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Small Business | IN BOX

Getting the Legal Papers for Start-Up

July 12, 2006|Karen E. Klein | Special to The Times

Question: I work full time and make gift baskets on the side, which I would like to try to sell at a street fair. What legal documents do I need?

Answer: If your goal is to make extra money and see how popular your products are, you could strike a deal with a street vendor to sell your baskets on consignment.

If you are serious about establishing a business, start by registering a fictitious business name -- also called a DBA, or "doing business as," filing -- with the county clerk's office.

You also will want to establish a merchant bank account for your company, so you can separate your personal and business finances for accounting and tax purposes.

Be sure to keep careful records of your start-up expenses, advises Frank Stokes, a small-business consultant at Stokes Pacifique Associates of Los Angeles.

Next, you should get a business license or tax permit from the city in which you will be operating and apply for a seller's permit. In California, an application for a seller's permit can be obtained from the state Board of Equalization. Information is available at www.boe.ca.gov/info/reg.htmsales.

Periodic sales-tax filings and deposits are required for all vendors, whether wholesale or retail.

If you decide to launch your business, you will want to register an Internet address (also called a domain name) to sell products online. Do that quickly, or else a speculator could spot your DBA filing and register the domain first, hoping you will later pay an exorbitant price for it, Stokes warned.

You also will want to set up a legal structure for your firm and write a business plan that sets up the milestones for transitioning from full-time employment to owning your own full-time business. The U.S. Small Business Administration has extensive information for new business owners at www.sba.gov.

Never Too Late to Write Your Business Plan

Q: I never wrote a business plan, but my company took off without one. Now I've hit a rough patch with reduced cash flow and almost no profit. How do I get back on track?

A: The reason a business plan is so important is that it lays out a road map to help navigate through difficult stretches like the one you are experiencing.

It's never too late to go back and develop a business plan, but if you can't do that immediately, you should at least write a simple, one-page growth plan, said Ken Keller, a Valencia-based small-business consultant at STAR Business Consulting Inc.

The growth plan should be action-oriented and should set realistic and measurable goals, he said.

"When we hit tough times, the tendency is to spend time wondering 'What went wrong?' instead of 'Where are we going now, and how do we get there?' " Keller said. "Plans are great, but execution is more important -- and that is where most businesses fail."

You can find sample action plans online at www.onepagebusinessplan.com.

Your second step, Keller said, should be to find a peer group of fellow business owners "that has accountability as a component of its programs." He recommends Renaissance Executive Forums, www.executiveforums.com.

The next step he suggests is to make a commitment to improve your business skills through entrepreneurial education. Although you don't need to take a formal course, you can gain enormous savvy by reading business books and watching DVDs on entrepreneurship. Another avenue is to attend workshops or seminars offered through groups such as the government's Small Business Development Centers, www.sba.gov/sbdc.

"If we don't improve as individuals, our businesses won't improve either," Keller said. "Sooner or later you will hit a stretch of slow sales, and you will have to deal with it using the same set of tools you have now."

Got a question about running or starting a small enterprise? E-mail it to karen.e.klein@latimes.com or mail it to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.

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