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| Regional and Area Office Alliances > Region IV > Small Business Tool Kit > Chapter 2 |
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| SMALL BUSINESS TOOL KIT |
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CHAPTER 2 START-UP GUIDELINES A. REGULATIONS AND PERMITS When determining what licenses and permits are required for your specific business, it is essential to determine what federal, state; county and city requirements must be met. This information should be obtained very early in the research process to determine if a particular type of business is allowable in the area you are considering. Most every person, firm, company, corporation or association engaged in any business, vocation, occupation or profession must obtain a state license, as well as a county license when required. Title 40-12, Code of Alabama, 1975 covers state license requirements. Additionally municipalities issue business licenses to do business within their limits. Authority of municipalities is covered in Title 11-51, Code of Alabama, 1975. Alabama Department of Industrial Relations, Labor Market Information Division, maintains a website on the "Alabama Comprehensive Labor Market Information System (ACLMIS) that provides detailed information for all Alabama Occupational Licenses. Go to ACLMIS website, and click on Occupations. The next screen will provide access to Occupational License Information. The Alabama League of Municipalities provides a listing of the professions that municipal clerks must verify the possession of a state license before they may issue a local license. Any questions concerning privilege license laws or store license laws should be directed to: Alabama Department Of RevenueOn the following page is a reference list of agencies and their phone numbers that you can contact to obtain specific information on permits and regulations relating to your particular business. In addition to this list, it is recommended that entrepreneurs engage the help of a lawyer, preferably a lawyer familiar with the process of starting new businesses. The legal counsel could prove to be invaluable in determining the proper licenses and permits that will be required. B. RESOURCE AND AGENCY REFERENCE LIST
C. ACCOUNTING & RECORDKEEPING For the individual just going into business, experience clearly indicates that an adequate record keeping system helps increase the chances of survival and reduces the probability of early failure. Similarly, for the established business owner, it has been clearly demonstrated that a good record keeping system increases the chances of staying in business and of earning large profits. It is practically impossible to negotiate for a business loan from a bank without properly prepared financial statements. It may even be difficult to secure credit in any form without statements. Bankers and other credit grantors need to study the business owner's balance sheet and income statement in order to decide whether credit should be extended. Sometimes audited financial statements are required; the record keeping system must provide the basis for these statements. Requirements by federal and local government agencies for adequate records are as important as the management and credit importance of financial statements. The responsibility for maintaining records and proving their accuracy falls on the taxpayer. Federal and local income taxes, payroll taxes, sales taxes, personal property taxes, and an increasing number of other laws and regulations require certain reports that are easier to prepare and substantiate if the figures are organized by a good record keeping system. Records backing up government requirements must be available during the audit period. Record retention will depend upon the statute of limitations set forth by local and federal law. It is important to consult an attorney to determine the requirements of governing statutes. Due to the cumulative volume of required records, storage and retrieval can become burdensome. Many business owners are microfilming their old records and microfilming service centers are being called on to solve this problem. A number of "one-book" record keeping systems are available. Some are prepared with instructions and forms designed for specific kinds of businesses, while others are for small business use in general. Some trade associations, manufacturers and wholesalers offer specially designed record keeping systems to meet the general needs of a large variety of retail and service establishments. The owners of a business will often find it desirable to obtain specialized assistance to help them adapt such systems to their special requirements. There are several copyrighted systems providing simplified records, usually in a simplified record book. These systems cover the basic records with complete instructions for their use. The Small Business Administration (SBA) has a publication, FM10 "Record Keeping in Small Business," that lists many of these systems. Copies of this publication may be obtained from the SBA. In order for a record keeping system to be useful it must be simple to use, easy to understand, reliable, accurate, consistent and designed to provide information on a timely basis. To keep effective records you must be able to:
Public accountants also render other accounting services such as auditing, preparation of reports for government agencies, tax planning, analysis of financial reports and a variety of specialized management advisory services. ACCOUNTING SYSTEMS Computerized accounting is the way most accountants do your monthly books each month. If you desire to do your own books, you should consider an accounting program for your record keeping. There are several good accounting programs available at office supply retailers. Accounting systems range from simple and inexpensive to powerful and rather costly. Some of the available options include the one-write system, a ledger-less system for accounts receivable and accounts payable, standard ledgers and journals, prepackaged services provided by banks and service bureaus, bookkeeping services, and accountants. With this wide variety of options it is important to choose a system that you can understand and feel comfortable using. The accounting system you choose should meet the needs of your business situation and at the minimum meet the following objectives:
D. INSURANCE Some small business owners view insurance as if it were some form of tax. They recognize that it is necessary but consider it burdensome. However, if used correctly, insurance can contribute to the overall success of your business by reducing the uncertainties under which you operate. It can also reduce employee turnover, improve your credit at the bank, make it easier to sell to customers on favorable terms and help keep your small business going in case an insured peril interrupts your normal business operations. It is sensible for any business to purchase a number of basic types of insurance. The importance of good insurance management is too important to overlook. Therefore, it is essential that you discuss your insurance needs with an agent of your choice as early as possible. Insurance Checklist ____Fire Insurance ____Liability Insurance ____Automobile Insurance ____Workers Compensation ____Business Interruption Insurance ____Crime Insurance ____Glass Insurance ____Rent Insurance ____Employee Benefit Coverage ____Aviation Insurance ____Group Life Insurance ____Business Life Insurance ____Group Health Insurance ____Disability Insurance ____Retirement Insurance ____Key Man Insurance ____Marine and/or Inland Marine ____Boiler and Machinery ____Flood Insurance Insurance matters are addressed in two SBA publications: MP-20- "Insurance Options for Business Continuation Planning", and MP-28- Small Business Insurance and Risk Management Guide". Both of these are available on-line at the SBA Library site.
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