Small Business Checklist and Legal Requirements
Starting a small business? Make sure you've reviewed each of these important steps.
Click on each link below to expand that step for more detailed information.
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This is the first crucial step to begin the process of starting your business. Many small
businesses fail because the research and strategy necessary to start the business does not happen.
It is important to select the right industry that meets your needs, not only because it is something
you are interested in, but also because it is something that reflects your experience, management style,
leadership, background and specialty.
As you consider the business you’d like to start – visit the following Web sites for further
information:
Is Entrepreneurship For You?
Discover if You are Really Ready
Small Business Quiz
Consider attending BizLaunch’s free monthly Starting a Business Workshop.
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The business plan (BP) is a living, breathing document – and can be the very reason whether your
business will succeed or fail. The BP consists of the how, when, where and what you need to do to successfully, start and operate your business. Unfortunately, many start-ups skip this crucial step in their quest to get started in business.
Get a business plan outline from the SBA
The BP is used to ensure that the assumptions made regarding your industry type are completely
accurate. It is developed first for you: the entrepreneur. It may also be needed if you will secure
leased retail or commercial space. It is also needed if you will acquire capital from a financial
institution. The length of the business plan varies depending on the complexity of the businesses
industry. Typically a plan will range from 10 – 20 pages.
Can you write the plan yourself? YES!
BizLaunch offers Business Plan Workshops
The Arlington County Public Library offers free business databases (accessed via your library card)
which can assist you in identifying the latest market trends, competition, opportunities and more.
The business databases include: RefUSA, Business & Company Resource Center & ProQuest. Visit the
Arlington County Library Web site.
SCORE counselors are available at the BizLaunch offices to help critique the elements of your business plan.
Schedule an appointment.
Web sites featuring free sample business plans:
BusinessPlans.com,
MoreBusiness.com,
BulletproofBusinessPlans.com, and
CCH’s Business Owners Toolkit.
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A business never can have too much capital. Your business plan (see Step 2) will determine how much you’ll need to start and
manage your business successfully. Include financing for unforeseen circumstances such as business continuity
planning or other potential business emergencies.
Common Forms of Capital Sources for a Small Business Start-Up:
- Personal Savings
- Friends & Family
- Traditional Lending
- Commercial Lending
- SBA Guaranteed Lending
- Venture Capital
....be sure to shop around for a financial institution that lends to small businesses in your industry
sector.
Before you set up an appointment with a lender, be sure you can answer the following questions:
- Can the business repay the loan? Is cash flow greater than debt service?
- Can you repay the loan if the business fails? Is collateral sufficient to repay the loan?
- Does the business collect its bills?
- Does the business control its inventory?
- Does the business pay its bills?
- Are the officers committed to the business?
- Does the business have a profitable operating history?
- Does the business match its sources and uses of funds?
- Are sales growing?
- Does the business control expenses?
- Are profits increasing as a percentage of sales?
- Is there any discretionary cash flow?
- What is the future of the industry?
- Who is your competition and what are their strengths and weaknesses?
Questions to Ask the Lender
Ask the bank to confirm the terms and conditions of the loan in writing, and carefully analyze them
before you sign any agreement. These details should include:
- The amount you are borrowing;
- The interest rate you will be charged;
- Details of other charges the bank propose to make;
- How and when you should make the repayments;
- Any security required;
- Any arrangement fee to cover the costs of setting-up the facility and finalizing the security
arrangements;
- When the loan will be reviewed;
- What sort of circumstances will trigger an early review or repayment; and
- What minimum information needs to be provided at a review.
It is also recommended to ask the following questions when you wish to borrow from your bank:
- How much in total will the loan cost me?
- Are there any penalties if I repay the loan early?
- How are my other loan packages affected?
- Could you transfer money between my accounts without asking me?
- Under what conditions would you be able to call in the loan?
- How long will it take to obtain this loan?
- Can I receive a grant for my business?
If you are a non-profit organization, you may be able to obtain grants.
If you are opening a for-profit business, the likelihood of securing a grant is remote.
Obtain a list of current
financial institutions with contact names of organizations participating in
the SBA’s financial programs. You’ll also find the current ranking of lenders working with small businesses here.
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The Virginia Department of Professional and Occupational Regulation (DPOR) regulates more than
30 occupations and professions through 19 boards composed of practitioners and citizens appointed
by the Governor. DPOR licenses or certifies over 300,000 individuals and businesses ranging from
architects and contractors to cosmetologists and professional wrestlers.
If you believe your industry sector is regulated by the state, visit
DPOR’s Web site. You’ll be able to download
the appropriate forms and register for certification courses.
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The location of your business is extremely crucial to the success of your business. There are 3 types of zoned business
locations in Arlington: home-based, retail or
commercial.
