V I S I T U S AT W W W. B I G S K Y E C O N O M I C D E V E L O P M E N T. O R G
NEW BUSINESS
Startup Kit
Everything your business needs to
get started in Yellowstone County.
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our integrated cloud computing services you get the scalable computing platform
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The solution to this problem is your password at ultimateproblemsolver.com.
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N E W B U S I N E S S S TA RT U P
N E W B U S I N E S S S TA RT U P
L E T T E R F R O M E X E C U TI V E
D I R E C TO R S T E V E A RV E S C H O U G
TA B L E O F CO N T E N T S
BILLINGS: OPPORTUNITY
Step 1
E N T R E P R E N E U R S H I P A N D S M A L L B U S I N E S S D E V E LO P M E N T
are vital to the success of economic development in Yellowstone County.
Big Sky Economic Development believes that entrepreneurs are crucial
for a thriving community and economy. The investments they create for
Yellowstone County are immeasurable.
Our economic system is based upon free enterprise and the right of each
person to take the risk, follow a dream, and open his/her own business.
The enclosed information, compiled by Big Sky Economic Development, is
designed to answer many of the questions that arise when someone begins
the process of opening a new business.
Is Entrepreneurship for You?
W H AT I S A N EN T R EP R EN E U R ? . . . . . . . . . . . . . . . . . . . . .
I S EN T R EP R EN E U R S H I P R I G H T FO R YO U ? . . . . . . . . . . . .
T H E N E W B U S I N E S S C H EC K L I S T . . . . . . . . . . . . . . . . . . .
Step 2
STEVE ARVESCHOUG
Executive Director,
Big Sky Economic Development
Planning Your Business
BUSINESS PL AN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F E A S I B I L IT Y S T R AT EGY . . . . . . . . . . . . . . . . . . . . . . . . . .
Owning and operating a business can be challenging. It requires dedication,
patience, a variety of skills, and money. Big Sky Economic Development
has worked to gather this information for small businesses to support the
desire of entrepreneurs to follow their dreams. Please take the time to
read the material and use it to your advantage. Knowing how to handle
the challenges of opening your own business and knowing yourself is
imperative to your businesses success.
D E T ER M I N I N G C A S H N EED ED TO S TA RT A B U S I N E S S . .
FI N A N C I N G I N FO R M AT I O N . . . . . . . . . . . . . . . . . . . . . . . .
D EM O G R A P H I C I N FO R M AT I O N . . . . . . . . . . . . . . . . . . . . .
L EG A L A S P EC TS O F S TA RT I N G A B U S I N E S S . . . . . . . . . .
R EG I S T R AT I O N O F A S S U M ED B U S I N E S S N A M E . . . . . . .
In the event this information leads to additional questions, please don’t
hesitate to contact Big Sky Economic Development. Big Sky Economic
Development offers a variety of services to assist Montana business owners
with getting on the road to success, and we do that through the support of
Yellowstone County taxpayers and our Member Investors.
T H E S EC R E TA RY O F S TAT E . . . . . . . . . . . . . . . . . . . . . . .
S TAT E I S S U ED L I C EN S E S . . . . . . . . . . . . . . . . . . . . . . . . .
L I C EN S I N G A N D P ER M ITS I N FO R M AT I O N . . . . . . . . . . . .
ZO N I N G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
We ask for your help in identifying additional information that should be
added to this guide. Share your suggestions! The more information we can
provide, the better we may assist you and the entrepreneurs who follow.
B U I L D I N G CO N S T R U C T I O N / R EN OVAT I O N S/O CC U PA N C Y
H E A LT H P ER M ITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F ED ER A L L I C EN S I N G . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Best of luck,
EM P LOY ER TA X R E S P O N S I B I L IT I E S . . . . . . . . . . . . . . . . .
U T I L IT I E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
L A B O R A N D SA F E T Y R EG U L AT I O N I N FO R M AT I O N . . . . .
A P P L I C AT I O N , H I R I N G & T ER M I N AT I O N P R O C E S S E S . . .
Steve Arveschoug
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Executive Director
Big Sky Economic Development
NOTICE: The information contained within this publication is given for informational purposes only and should not be constructed as legal or professional
advice or assistance.
Laws and information contained herein are from multiple sources and are subject to frequent changes. While this publication will be updated annually to
capture those changes, you should consult a licensed professional when dealing with legal and financial matters regarding your specific situation. You
should also verify the other information contained herein to be sure that you have the most current and accurate information.
8 ? =I A O ; 9 E D E C ? 9 : ; L ; BE F C ; D J š 9 H ; 7J ? D = C E D J7 D 7 8 K I ? D ; I I E F F E H J K D ? J ? ; I
4
Step 3
Additional Resources
R E S O U R C E D I R EC TO RY . . . . . . . . . . . . . . . . . . . . . . . . . .
G LO S SA RY O F T ER M S . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
27
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5
N E W B U S I N E S S S TA RT U P
N E W B U S I N E S S S TA RT U P
S T E P 1 : I S E N T R E P R E N E U R S H I P FO R YO U ?
STEP 1: IS ENTREPRENEURSHIP
FO R YO U ?
Is
Entrepreneurship
for You?
W H AT I S A N
ENTREPRENEUR?
šI e c [ e d [ m ^ e e h] W d _p[ i W d Zc W _ dj W _ d i
a b u s i n e s s ve n t u re
šI e c [ e d [ m ^ e j W a[ i e d j^ [ h _ i a W d Z
d o e s w h a t h e /s h e wa n t s i n o rd e r to
m a ke a p rof it
šI e c [ e d [ m ^ e Y W d Y e e hZ _ d Wj[ j^ [
re s o u rc e s ava i l a b l e to m e e t a n e e d
H ow c a n yo u b e c o m e a n e n tre p re n e u r ?
H ow c a n yo u s t a r t yo u r ow n b u s i n e s s?
B i g S k y Ec o n o m i c D eve l o p m e nt h a s
c o m p i l e d th i s b o o k a s a re f e re n c e
g u i d e to s i m p l if y tr a n s iti o n i nto th e
ro l e of a n e n tre p re n e u r. T h e A B C ’s
of St a r ti n g a B u s i n e s s i n Ye l l ows to n e
C o u n t y wi l l m a ke e s t a b l i s h i n g yo u r ow n
b u s i n e s s e a s i e r by g i v i n g yo u “o n e - s to p
s h o p p i n g ” fo r th e i n fo r m a ti o n yo u wi l l
n e e d . B i g S k y Ec o n o m i c D eve l o p m e nt
i s d e te r m i n e d to p ro m ote e co n o m i c
g row th a n d d eve l o p m e n t . We b e l i eve
th i s b e g i n s with yo u . B y g i v i n g yo u th e
p ro p e r to o l s , we c a n h e l p b u i l d a s tro n g
e c o n o m i c fo u n d a ti o n . We h o p e th i s
b o o k l e t wi l l b e of a s s i s t a n c e . I n o rd e r
to re c e i ve th e m a x i m u m b e n e f it s of th e
i n fo r m a ti o n c o n t a i n e d i n th i s b o o k l e t ,
we s u g g e s t yo u tre a t th i s a s yo u wo u l d
a wo r k b o o k . St a r t a t th e b e g i n n i n g a n d
wo r k th ro u g h to th e e n d , m a k i n g n ote s
a l o n g th e way.
B e f o r e yo u g o to th e b a n k , b e f o r e yo u
w r ite yo u r b u s i n e s s p l a n , o r b e f o r e
yo u q u it yo u r d ay j o b … S TO P a n d a s k
yo u r s e l f o n e q u e s ti o n .
“Is business
ow n e r s h i p a n d a l l th at it i m p l i e s r ig ht
f o r m e? ”
I n th i s s e c ti o n B ig S k y
E c o n o m i c D eve l o p m e nt wi l l h e l p yo u
a s s e s s th at q u e s ti o n .
IS ENTREPRENEURSHIP
R I G H T F O R YO U ?
T h e re i s n o way to e l i m i n ate a l l th e
r i s k s a s s o ci ate d with s t a r ti n g a s m a l l
business.
