Starting a small business is never easy and in this economy most people will look at you like you are crazy. You are greeted with cries of: “Are you crazy?” “Must be nice to have so much money now!” “Why would you start something new in the worst economy in recent memory?”
Yes, you are shaking your head in agreement as you read this because you know it’s true. What you don’t know is that it’s also a difficult time for your attorney. I have seen 100+ member law firms close down and solo practitioners worry how to pay the overhead in the past year. No one is making money now (except banks hoarding our tax dollars and not loaning it back to us) but don’t let that deter you from realizing your dream of starting a new venture. So here are some practical tips to get you going through self-help because if you call your lawyer, you will be billed from the first second.
1. Naming your business: A catchy name is “key” to attracting new customers/clients but chances are someone else has already thought of the same thing. Now, while you cannot copyright names, you don’t want to infringe on someone else’s trademark or service mark, which is a whole other ballgame. Why walk into a lawsuit before you even leave the gate. The Patent and Trademark Office’s website is very user friendly. It allows you to search their database for active and expired marks and it details the status of marks and/or applications. Do this for yourself and save the legal fees for such a search.
2. Operate as a d/b/a (doing business as) – this may be a good way to get your feet wet before the idea flies. It will allow you to open a bank account and conduct business in your company name even if it is just an alias for you personally. Anyone can operate as a d/b/a, generally, by filing an application for such at your county clerk ‘s office. The requirements will vary by locality but in NYS you must obtain such a certificate if you are going to conduct business under a name other than your own. You must conduct a name search to make sure it is not taken and there are certain words which may not be included in your new name (i.e. – State Police, Savings, Bank and Lawyer, unless you are so licensed as such an entity) However, this is usually a one-page application and is very easy to fill out. The filing fees vary by county so be prepared to fill out the form and bring an accepted form of payment for the fee.
3. Protect your personal data – in order to open a bank, obtain vendor credit and assorted other business transactions under this new d/b/a, you may be required to provide a taxpayer identification number to a third party. That could be dangerous if you have to give them your social security number. So, why not obtain a federal EIN #? It provides budding entrepreneurs with some protection by giving them a new tax identification for the d/b/a. You can easily apply for the number online at the IRS website. (again, you don’t need a lawyer)
4. d/b/a certificate not the same as a license – A d/b/a certificate merely sets up a fictitious name for a person or corporation; however, it does not allow the person or entity to operate in any field they desire. For example, in Westchester County, you must obtain a permit to be a licensed home improvement contractor. Setting up a d/b/a as “Hank’s Happy Home Repairs” is not sufficient. In other words, check what type of licenses may be required by federal, state or local authorities to operate your business before actually conducting such an operation. A visit to the Secretary of State’s website for your state and/or county may be a good place to start.
5. Legal fees can be manageable – Now I know for a fact that most lawyers won’t admit this but they would much rather work with a client who can pay than one who signs an hourly retainer and then leaves the attorney high and dry, chasing down collections. So there are two ways to skin a cat. If you find that having an attorney hold your hand through your start-up process, and even the eventual management of your business affairs, is something that will make you sleep better at night, then inquire as to whether or not your attorney will accept a flat rate for payment. This will allow you to budget for services rather than be charged an hourly rate where you incur fees for every phone call and email. In other words, ask your attorney if she will accept a flat rate for a given service (i.e. – filing the d/b/a certificate; obtaining the EIN #; drafting new contracts for your business). Most attorneys may agree to this method of retainer provided you pay up front for the service, which is customary.
Now, go forth and prosper and remember which attorney here gave you the free advice!