the steps to make your home business legal and official. Local cities' fees vary widely, from less than $50 a year to a percentage of your gross receipts that may add up to more than $2,000 annually.

If you are a renter or you live in a condominium or development with a homeowners association, you need to check your lease or your association rules to find out whether home businesses are permitted and under what conditions. If your association or lease prohibits home-based businesses, you may be able to appeal or ask for an exemption.

Last, talk to a lawyer who is familiar with small-business start-ups. There are some legal restrictions on manufacturing certain products from home.

--Sarah Edwards

Author with her husband, Paul, of "Working From Home" and other books on home-based businesses.

If you have a question about how to start or operate a small business, please mail it to Karen E. Klein in care of the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or e-mail it to business@latimes.com. Include your name and address. The column is designed to answer questions of general interest. It should not be construed as legal advice.

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