Yo u
can
i m p rove
yo u r
c h a n c e s of s u cc e s s with g o o d p l a n n i n g
a n d p re p a r ati o n . A g o o d s t a r ti n g
p l a c e i s to eva l u ate yo u r s tre n g th s a n d
we a k n e s s e s a s th e ow n e r a n d m a n a g e r
of a s m a l l b u s i n e s s . C a re f u l l y co n s i d e r
e a c h of th e fo l l owi n g q u e s ti o n s i n th e
t a b l e o n th e n ex t p a g e .
en·tre·pre·ne
ur
\ˌäⁿn-trә-p(r)ә
noun
-ˈnәr, -ˈn(y)u̇ r\
: one who orga
nizes, manag
es,
and assumes
the risks of a
business or en
terprise
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6
Question
Explanation
Are you a self-starter?
It will be up to you—not someone else telling you—to develop projects,
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How well do you get
along with different
personalities?
Business owners need to develop working relationships with a variety of
people including customers, vendors, staff, bankers, and professionals
such as lawyers, accountants, or consultants. Can you deal with a
demanding client, an unreliable vendor, or an unreliable employee?
Are you bankable?
Have you addressed
the need for your
product or service in
the target market?
Do you know who your
target market is?
Are you prepared,
if necessary, to
temporarily lower your
standard of living until
your business is firmly
established?
Have you ever worked
in a managerial or
supervisory capacity?
How good are you at
making decisions?
Do you have the
physical and emotional
stamina to run a
business?
How well do you plan
and organize?
Is your drive strong
enough to maintain
your motivation?
How will the business
affect your family?
The lender will be expecting you as the business owner to share in the
financial risk of your project. The lender will be looking for good credit
score of 650 or more, 100% collateral, and at least 20% equity.
There has to be an unfilled need in the market that your business will
be able to fill in order for your business to be sustainable. Are there
many other options or substitutes for your offering? If so, you may
need to re-evaluate.
Once the need is determined to exist, you need to identify the primary
customer who will pay money for your offering. You need to be able to
describe this customer(s) down to their income, tastes, and motivators
with decision making.
As a small business owner you may not bring as much money home
as you do currently with a full-time job, if any money at all. Are you
prepared (and is your family prepared) to adjust your lifestyle to
accommodate a decrease in income and less free time?
Your professional background is going to be a factor when running
a business. Do you have the management history and interpersonal
skills to be an effective boss?
Small business owners are required to make decisions constantly, often
quickly, under pressure, and independently.
Business ownership can be challenging, fun and exciting. But it’s also
a lot of work. Can you face 12-hour work days six or seven days a week
if necessary?
Research indicates that many business failures could have been avoided
j^hek]^ X[jj[h fbWdd_d]$ =eeZ eh]Wd_pWj_ed e\ ÓdWdY_Wbi" _dl[djeho"
schedules, and production can help avoid many pitfalls.
Running a business can wear you down. Some business owners feel
burned out by having to carry all the responsibility on their shoulders.
Strong motivation can make the business succeed and will help you
survive slowdowns as well as periods of burnout.
The first few years of business startup can be hard on family life. The
strain of an unsupportive spouse may be hard to balance against the
demands of starting a business. There also may be financial difficulties
until the business becomes profitable, which could take months or
years. You may have to adjust to a lower standard of living or put
family assets at risk.
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7
N E W B U S I N E S S S TA RT U P
N E W B U S I N E S S S TA RT U P
1 : T H E N E W B U S I N E S S C H EC K L I S T
The New Business
Checklist
S T E P 2 : P L A N N I N G YO U R B U S I N E S S
THE BUSINESS PL AN
N ow th at yo u h ave e xa m i n e d yo u r
q u a lif ic atio n s to b e a b u si n e s s
own e r, it ’s ti m e to s ta r t yo u r
b u si n e s s p la n n i ng p r o c e s s !
Planning Your
Business
Provided by QuickBooks
D E T E R M I N E YO U R B U S I N E S S
Fo c u s yo u r i d e a
Re s e a rc h yo u r i d e a
C h o os e a b u si n e s s n a m e
Wr ite a b u si n e s s p l a n
S T R U C T U R E YO U R B U S I N E S S
9 ^ e ei [W de h] W d _pWj_ e dj of [
C o n su lt p rofe s si o n a ls (C PA , t a x a cco u nt a nt , o r at to r n ey)
S et u p yo u r f i n a n ci a l s ys te m s
P R E PA R E A L L N E C E S S A R Y F O R M S , P E R M I T S , A N D L I C E N S E S
O ve r vi ew of fe d e r a l , s t ate , a n d l o c a l re q u i re m e nt s
Fil e co m p a ny p a p e r s with th e S e c ret a r y of St ate ’s of f i ce
O bt a i n a fe d e r a l t a x i d e ntif i c ati o n n u m b e r
Re g is te r yo u r b u si n e s s n a m e
O bt a i n a ll n e ce s s a r y li ce n s e s a n d p e r m it s
Fu lf ill a ll e m p l oye r re q u i re m e nt s
S e c u re i nte ll e c tu a l p ro p e r t y
JW a[Y W h[e\b e Y W bh[ g k _ h[ c [ dj ipe d _ d ] "X k _b Z _ d ]Ye Z [ i
F U N D YO U R B U S I N E S S
U s e yo u r own a s s et s
B o r row f ro m f r i e n d s a n d f a m ily
B o r row f ro m a b a n k
O th e r s o u rce s of e q u it y f u n d i n g
TA X E S A N D I N S U R A N C E
Fu lf ill a ll t a x re q u i re m e nt s
Ke e p d et a il e d re co rd s of a ll d e d u c ti b l e exp e n d itu re s
The Business Plan
A
business plan precisely defines your
business, identifies your goals, and
serves as your company’s résumé. The
basic components include a current and pro
forma balance sheet, an income statement,
and a cash flow analysis. It helps you allocate
resources properly, handle unforeseen
complications, and make good business
decisions. Because it provides specific and
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and how you will repay borrowed money, a
good business plan is a crucial part of any
loan application. Additionally, it informs sales
personnel, suppliers, and others about your
operations and goals.
The following outline of a typical business plan
can serve as a guide. You can adapt it to your
specific business. Breaking down the plan
into several components will make writing it
more manageable. Technical assistance is
provided free of charge at Big Sky Economic
Development through the Small Business
Development Center. Call and set up an
appointment with one of our knowledgeable
business advisors.
INTRODUCTION
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b u si n e s s a n d it s g o a ls .
š: _i Y k i i j^ [ emd [ h i ^ _ f e\ j^ [
b u si n e s s a n d th e l e g a l s tr u c tu re .
šB _i j i a _bbi W d Z [nf [ h _ [ d Y[ oe k
b r i n g to th e b u si n e s s .
š: _i Y k i i j^ [ W Z lW dj W ] [ i oe k W d Z
yo u r b u si n e s s h ave ove r yo u r
co m p etito r s .
MARKETING
š: _i Y k i i
of fe re d .
j^ [
f he Z k Y j i%i [ h l_ Y[ i
š? Z [ dj_\ oj^ [Y k i je c [ hZ [ c W d Z\e h
yo u r p ro d u c t /s e r vi ce .
š? Z [ dj_\ o oe k h c W h a[j " _j i i_p[ W d Z
l o c ati o n s .
š; nf b W _ d^ emoe k hf he Z k Y j %i [ h l_ Y[
will b e a d ve r tis e d a n d m a r kete d .
š; nf b W _ dj^ [ f h _ Y_ d ]i jh Wj[ ] o$
FI N A N C I A L M A N AG E M E N T
š; nf b W _ d oe k h i e k hY[ W d Z j^ [
a m o u nt of i n iti a l e q u it y.
š: [l[ b e f W c e dj^ bo e f [ h Wj_ d ]
b u d g et fo r th e f i r s t ye a r.
š: [l[ b e f W d [nf [ Y j[ Z h[jk h d e d
i nve s tm e nt a n d m o nth ly c a sh f l ow
fo r th e f i r s t ye a r.
šF hel_ Z [
f he ` [ Y j[ Z
_ d Ye c [
s t ate m e nt s a n d b a l a n ce s h e et s
fo r a t wo –ye a r p e r i o d .
š? Z [ dj_\ ooe k hX h[ W a[l[ df e _ dj $
š; nf b W _ doe k hf [ h i e d W bX k Z ] [jW d Z
m eth o d fo r co m p e n s ati o n .
š: _i Y k i i m^ e m_bb c W _ dj W _ d oe k h
a cco u nti n g re co rd s a n d h ow th ey
will b e ke pt .
šF hel_ Z [ Ç m^ Wj _\ È i j Wj[ c [ dj i j^ Wj
a d d re s s a lte r n ative a p p ro a c h e s to
a ny p ro b l e m th at m ay d eve l o p .