Home-Based Business
If you are planning to start a business in your home you must
fill out a
home occupancy permit through the Arlington County Zoning Office as well as a parking space
disclosure. There is no additional cost associated acquiring a home occupancy permit.
Note: If you reside in an apartment building, check with your leasing agent to ensure there are no
restrictions on operating a business out of your rental unit.
If you need to lease space in Arlington it is highly recommended you speak with Arlington Economic
Development, hire a broker and start six months to one year in advance. Space in Arlington can be highly competitive.
Before you speak with a broker, make sure you know how much space you need and the amount you can
afford per square foot. This is where the business plan comes in handy!
Retail Business
Construction Permit
When do you need a Permit?
The Permit Process (PDF file; Adobe Acrobat required)
Certificate of Occupancy
Signage
Does your business involve food?
Click here
Commercial Business
Construction Permit
When do you need a Permit?
The Permit Process (PDF file; Adobe Acrobat required)
Certificate of Occupancy
Signage
ADA Requirements
As a small business owner, you will need to familiarize yourself with the American with Disabilities Act (ADA). There are certain federal requirements in the
build out and maintenance of both commercial and retail locations.
Please review the small business publication on the ADA Web site to ensure that your
business complies with ADA requirements.
Recycling
A business is required by law to recycle the two recyclable materials it generates in the greatest
quantities. They must submit a recycling plan with Arlington's Department of Environmental Services within thirty days of receiving a Certificate of
Occupancy and have an operational recycling program in place within ninety days. Forms are available
online. If a business qualifies for a Home Occupancy Permit, it is exempt from this requirement. For
additional information contact:
Department of Environmental Services Solid Waste Division
4300 S. 29th Street, Arlington, Virginia 22206
703-228-6570
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An Employer Identification Number (EIN) is also known as a federal tax identification number, and is
used to identify a business entity. Generally, businesses need an EIN. You may apply for an EIN in
various ways, and now you may also apply online. If you apply for an EIN online or by phone
the entire process will take approximately one week. If you apply by mail, the process may take four to five weeks.
For more information visit the
Internal Revenue Service to see if you should apply and how.
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In the United States there are 4 major types of business entities you can form for your business:
- Sole Proprietorship
- General Partnership
- Limited Liability Partnership or Company
- Incorporation
Sole Proprietorship: The vast majority of small businesses start out as sole proprietorships. These
firms are owned by one person, usually the individual who has day-to-day responsibility for running the
business. Sole proprietors own all the assets of the business and the profits generated by it. They also
assume complete responsibility for any of its liabilities or debts. In the eyes of the law and the public,
you are one in the same with the business.
Partnership: In a partnership, two or more people share ownership of a single business. Like
proprietorships, the law does not distinguish between the business and its owners. The Partners should
have a legal agreement that sets forth how decisions will be made, profits will be shared, disputes will
be resolved, how future partners will be admitted to the partnership, how partners can be bought out,
or what steps will be taken to dissolve the partnership when needed. Yes, it’s hard to think about a
"break-up" when the business is just getting started, but many partnerships split up at crisis times and
unless there is a defined process, there will be even greater problems.
General Partnership: Partners divide responsibility for management and liability, as well as the
shares of profit or loss according to their internal agreement. Equal shares are assumed unless there
is a written agreement that states differently.
Limited Liability Partnership: "Limited" means that most of the partners have limited liability
(to the extent of their investment) as well as limited input regarding management decisions, which
generally encourages investors for short term projects, or for investing in capital assets. This form
of ownership is not often used for operating retail or service businesses. Forming a limited partnership
is more complex and formal than that of a general partnership.
Limited Liability Company: The LLC is a relatively new type of hybrid business structure that is
now permissible in most states. It is designed to provide the limited liability features of a corporation
and the tax efficiencies and operational flexibility of a partnership. LLC's must not have more than two of the four
characteristics that define corporations: Limited liability to the extent of assets; continuity of life;
centralization of management; and free transferability of ownership interests.
Corporation: A corporation, chartered by the state in which it is headquartered, is considered by
law to be a unique entity, separate and apart from those who own it. A corporation can be taxed; it
can be sued; it can enter into contractual agreements. The owners of a corporation are its shareholders.
The corporation has a life of its own and does not dissolve when ownership changes.
To register and organize your business in the Commonwealth of Virginia, visit the
Virginia State Corporation Commission.
The State forms may be found
here.
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Your trade name is what makes your business “uniquely” you. A "Fictitious Trade Name" is required to be filed when a business is operating
under an assumed name. If the company is incorporated with the State of Virginia and is doing business in
Arlington County under the corporate name, the company does not have to register the name at the County level.
If the company is incorporated in a different state, then it must register with the State Corporation
Commission in Richmond Virginia as a foreign corporation.