O bt a i n i n su r a n ce to m itig ate r is k
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8
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9
N E W B U S I N E S S S TA RT U P
N E W B U S I N E S S S TA RT U P
2 : T H E B U S I N E S S P L A N c o nt .
F E A S I B I L IT Y S T R AT EGY
2 : F E A S I B I L IT Y S T R AT EGY
O P E R AT I O N S
š; nf b W _ d ^ em j^ [ X k i_ d [ i i
will b e m a n a g e d o n a d ay–
to – d ay b a sis .
š: _i Y k i i
^ _ h _ d ]
W d Z
p e r s o n n e l p ro ce d u re s .
š: _i Y k i i _ d ik h W d Y[ " b [ W i [
o r re nt a g re e m e nt s , a n d
is su e s p e r ti n e nt to yo u r
b u si n e s s .
š7 YYe k dj\e hj^ [[ g k _ f c [ dj
n e ce s s a r y to p ro d u ce yo u r
p ro d u c t s o r s e r vi ce s .
š7 YYe k dj \e h f he Z k Y j_ e d
a n d d e live r y of p ro d u c t s
a n d s e r vi ce s .
C O N C L U D I N G S TAT E M E N T
šI k c c W h _p[ oe k h X k i_ d [ i i
g o a ls a n d o b j e c tive s a n d
exp re s s yo u r co m m itm e nt
to th e su cce s s of yo u r
b u si n e s s .
šE d Y[ oe k ^ Wl[ Ye c f b [j[ Z
yo u r b u si n e s s p l a n , revi ew
it with a b u si n e s s co ll e a g u e
f i r s t a n d th e n with th e S m a ll
B u si n e s s
D eve l o p m e nt
C e nte r
šM ^ [ doe k\[ [ bYe c\e h j W X b [
with
th e
co nte nt
and
s tr u c tu re ,
m a ke
an
a p p o i ntm e nt
to
revi ew
a n d d is c u s s it with yo u r
b a n ke r. T h e b u si n e s s p l a n
is a f l exi b l e d o c u m e nt th at
s h o u l d c h a n g e a s yo u r
b u si n e s s g rows .
S o u r c e : w w w. s b a .g o v
Feasibility Strategy
I S YO U R B U S I N E S S I D E A
FEASIBLE?
A n swe r th e fo ll owi n g q u e s ti o n s re g a rd i n g
yo u r i d e a .
G ive co m p l ete , we ll th o u g ht
o ut a n swe r s to th e s e q u e s ti o n s .
I f yo u
a re u n su re a b o ut o r a n swe r n o to a ny of
th e fo ll owi n g q u e s ti o n s , th e n yo u s h o u l d
reth i n k yo u r i d e a .
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2 2 2 N 3 2 n d S t . S te . 2 0 0
Billings, MT 59101
4 0 6 -2 5 4 - 6 0 1 4
www.bigskyeda-edc.org/small-businessdevelopment.php
šM ^ Wj a _ d Z e\ f he Z k Y j Z e oe k f b W d je
of fe r ?
šM _bb oe k h f he Z k Y j i Wj_i \ o W d [ [ Z o[j
u nf ill e d ?
šM ^ e W h[ co Y k i je c [ h i5 J ^ _i
d ete r m i n e s yo u r t a rg et m a r ket .)
šM _bb oe k h f he Z k Y j ^ Wl[ W Ye c f [j_j_l[
e d g e b a s e d o n p r i ce , l o c ati o n , q u a ntit y,
o r s e l e c ti o n?
šM ^ [ h[W h[j^ [o 5
šM ^ Wj j of [ e\ X k i_ d [ i i Z e oe k f b W d je
start?
R E S E A R C H I N G YO U R M A R K E T S
I t is re co m m e n d e d th at yo u re s e a rc h yo u r
p ote nti a l m a r ket d e m a n d fo r yo u r p ro d u c t
o r s e r vi ce . Fi r s t , d ete r m i n e wh at q u e s ti o n s
yo u n e e d a n swe re d .
T h e fo ll owi n g a re
i d e a s o n wh e re to f i n d th e i nfo r m ati o n yo u
need.
Primary Data:
šOe k h[nf [ h _ [ d Y[ $
š; nf [ h _ [ d Y[ ie\f [ e f b [oe ka d em$
šI k h l[o
f ej[ dj_ W b
Y k i je c [ h i
je
d ete r m i n e th e i r wa nt s/n e e d s . O bs e r ve
si m il a r b u si n e s s e s .
š> em c W do W h[ j^ [ h[5 J ^ _i
_ d Z _ Y Wj[ ioe k hc W h a[ji_p[ $
šM ^ WjW h[j^ [ _ hd [ [ Z i5
šM ^ eW h[coYe c f [j_je h i5
š> em Z e [ i co Ye c f [j_j_ e d Z e _j 5
(O n e m eth o d of m a r keti n g /d e a li n g
with co m p etiti o n is th e e n d - r u n
s tr ate g y.
I n th is s tr ate g y yo u
a d o pt yo u r co m p etito r s’ s tr ate g y
with th e i nte nti o n of m a k i n g it
b et te r.)
š> emY W d?h[ W Y ^coj W h] [jc W h a[j 5
( T h e d is tr i b uti o n of yo u r p ro d u c t
is ve r y i m p o r t a nt .
W h e re yo u r
p ro d u c t is l o c ate d d ete r m i n e s
h ow we ll it s e lls .)
š> emc k Y ^m_bbj^ [j W h] [jY k i je c [ h
p ay ? ( T h e p r i ci n g of yo u r p ro d u c t
is a ls o ve r y i m p o r t a nt . Yo u m u s t
t a ke i nto co n si d e r ati o n wh at yo u r
co m p etito r s c h a rg e .)
šM ^ Wj W h[ j^ [ c W h a[j jh[ d Z i5
( W h at a re p e o p l e b u yi n g? I t is
i m p o r t a nt to b e awa re of wh at
m a r ket tre n d s a re . T h is re l ate s
b a c k to k n owi n g yo u r c u s to m e r s’
n e e d s . Tr y to d is ti n g u is h b et we e n
tre n d s a n d f a d s .)
šM ^ WjW h[j^ [j[ Y^ d e b e ] _Y W bjh[ d Z i5
(O n e o bvi o u s a n swe r to th is
q u e s ti o n is th e I nte r n et . W ill yo u
b e u si n g te c h n o l o g y ? H ow c a n
it b e u s e d to h e l p yo u r b u si n e s s?
D o yo u n e e d to a d ve r tis e o n th e
I nte r n et ? D o yo u n e e d a n et wo r k
of co m p ute r s fo r yo u r b u si n e s s?
I f yo u a re i n a b u si n e s s re l ate d
to te c h n o l o g y, it is i m p e r ative
th at yo u s t ay a b re a s t of a ny
c h a n g e s .)
R e s o u rc e :
S m a l l B u s i n e s s D e ve l o p m e n t C e n te r
2 2 2 N 3 2 n d S t . S te . 2 0 0
Billings, MT 59101
4 0 6 -2 5 4 - 6 0 1 4
www.bigskyeda-edc.org/small-business-development.php
š? dj[ h l_ [mj^ [ i [X k i_ d [ i iÊiemd [ h i $
š? dj[ h l_ [mik f f b_ [ h i "l[ d Z e h i "X W d a[ h i $
Secondary Data:
š9 e dj W Y j jh W Z [ W i i e Y_ Wj_ e d i _ $ [ $ jh W Z [
s h ows a n d tr a d e j o u r n a ls).
š9 edjWYjj^[IcWbb8ki_d[ii:[l[befc[dj
C e nte r. S e e th e Re s o u rce D i re c to r y
fo r co nt a c t i nfo r m ati o n .
8 ? =I A O ; 9 E D E C ? 9 : ; L ; BE F C ; D J š 9 H ; 7J ? D = C E D J7 D 7 8 K I ? D ; I I E F F E H J K D ? J ? ; I
10
M A R K E T I N G YO U R B U S I N E S S
I n o rd e r to p ro p e r ly m a r ket yo u r
p ro d u c t , yo u n e e d to a n swe r th e
fo ll owi n g q u e s ti o n s . T h is i nfo r m ati o n
c a n b e u s e d to h e l p yo u d eve l o p yo u r
m a r keti n g p l a n . C o nt a c t th e S B D C fo r
m o re i nfo r m ati o n o n co n s tr u c ti n g th is
plan.
šL _i_joe k hf k X b_ Yb_ X h W h o$
Resource:
šK i [lW h _ e k ii [ W hY ^[ d ] _ d [ ie dj^ [
I nte r n et (i . e . Ya h o o , B i n g , G o o g l e ,
M S N etc .).
Fu n d e d i n p a r t t h ro u g h a c o o p e r a t i ve a g r e e m e n t
with the U. S . Small Business Administration.
All opinions , conclusions or recommendations
e x p r e s s e d a r e t h o s e o f t h e a u t h o r (s) a n d d o
not necessarily reflect the views of the SBA .
Reasonable accommodations for persons with
d i s a b i l i t i e s w i l l b e m a d e i f r e q u e s te d a t l e a s t
two weeks in advance.
C o n t a c t B i g S k y E c o n o m i c D e ve l o p m e n t
2 2 2 N . 3 2 n d S t . , S u i te 2 0 0
Billings, MT 59101
4 0 6 -2 5 4 - 6 0 1 4 .
( ( (D $) ( D :I J$ "I K ? J ;( & &š8 ? B B ? D = I "C J+ / ' & 'š* & , #( + , # , . - 'š8 ? = I A O ;9 E D E C ? 9 : ; L ; BE F C ; D J$ E H =
11
N E W B U S I N E S S S TA RT U P
N E W B U S I N E S S S TA RT U P
2: DETERMINE CASH NEEDED
2 : FI N A N C I N G I N FO R M ATI O N
Determine Cash Needed to Start Business
A
ll of the costs/
expenses can
be estimated
with accuracy through
research on the
internet and obtaining
quotes from the
appropriate vendors/
government agencies.
Add up all monthly
expenses and multiply
by the amount of
months you will need
cash flow during your
business’s first year
of operation (This
is considered your
working capital and
the bank will most
likely not lend you this
total amount.). Finally,
add the start-up costs
to the cash needed.
This is the total cash
needed to start your
business.
Item(s) Needed
START-UP
COSTS
ONGOING MONTHLY
EXPENSES
Salary of Owner/Exempt Emp.
No
Yes
Non-Exempt Employee Payroll
No
Yes
Rent (Building/Equipment)
No
Yes
Purchase of Building
Yes
No
Loan Payment
No
Yes
Yes
Yes
Advertising
(Website, signage)
Supplies
Maybe
Yes
Inventory
Yes
Yes
Internet/Telephone/Fax/Cable
No
Yes
Deposits for Utilities/Services
Yes
No
Maybe
Yes
Insurance
No
Yes
Taxes (including Social Security)
No
Yes
Maintenance/Repairs
No
Yes
Leasehold Improvements
Yes
No
Legal/Professional Fees
Yes
Yes
Purchase of Equipment
Yes
Maybe
Licenses & Permits
Yes
Yes
Utilities
8 ? =I A O ; 9 E D E C ? 9 : ; L ; BE F C ; D J š 9 H ; 7J ? D = C E D J7 D 7 8 K I ? D ; I I E F F E H J K D ? J ? ; I
12
Financing Information
M A R K E T I N G YO U R B U S I N E S S
W
hen starting a business, one
important consideration is where
to obtain capital to back your
venture. Most startup businesses require a
capital contribution by the business owner,
usually 20%-30% (start-up businesses are more
likely going to contribute 25% or more). The
remaining financing may be available from
local banks, a Certified Development Company,
or private investors. There are several loan
programs available to businesses, all of which
require bank participation. Examples include
the following SBA loans currently available.
šSBA Guaranteed Loan Program 7(A).
This program provides financing to
small businesses through guaranteeing
a percentage of the bank’s loan to the
business. Eligible expenditures are for land
and building, machinery and equipment,
working capital, and some restructure
of existing debt. The maximum SBA will
guarantee is $750,000 and not more than
75% of the total loan. The USDA and BIA
offer Guaranteed Loan programs as well.
šSBA 504 Loan Program. This program
provides financing for small businesses
through a low interest, fixed rate, and
a long-term loan. The Small Business
Administration (contributing 40%) takes a
second line position behind the bank (50%)
and the borrower is in third place (at least
10% equity).
Eligible expenditures are
for land and building, long-life machinery
and equipment. The maximum the SBA
will finance is $1.5 million (for eligible
manufacturers this amount may be
greater). Job creation is a requirement of
the program.
šRevolving Loan Fund.
Businesses in
Billings may qualify for loan funds through
a Revolving Loan Fund. Big Sky Economic
Development, Beartooth RC & D, and
Montana CDC offer a revolving loan fund.
Big Sky EDC’s Revolving Loan Fund
benefits the borrower in that the funds
are available for fixed assets, inventory
and working capital. The fund offers low
origination fees and a competitive fixed
five-year interest rate.
All loan programs require that certain standards
be met. A loan applicant must be of good
character, show the ability to operate a small
business successfully, and have a reasonable
amount of his/her own resources to invest to
withstand possible losses. In addition, the
following will likely be required:
š9h[Z_jH[fehjiYeh[,+&WdZWXel[
š9ebbWj[hWb WZ[gkWj[ je i[Ykh[ j^[ Z[Xj
(100%) (including a list of collateral and its
value);
š7ffhW_iWbi ed j^[ h[Wb fhef[hjo ki[Z Wi
collateral;
šF[hiedWb]kWhWdj[[ie\j^ei[f[hiedieh
companies) with 20% ownership and/or
key employees;
šI[YedZWhoYebbWj[hWb1
šF[hiedWbÓdWdY_WbijWj[c[djiWdZÓdWdY_Wb
statements of business, if applicable; and
š8ki_d[iiFbWd$
R e s o u rc e :
Business Finance Department
2 2 2 N 3 2 n d S t . S te . 2 0 0
Billings, MT 59101
4 0 6 -2 5 6 - 6 8 7 1
www.bigskyeda-edc.org/finance-tax.php
( ( (D $) ( D :I J$ "I K ? J ;( & &š8 ? B B ? D = I "C J+ / ' & 'š* & , #( + , # , . - 'š8 ? = I A O ;9 E D E C ? 9 : ; L ; BE F C ; D J$ E H =
13
N E W B U S I N E S S S TA RT U P
N E W B U S I N E S S S TA RT U P
2 : D E M O G R A P H I C I N FO R M ATI O N
2 : L EG A L A S P EC TS O F
S TA RTI N G A B U S I N E S S
Demographic
Information
A
va r i et y of f re e d e m o g r a p h i c i nfo r m ati o n is ava il a b l e vi a th e i nte r n et . A
few a re p rovi d e d b e l ow. T h is i nfo r m ati o n b re a k s d own th e p o p u l ati o n by
d if fe re nt c ate g o r i e s su c h a s a g e , s ex , r a ce , i n co m e , e d u c ati o n , a n d eve n
t a s te s . I t c a n b e u s e d to h e l p i d e ntif y th e n u m b e r of p e o p l e with i n yo u r t a rg et
m a r ket th at wo u l d p ote nti a lly u s e yo u r b u si n e s s o r s e r vi ce s .
MSU - B CENTER FOR APPLIED ECONOMIC RESEARCH
w w w. msubillin gs . e d u /c a e r/ in d ex . htm
C E N S U S & E C O N O M I C I N F O R M AT I O N C E N T E R / M O N TA N A
D E PA R T M E N T O F C O M M E R C E
ce ic . mt .g ov
M O N TA N A D E PA R T M E N T O F L A B O R & I N D U S T R Y
wsd .dli . mt .g ov/se r vice/ra d . asp
CENTR AL INDEX OF ECONOMIC INSTITUTIONS
e dirc . re p e c .o rg
U.S. CENSUS
w w w.ce nsus .g ov
U . S . D E PA R T M E N T O F L A B O R
w w w.d ol .g ov/d ol/to pic /s tatis tic s/ in d ex . htm
Legal Aspects of
Starting a Business
D
eciding the legal structure of your
business is a critically important
decision. This determines the taxes
that you’ll pay, the level of personal liability
you will have for your business’s debts and
various rules and regulations governing your
business.
Before you enter into any of these four forms of
business that you contact a business attorney,
CPA, or other qualified advisor. Don’t risk a
mistake! Also, contact the Small Business
Development Center for more information.