There are three types of Fictitious Trade Name applications:
- Individual
- Partnership
- Corporation
If a company is incorporated with the State of Virginia and is doing business in Arlington County
under a fictitious name, the Company must register the fictitious trade names with the County.
The Commissioner of Revenue issues your trade name. To apply for a trade name click here:
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The Business License is the way you pay for your local taxes.
Business License Tax
The Commissioner of Revenue assesses Arlington County business privilege license taxes on business conducted in Arlington County, including
home-based businesses. Applications for licenses must be filed by March 1 of each year beginning on the first day a business commences operations.
Business Tangible Personal Property Tax
Arlington County levies a tax on tangible personal property located in Arlington on January 1 and
used in a trade or business. This includes items such as furniture, fixtures, machinery, tools, and
programmable computer equipment. Businesses must itemize personal property and/or equipment, giving its
date of acquisition and original purchase price. You must file a return by May 1; payment is due by
September 15. Business tangible personal property tax is not pro-rated if you should cease business
during the year.
Other Business Taxes
The following taxes are levied on industry specific activities:
Short-Term Rental Tax applies to certain rental businesses such as video rental stores.
Transient Occupancy Tax applies to hotel, motel, or tourist home room or space rentals.
Meals, Food, and Beverage Tax must be charged by a seller for prepared foods sold in Arlington.
Obtain local tax forms here.
Note: Don’t forget to file your state and federal taxes! This is where you accountant will come in
handy.
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Besides your attorney and accountant, another professional you will need to bring into the start-up
process will be your insurance agent. It may be helpful to have one agent who can handle all of your
insurance needs. There are policies available that are specifically designed to cover small businesses
that, in one package, will cover most of your insurance needs. Insurance is not only going to be
important to you but it will be important to your other business relationships. For example, if you
choose to lease office space, the landlord will typically require that you furnish a certificate of
insurance or be listed as an additional insured on your policy as assurance that your business will not
disappear overnight in the event a loss occurs.
Types of Business Insurance:
- Business property insurance (buildings, loss of income, earthquake and flood)
- Liability insurance (personal and advertising injury, fire legal liability, products and completed
operations, medical expense or pedical payments, and general liability for your premises)
- Worker's compensation insurance (See information below)
- Other insurance coverage (auto coverage for company vehicles and health insurance)
- Excess liability coverage
- Employment practices liability coverage
- Life insurance
- Workers' Compensation
Any employer who has three or more regular employees is required to furnish workers' compensation
insurance coverage at no cost to the employees. The employer may either purchase the insurance through
a private insurance company or apply to the Workers' Compensation Commission to be a self-insurer.
For additional information contact:
Virginia Workers' Compensation Commission
520 King Street, Suite 203
Alexandria, Virginia 22314
703-518-8055
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Many small business owners decide as part of their marketing strategy to offer their goods and
services to the local, state and federal government.
Local Contracting
Arlington County Government is a Central Purchasing Agency.
Register your business to receive e-mails regarding upcoming business opportunities for your business.
State Contracting
The Commonwealth of Virginia as well as many local jurisdictions in Virginia use the
state’s purchasing engine. The Commonwealth
spends approximately $8 billion a year in the purchase of goods and services. There is a fee to
participate in this service.
Federal Contracting
The Small Business Administration
offers an excellent Web site to help create your business development strategy.
Register your business on CCR for even more federal opportunities.
Additional Resources:
The Procurement Technical Assistance Program (PTAP) will work with you to answer bids for free.
They are a part of the Mason Enterprise Center and the Defense Logistics Agency.
Click here for more information on this free program.
If you would like to find other current Federal opportunities visit:
fedbizopps.gov
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Arlington Employment Center
One of Arlington’s best kept secrets for business owners is the Arlington Employment Center.
This Arlington County department can help you find the right employees without paying a fee.
Click here to learn more.
Workforce Services – State of Virginia Programs
The Workforce Services division of the Virginia Department of Business Assistance provides customized
recruiting and training services to companies that are creating new jobs or experiencing technological
change. With strong support from the Governor and the General Assembly, Workforce Services' programs are completely state-funded.
Learn if you’re eligible to benefit from Workforce Services Programs.
If you are hiring employees, remember that you’ll have to pay the state an unemployment tax. For more information contact the
Virginia Employment Commission,5520 Cherokee Avenue, Suite 100, Alexandria, VA (703) 813-1300.
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Many times an entrepreneur is so focused on the first 13 steps of the checklist that they forget to
develop a marketing plan. It is essential that you have a strategy to market your business to your
targeted audience.
Click here for sample marketing plans:
Plan 1
Plan 2
Web sites which give an overview on marketing initiatives:
SBA Web site
CCH Small Business Toolkit
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