THERE ARE FOUR BASIC FORMS
T H AT A N E W B U S I N E S S C A N
FILE AS:
šIeb[Fhefh_[jehi^_f
šFWhjd[hi^_f (general, limited, or limited
liability)
š9ehfehWj_ed (C or S)
šB_c_j[ZB_WX_b_jo9ecfWdo (LLC)
Crist, Krogh & Nord, LLC
John G. Crist · Harlan B. Krogh
Eric Edward Nord · Tanis M. Holm
Attorneys at Law
2708 First Avenue North, Suite 300
Billings, Montana 59101
406.255.0400
www.cristlaw.net
M O N TA N A T O U R I S M
w w w.trave lm o nta n a .o rg /re se a rch
U SA .G OV
w w w. us a .g ov/ To pic s/ Refe re n ce _ S h e lf/ Data . shtm l
B U R E A U O F E C O N O M I C A N A LY S I S ( B E A )
w w w. b e a .g ov
M O N TA N A M E A N S B U S I N E S S
m o nta n a m e a nsb usin e ss .co m
8 ? =I A O ; 9 E D E C ? 9 : ; L ; BE F C ; D J š 9 H ; 7J ? D = C E D J7 D 7 8 K I ? D ; I I E F F E H J K D ? J ? ; I
14
Specializing in business law,
employment law, securities
matters, commercial litigation,
contract disputes, construction law,
mediations and arbitrations.
( ( (D $) ( D :I J$ "I K ? J ;( & &š8 ? B B ? D = I "C J+ / ' & 'š* & , #( + , # , . - 'š8 ? = I A O ;9 E D E C ? 9 : ; L ; BE F C ; D J$ E H =
15
N E W B U S I N E S S S TA RT U P
N E W B U S I N E S S S TA RT U P
2 : L EG A L A S P EC T c o nt
A sole proprietorship is owned and operated
by one person. Under Federal law, it is not
actually considered a separate legal entity.
It is instead considered an extension of the
person who owns the business. This individual
has sole ownership of assets but is also solely
liable for the debts of the business.
A partnership can be formed in three ways.
A general partnership is comprised of two or
more individuals who join to start a business.
Each person has proportional ownership
of the business assets and proportional
liability for business debts. Each person
also has authority in running this business.
A partnership agreement can be drawn up
to alter each person’s particular liability.
However, despite this document, creditors
may collect from each and every member of
the partnership (this may include personal
assets).
A limited partnership is made up of one or
more general partners as well as one or more
limited partners. Limited partners contribute
capital and share in profits/losses. These
limited partners, however, take no part in the
running of the business and are not held liable
\ehj^[eh]Wd_pWj_edÊiZ[Xji$
A limited liability partnership is very similar
to a limited liability company (LLC) which is
discussed below and is generally used by those
types of businesses prohibited by statute from
X[_d]eh]Wd_p[ZWiWb_c_j[Zb_WX_b_joYecfWdo$
In an LLP, all partners may act essentially as
general partners, but are generally protected
from liability for the partnership’s debts. An
LLP is taxed like a regular partnership, but
must be registered with the Secretary of
State.
Whether taking part in a general, limited, or
limited liability partnership, it is advisable that
you draw up a partnership agreement. This
document will detail each partner’s rights
and their responsibilities. Partnerships are
required to file informational tax forms with
both federal and state governments. While
the partnership is not typically taxed on
income, each partner reports share of income
for the partnership on his/her personal tax
returns.
2 : R EG I S T R ATI O N O F A S S U M E D B U S I N E S S N A M E ,
T H E S EC R E TA RY O F S TAT E
A corporation is an entity which must be
approved by the state of Montana through
the Office of the Secretary of State. A
corporation must file federal, state, and local
tax returns on its operations. One advantage
to a corporation is the protection from liability
afforded to shareholders. However, when an
eh]Wd_pWj_ed _i icWbb" Yh[Z_jehi cWo h[gk_h[
personal guarantees of predominant owners.
A disadvantage of the corporation is that the
eh]Wd_pWj_edÊi _dYec[ YWd X[ jWn[Z jm_Y[
(once on the business’s corporate tax return
and again on the shareholder’s personal
income tax returns for any dividends paid to
the shareholders). To address the issue of
double taxation a business can elect to be
an S Corporation. This status allows income
of the company to flow through to the
shareholder’s personal income tax return.
When filing for S Corporation status, please
consult a professional.
To incorporate your business you must file
paperwork with the Montana Secretary of
State. Once incorporated, you will be required
to register and pay fees annually. Publication
of the intent to incorporate is also required.
A limited liability company (LLC) is a relatively
new form of business entity in Montana that
includes some of the characteristics of the
other business entities. The owners are known
as members, and the LLC has the potential to
shield its members from personal liability like
a corporation. However, the profits generated
by the business pass through the business
entity to the members. The default structures
used for taxation purposes are a Partnership
(for multiple–member LLCs) and Sole
Proprietorship (for single–member LLCs).
An attorney should handle the creation of your
business entity for you. In addition to creating
your business, there are more activities that
must be performed. An attorney will advise
you concerning those other requirements.
R e s o u rc e :
M o n t a n a S e c r e t a r y o f S t a te L i n d a M c C u l l o c h
1 3 0 1 E . 6 t h Ave n u e
Helena, MT 59 601
P h o n e : (4 0 6 ) 4 4 4 -2 0 3 4
Fa x : (4 0 6 ) 4 4 4 - 3 976
sos.mt.gov/index.asp
8 ? =I A O ; 9 E D E C ? 9 : ; L ; BE F C ; D J š 9 H ; 7J ? D = C E D J7 D 7 8 K I ? D ; I I E F F E H J K D ? J ? ; I
16
Registration
of Assumed
Business Name
I
n the state of Montana, if you are
structured as a sole proprietor you
are not required to register your
business name with the state. It is
recommended that every business
conduct a business entity search on the
Montana Secretary of State’s website to
make sure that a pre-existing business
is not already operating under the
same name.
It is also recommended that a national
search is done as well. IT IS ALSO
ADVISED THAT EVERY BUSINESS
REGISTER THEIR ASSUMED BUSINESS
NAME
WITH
THE
MONTANA
SECRETARY OF STATE. If you have
any questions regarding registration of
assumed business name, contact the
Business Services with the Montana
Secretary of State at the address or
phone number listed below.
R e s o u rc e :
M o n t a n a S e c r e t a r y o f S t a te
Business Services
P. O . B ox 2 0 2 8 0 1
H e l e n a , M T 5 9 6 2 0 -2 8 0 1
P h o n e : (4 0 6 ) 4 4 4 - 3 6 6 5 - B u s i n e s s E n t i t y
sos.mt.gov/Business/index.asp
R e s o u rc e :
U n i te d S t a te s P a te n t & Tr a d e m a r k O f f i c e
M a i l S to p
C o m m i s s i o n e r f o r P a te n t s
P. O . B ox 1 4 5 0
A l e x a n d r i a , VA 2 2 3 1 3 - 1 4 5 0
www.uspto.gov/about/index.jsp
A corporation or limited liability company
will not need to file this registration, as
it will already be registered with the
Montana Secretary of State. The fee for
trade name registration is approximately
$20. The Business Services office will
provide any paperwork that needs to be
completed, or you can do so online at
the above web address.
The Secretary of State
T
he Montana Office of the Secretary of State can
provide you with ample information regarding
many different areas of your business including:
š9 e hf e hWj_ e d – establishing your legal structure
with online forms and applications
šF he\ [ i i _ e d W b B_ Y[ d i k h[ – information
regarding applying for and renewing professional
licensures
šI [ Yk h_j_ [ i 8 k i _ d [ i iH[ ] k b Wj_e d –
including securities, cemeteries, and charities
š; b [ Y j_ e d i W d Z C e dj W d WLej[ h
I n f o rm ati o n
šI j Wj[ 9 W f _je b _ d\e hc Wj_e d
R e s o u rc e :
M o n t a n a S e c r e t a r y o f S t a te
sos.mt.gov
EXECUTIVE OFFICES
State Capitol Building
1301 E. 6th Avenue
Helena, MT 59601
Phone: 406-444-2034
Fax: 406-444-3976
A D M I N I S T R AT I V E
R U L E S S E RV I C E S
1236 6th Avenue
Helena, MT 59601
Phone: 406-444-2055
406-444-2842
Fax: 406-444-4263
NOTARY SERVICES
1236 6th Ave
Helena, MT 59601
Phone: 406-444-5379
406-444-1877
Fax: 406-444-4263
MEDIA CONTACT
Phone: 406-444-2807
Fax: 404-657-5804
RECORDS AND
INFORMATION
MANAGEMENT
')(&8ep[cWdIjh[[j
Helena, MT 59601
Phone: 406-444-9000
Fax: 406-444-9002
ELECTIONS DIVISION/
GOVERNMENT
SERVICES
State Capitol, Room 260
1301 6th Avenue
Helena, MT 59620
Phone: 406-444-4732
Fax: 406-444-2023
B U S I N E S S S E RV I C E S
State Capitol, Room 260
1301 6th Avenue
Helena, MT 59620
Phone: 406-444-5522
Annual Reports:
406-444-3665
Business Entity:
Phone: 406-444-2468
Fax: 406-444-3976
( ( (D $) ( D :I J$ "I K ? J ;( & &š8 ? B B ? D = I "C J+ / ' & 'š* & , #( + , # , . - 'š8 ? = I A O ;9 E D E C ? 9 : ; L ; BE F C ; D J$ E H =
17
N E W B U S I N E S S S TA RT U P
N E W B U S I N E S S S TA RT U P
2 : S TAT E I S S U E D L I C E N S E S , L I C E N S I N G
A N D P E R M IT I N FO, ZO N I N G
State Issued
Licenses
S
ome businesses are required to apply for
licensing through the state of Montana.
For more information on license
verification and renewal, visit the Montana
Department of Labor and Industry Business
Standards Division website at:
bsd.dli.mt.gov/license/license.asp
Licensing and
Permit Information
2 : B U I L D I N G CO N S T R U C TI O N , R E N OVATI O N & O CC U PA N C Y,
H E A LT H P E R M ITS , F E D E R A L L I C E N S I N G
Zoning
Building
Construction,
Renovation &
Occupancy
O
nce you have chosen a tentative
location for your business, contact
j^[ ped_d] Z[fWhjc[dj je Z[j[hc_d[
the permitted uses of that location. There
might be special restrictions on that area. DO
NOT INVEST ANY MONEY IN A LOCATION
UNTIL ZONING HAS BEEN THOROUGHLY
RESEARCHED!!!
š9khh[djped_d]YbWii_ÓYWj_edi
š8k_bZ_d]i[jXWYai
šE\\#ijh[[jfWha_d]WlW_bWX_b_joWdZi[hl_Y[
entrance requirements
R e s o u rc e :
Building Division
City of Billings
5 1 0 N . B ro a d w ay - 4 t h f l o o r
Billings, MT 59101
P h o n e : 4 0 6 - 6 5 7- 8 24 6
Fa x : 4 0 6 - 6 5 7- 8 3 2 7
š8k\\[hoWhZiehh[gk_h[ZiYh[[d_d]
šBejWh[Wc_d_ckc
(ALSO CALLED AN
O C C U PAT I O N A L TA X )
šI_]dh[]kbWj_edi
I
f you plan to operate a business in the
state of Montana, you may have to obtain
a city or county business license. In some
cases such as home-based businesses and
some county areas outside the incorporated
city limits, no license is needed. You should
discuss the details of your situation with the
licensing department. The fee for a license is
Yedj_d][dj ed j^[ beYWj_ed" jof[" WdZ i_p[ e\
your business.
R e s o u rc e :
For conducting business within the City of Billings
City of Billings
210 N . 27th St
Billings, MT 59101
c i . b i l l i n g s . m t . u s / i n d e x . a s px ? N I D = 9 8 1
R e s o u rc e :
For conducting business within the Cit y of Laurel
Cit y of Laurel
215 S 1st St
Laurel, MT
w w w. l a u r e l . m t . g ov
Sign permits are required for erecting and
placing any mounted or free-standing signs.
7ffb_YWj_ediWh[Ób[Zj^hek]^j^[ped_d]e\ÓY[$
For specific information about the signage,
contact your local Zoning Administrator or
Commissioner’s office. If your plans do not/
cannot meet these specifications, you can
Z_iYkiiefj_edim_j^j^[ped_d]e\ÓY[$?\oek
ÓdZ j^[ Ykhh[dj ped_d] YbWii_ÓYWj_ed e\ oekh
potential location does not allow for your
Xki_d[ii"oekcWoÓb[WdWff[Wb\ehh[ped_d]$
In order to file this appeal, contact the Zoning
Administrator’s office. An answer on this
appeal can usually be expected 4-5 weeks
after submission of your application packet.
R e s o u rc e :
City & County Planning Division
City of Billings
5 1 0 N . B ro a d w ay - 4 t h f l o o r
Billings, MT 59101
P h o n e : 4 0 6 - 6 5 7- 8 24 6
Fa x : 4 0 6 - 6 5 7- 8 3 2 7
c i . b i l l i n g s . m t . u s / i n d e x . a s px ? n i d =1 8 4
8 ? =I A O ; 9 E D E C ? 9 : ; L ; BE F C ; D J š 9 H ; 7J ? D = C E D J7 D 7 8 K I ? D ; I I E F F E H J K D ? J ? ; I
18
R e s o u rc e :
M i s s i o n M o u n t a i n F o o d E n te r p r i s e C e n te r
4 0 5 M a i n S t . , P. O . B ox 7 2 2
Ronan, MT 59864
P h o n e : (8 8 8) 3 5 3 - 5 9 0 0
w w w. m m f e c . c o m
A
building permit must be obtained
for both new construction and
renovations of additions to existing
buildings. Before you may construct a
new facility or renovate an existing one,
you must have this permit. Once you have
obtained a building permit, complied with
the regulations pertaining to the area you
are in, and construction is complete, your
facility will be inspected. You will then apply
for a Certificate of Occupancy. Without this
certificate, it is illegal for your business to
reside in the facility.
The Office of Zoning Administration can help
you determine if your location and type of
business are in compliance with ordinances.
You will be required to submit your business
fbWdijej^[ped_d]e\ÓY[jeZ[j[hc_d[_\j^[
business complies/can be adapted to comply
with the following:
BUSINESS LICENSE
agricultural enterprises to become viable
competitors in diverse global markets. Advisory
services offered are: HACCP Plan development;
market analysis; food product development;
label and packaging development; pricing
structure; and co-packing. Contact information
is listed below.
Health Permits
I
f your business involves food processing,
handling, storage, or distribution, you must
obtain permits from your local County Health
Department, (Riverstone Health for Yellowstone
County), which handles the permits for the
entire county and city. If you are unsure if your
business needs a permit, contact the Health
Department.
R e s o u rc e :
E nv i ro n m e n t a l H e a l t h S e r v i c e s
R i ve r s to n e H e a l t h
123 South 27th Street
Billings, MT 59101
P h o n e : 4 0 6 -247- 3 2 0 0
w w w. r i ve r s to n e h e a l t h . o r g / P u b l i c H e a l t h /
E nv i ro n m e n t a l H e a l t h S e r v i c e s / t a b i d / 1 0 5 / D e f a u l t . a s px
The Mission Mountain Food Enterprise Center
assists individuals, small businesses and
Federal Licensing
M
ost new small businesses will not require
any type of federal licensing to conduct
business, unless you will be engaged in
one of the following activities:
šH[dZ[h_d]_dl[ijc[djWZl_Y[
šCWa_d]WbYe^eb_YfheZkYji
šCWa_d]jeXWYYefheZkYji
šFh[fWh_d]c[WjfheZkYji
šCWa_d]ehZ[Wb_d]_dÓh[Whci
You will need a Federal permit to also start large
operations such as a television station, radio
station, common carrier, or producer of drugs
or biological products. The aforementioned
businesses are all heavily governmentally
regulated. For more information on federal
licensing for these types of businesses,
contact:
R e s o u rc e :
T h e U . S . D e p a r t m e n t o f A l c o h o l , To b a c c o , a n d
Firearms
Billings Field Of fice
2 9 2 9 T h i r d Ave n u e N o r t h , R o o m 5 2 8
Billings, Montana 59101 USA
P h o n e : (4 0 6 ) 6 5 7- 970 0
Fa x : (4 0 6 ) 6 5 7- 970 1
R e s o u rc e :
The U. S . Federal Drug Administration
1 0 9 0 3 N e w H a m p s h i r e Ave
S i l ve r S p r i n g , M D 2 0 9 9 3 - 0 0 0 2
1 - 8 8 8 - I N F O - F DA ( 1 - 8 8 8 - 4 6 3 - 6 3 3 2 )
w w w. f d a . g ov/
R e s o u rc e :
The U. S . Federal Communications Commission
4 4 5 1 2 t h S t r e e t S W, Wa s h i n g to n , D C 2 0 5 5 4
P h o n e : 1 - 8 8 8 -2 2 5 - 5 3 2 2
T T Y: 1 - 8 8 8 - 8 3 5 - 5 3 2 2
Fa x : 1 - 8 6 6 - 4 1 8 - 0 2 3 2
w w w. f c c . g ov/
( ( (D $) ( D :I J$ "I K ? J ;( & &š8 ? B B ? D = I "C J+ / ' & 'š* & , #( + , # , . - 'š8 ? = I A O ;9 E D E C ? 9 : ; L ; BE F C ; D J$ E H =
19
N E W B U S I N E S S S TA RT U P
N E W B U S I N E S S S TA RT U P
2 : E M P LOY E R TA X
R E S P O N S I B I L ITI E S
2 : OT H E R TA X E S
Employer Tax Responsibilities
I N C O M E TA X E S
Fe d e ra l
Businesses with employees must pay employer
taxes and withhold employee taxes for the
Federal government. The EFTPS is used for
Federal tax deposits. The U.S. Department of
Revenue will determine the time of payment. You
will be required to withhold Social Security and
Medicare taxes on gross wages. In addition to this
withholding, the employer must pay a matching
amount. Withholding amounts are also dependent
on the W-4 form from the employee. You should
consult the current year tax table for present
percentages.
St a te
Businesses with employees must pay employee
taxes and withhold employee taxes for the State
of Montana. The State of Montana will provide a
coupon book to accompany your state deposits.
These deposits may be required monthly,
quarterly, or annually. The Montana Department
of Revenue will determine the time of payment.
As with Federal income taxes, you will be required
to withhold Social Security and Medicare taxes
on gross wages. In addition to this withholding,
the employer must pay a matching amount.
Withholding amounts are also dependent on the
W-4 form from the employee. You should consult
the current year tax table for present percentages
R e s o u rc e :
M o n t a n a S t a te D e p a r t m e n t o f R e ve n u e
To l l - f r e e : (8 6 6 ) 8 5 9 -2 2 5 4
r e ve n u e . m t . g ov/f o r b u s i n e s s e s /d e f a u l t . m c px
U n e m p l oy m e n t I n s u ra n ce Ta xe s
Employers pay unemployment insurance taxes as
a business cost through the State Unemployment
Tax Act (SUTA) and the Federal Unemployment
Tax Act (FUTA.) FUTA is normally remitted on a
quarterly basis via the EFTPS. Tax payments cannot
be deducted or withheld from the employee’s
wages.
The Montana Department of Labor collects the
State Unemployment Insurance Tax (SUTA). Newly
liable employers are assigned a beginning tax rate
that can vary between different industries and
pay the tax on the applicable wage-base. Wages
include all remuneration for personal services,
including commissions and bonuses and the
cash value of all remuneration paid in any other
medium other than cash. SUTA tax is remitted on
a quarterly basis to the Montana Department of
Labor & Industry.
R e s o u rc e :
Billings Job Service
2 1 2 1 - B R o s e b u d D r.
Billings, MT 59102
P h o n e : (4 0 6 ) 6 5 2 - 3 0 8 0
w s d . d l i . m t . g ov/ l o c a l / b i l l i n g s
For further information on unemployment Taxes,
contact the Montana Unemployment Insurance
Division at the website below for a complete
directory of state resources regarding taxes and
other new business needs.
R e s o u rc e :
M o n t a n a U n e m p l oy m e n t I n s u r a n c e D i v i s i o n
P h o n e : (4 0 6 ) 4 4 4 - 3 7 8 3
Fa x : (4 0 6 ) 4 4 4 -2 6 9 9
T T Y: (4 0 6 ) 4 4 4 - 0 5 3 2
u i d . d l i . m t . g ov
Wo r ke r s ’ C o m p e n s a t i o n I n s u ra n ce
Workers’ Compensation insurance is required of
all businesses with employees excluding corporate
owner-employees who have elected the exemption.
The rates vary with the business type and the risk
level. For more information, contact the Montana
State Fund.
R e s o u rc e :
M o n t a n a D e p a r t m e n t o f R e ve n u e
E m p l oye e R e l a t i o n s D i v i s i o n
P. O . B ox 8 0 1 1
H e l e n a , M T 5 9 6 24
r e ve n u e . m t . g ov/d e f a u l t . m c px
R e s o u rc e :
M o n t a n a S t a te Fu n d
P. O . B ox 47 5 9
H e l e n a , M T 5 9 6 0 4 - 47 5 9
P h o n e : (4 0 6 ) 4 9 5 - 5 0 0 0
To l l Fr e e : (8 0 0) 3 3 2 - 6 1 0 2
w w w. m o n t a n a s t a te f u n d . c o m /w p s /p o r t a l
8 ? =I A O ; 9 E D E C ? 9 : ; L ; BE F C ; D J š 9 H ; 7J ? D = C E D J7 D 7 8 K I ? D ; I I E F F E H J K D ? J ? ; I
20
P ay ro l l Ta xe s
Fe d e ra l E xci s e Ta xe s
There are taxes that as an employer you are responsible
for both withholding from employee wages as well as
paying yourself. For more complete information on
employer taxes, see Labor and Safety Regulations
Information on page 23.
There are some forms of business on which the U.S.
government requires additional taxation. This will be
a tax that you are responsible for collecting. This tax
does not come out of your pocket. Typically, it is added
to the sale price of your product or service. Quarterly
Federal Excise Tax Return is used to file most federal
excise taxes. Federal excise taxes can be broken into
nine general categories of products and services, as
follows:
Fe d e ra l Ta x I d e n t i f i c a t i o n N u m b e r s
Your federal tax identification number is the number
used to file your taxes. A Taxpayer Identification
Number (TIN) is an identification number used by the
Internal Revenue Service (IRS) in the administration
of tax laws. If you are a sole proprietorship, you may
use your Social Security Number. Sole proprietors
with employees must have a TIN. Partnerships and
corporations will need a Federal Tax ID number. To
determine whether you need a Tax ID number, contact
your attorney or accountant.
Other Taxes
S TAT E O F M O N TA N A
Big Sky Economic Development strongly encourages all
business owners to consult a CPA regarding taxation.
The following information is meant to be used as a quick
reference and does not constitute legal advice.
šCejehl[^_Yb[ki[jWnl[^_Yb[i]h[Wj[hj^Wd++"&&&
lbs. gross weight);
šH[jW_b[hijWnY[hjW_djof[ie\\k[bi1
šH[jW_b [nY_i[ jWn ed j^[ iWb[i e\ j^[ \ebbem_d]0
heavy trucks/trailers, tires and tubes, recreation
equipment (e.g. fishing/hunting supplies), firearms,
and ammunition;
š7_hjhWdifehjWj_edjWn_\oekWh[jhWdifehj_d]f[efb[
by air, you have to collect this tax);
š9ecckd_YWj_edi jWn[i [$]$ j[b[f^ed[ eh j[b[jof[
services);
šMW][h_d]jWn[i1
šJWn[iedK$I$c_d[ZYeWb
š;dl_hedc[djWbjWn[i_cfei[Z_df[jheb[kcfheZkYji"
lWh_ekiY^[c_YWbi"WdZ^WpWhZekimWij[i1WdZ
š7bYe^eb"Óh[Whci"Wcckd_j_edi"WdZjeXWYYejWn[i$
Be sure to contact the IRS for complete information
on federal excise taxes.
R e s o u rc e :
I n te r n a l R e ve n u e S e r v i c e
2 9 0 0 4 t h Ave . N .
Billings, MT 59101
(4 0 6 ) 247-74 4 6
w w w. i r s . g ov
S a l e s a n d U s e Ta xe s
Montana does not have a general sales tax; therefore
the state does not provide a sales tax exemption
number. Manufacturers and distributors often ask for
this number when purchasing products out-of-state.
In place of this number it is suggested that you use
the one number specific to the business (SSN or EIN).
Another suggestion would be your business license
number, if applicable. (Not all businesses are required
to have a license number.)
R e s o u rc e :
M o n t a n a D e p a r t m e n t o f R e ve n u e
P h o n e : To l l - f r e e 1 - 8 6 6 - 8 5 9 -2 2 5 4 ; H e l e n a 4 0 6 - 4 4 4 - 6 9 0 0
T D D : 4 0 6 - 4 4 4 -2 8 3 0
m o n t a n a f r e e f i l e . o r g / R T F 1 . c f m? p a g e n a m e = M o n t a n a % 2 0
D e p a r t m e n t % 2 0 o f % 2 0 R e ve n u e % 2 0 2
St a te E xci s e Ta xe s
In addition to federal excise taxes, you may be
responsible for collecting state excise taxes. The
categories are comparable to the federal categories.
Alcoholic beverages, tobacco products, motor carriers,
and trucks with no more than two axles are included in
the taxed categories. You should contact the Montana
Department of Revenue for complete information.
( ( (D $) ( D :I J$ "I K ? J ;( & &š8 ? B B ? D = I "C J+ / ' & 'š* & , #( + , # , . - 'š8 ? = I A O ;9 E D E C ? 9 : ; L ; BE F C ; D J$ E H =
21
N E W B U S I N E S S S TA RT U P
N E W B U S I N E S S S TA RT U P
2 : U TI L ITI E S
2 : L A B O R & SA F E T Y
R EG U L ATI O N I N FO R M ATI O N
Utilities
E S TA B L I S H I N G WAT E R , S E W E R ,
A N D GA R BAG E S E RV I C E
T
o establish water, sewer, and garbage service
in an existing location or new facility within
Yellowstone County, you must contact the
local Utility Department. You may be required to
sign a service contract and pay a deposit.
To establish service in the City of Billings contact:
Public Works
2224 Montana Ave - 2nd Floor
Billings, MT 59101
406-657-8230
To establish service in the Custer area contact:
Custer Area/Yellowstone County, Water and
Sewer District
321 4th Street
Custer, MT 59024
406-856-4160
To establish service in Huntley contact:
Huntley-Yellowstone Water District
1645 Date Street
Huntley, MT 59037-9116
406-348-2517
To establish service in Laurel or Park City contact:
Park City Water & Sewer District
120 1st Avenue Southwest
Park City, MT 59063
406-633-2910
To establish service in Lockwood contact:
Lockwood Water & Sewer District
1644 Old Hardin Road
Billings, MT 59101-6590
406-259-4120
To establish service in Worden or Ballantine contact:
Worden-Ballantine Water Sewer
3rd Street
Worden, MT 59088
406-967-2550
Labor & Safety Regulation Information
E S TA B L I S H I N G G A S S E R V I C E
To establish service in Yellowstone County:
Montana Dakota Utilities
1-800-MDU-FAST (1-800-638-3278)
www.montana-dakota.com/Pages/Overview.aspx
E S TA B L I S H I N G E L E C T R I C A L
SERVICE
There are two different electrical companies that
serve Yellowstone County.
Northwestern Energy
1944 Monad Road
Billings, MT 59102-6353
406-655-2543
www.northwesternenergy.com
Yellowstone Valley Electric Cooperative
P.O. Box 249
150 Cooperative Way
Huntley, MT 59037-0249
406-348-3411
Fax: 406-348-3414
www.yvec.com
E S TA B L I S H I N G T E L E P H O N E
SERVICE
T
here
are
multiple
telephone/
communications providers that serve the
Yellowstone County area. The following is a
list of the main providers to contact for rates and
service information.
T
he Montana Department of Labor
& Industry is available to provide
consultation to new businesses in the
state. The local and state departments offer
educational seminars and presentations
throughout the year. These classes cover a
wide range of labor-related topics such as
labor laws, labor issues, prevailing wages,
unemployment insurance, benefits, and
employment services.
It is advisable to contact the local Montana
Department of Labor office regarding these
classes. These seminars are intended to
provide you with all the information you
need to prepare you for the employment
aspect of running a business. You should
begin these classes up to one year before
your intended start-up. At these seminars
you will be provided with a section of the
instructional workbook.
The Montana
Department of Labor can help you walk
through all of your employment and labor
issues and concerns.
R e s o u rc e :
Montana Department of Labor & Industr y
P. O . B ox 1 7 2 8 H e l e n a M T 5 9 6 24 - 1 7 2 8
P h o n e : 4 0 6 - 4 4 4 -2 8 4 0
Fa x : 4 0 6 - 4 4 4 - 1 3 9 4
T T Y: 4 0 6 - 4 4 4 - 0 5 3 2
d l i . m t . g ov
OSHA
T
he issuing and enforcing of occupational
and safety health regulations is handled
by the United States Department of
Labor. The Occupational Safety and Health
Administration (OSHA) is the federal agency
which administers these policies.
The
requirements put forth by OSHA include posting
notices to employees and maintaining accurate
records of employee injuries. OSHA will provide
you with the information on all requirements as
well as related publications. OSHA policies and
regulations must be posted in the workplace
and visible to all employees.
In addition to OSHA, the U.S. government
also supports the Employment Standards
Administration, Mine Safety and Health
Administration, Veterans Employment and
Training Service, and the Pension and Welfare
Benefits Administration.
Each of these
departments is designed to protect both the
employer and employee. Similar to OSHA,
each entity issues and enforces a unique set of
requirements and regulations.
R e s o u rc e :
Occupational Safety and Health Administration
U. S . Department of Labor
2 9 0 0 4 t h Ave n u e N o r t h , S u i te 3 0 3
Billings, Montana 59101
P h o n e : (4 0 6 ) 247-74 9 4
h t t p : //w w w. o s h a . g ov
AT&T
Customer Service or Sales: 1-888-944-0447
Optimum
Customer Service or Sales: 1-866-718-6097
Qwest/CenturyLink
Customer Service or Sales: 1-877-744-4416
Integra Telecom
Customer Service or Sales 1-888- 342-5987
8 ? =I A O ; 9 E D E C ? 9 : ; L ; BE F C ; D J š 9 H ; 7J ? D = C E D J7 D 7 8 K I ? D ; I I E F F E H J K D ? J ? ; I
22
E D U C AT I N G YO U R S E L F O N
L ABOR /SAFET Y ISSU ES
( ( (D $) ( D :I J$ "I K ? J ;( & &š8 ? B B ? D = I "C J+ / ' & 'š* & , #( + , # , . - 'š8 ? = I A O ;9 E D E C ? 9 : ; L ; BE F C ; D J$ E H =
23
19
N E W B U S I N E S S S TA RT U P
N E W B U S I N E S S S TA RT U P
2 : A P P L I C ATI O N , H I R I N G &
T E R M I N ATI O N P R O C E S S
S T E P 3 : A D D IT I O N A L R E S O U R C E S
Application, Hiring and Termination Processes
State and Federal Employment Laws
T
here are basic ground rules to hiring and firing
employees, and you should always consult
with an employment attorney before making
these decisions. If handled incorrectly, personnel
issues can result in legal problems large enough to
shut down your business. While this guide cannot
provide legal advice, the following points are some
of the things you should consider when faced with
an employment situation. If in doubt, always make
sure to use legal or other employment resources.
š;:K97J;OEKHI;B< The best way to prevent
problems is to be familiar with the law. When
you are in doubt about any issue concerning
labor or safety, contact the Montana Department
of Labor & Industry and or the local Job Service
office. See the Resource Directory for contact
information.
T E R M I N AT I O N
DO:
A P P L I C AT I O N A N D H I R I N G
DON’T:
š7ia eXl_eki gk[ij_edi$ Do not ask questions
regarding sex, age, race, etc. or anything related
to these areas. These are sensitive areas and
cannot be used as discriminating factors.
Some applicants may believe that all gathered
information is used. It is for this reason that you
should not ask these questions. It is best to avoid
these topics so as to eliminate all possibility of
legal problems.
šMh_j[ ed j^[ `eX Wffb_YWj_ed \ehc$ Any notes
taken during interviews should be made on
photocopies or other paper. This allows you to
preserve the original application without marring
it for your permanent records.
DO:
šB_c_j oekh _dj[hl_[m gk[ij_edi je `eX Zkj_[i$
There is no reason to ask questions that apply to
the responsibilities of the position. You may ask an
applicant is he/she has any barriers to completing
the duties. Do not ask question like “Do you have
children?” or “Are you married?” Small talk is
acceptable if the interviewer is careful. Do not
venture into conversations that might produce
seemingly discriminatory information.
šCWa[ ikh[ Wbb YecfWdo fheY[Zkh[i \ebbem
employment statutes. Have your advisors or
attorney review your system for application,
hiring, and termination before you begin hiring
and periodically thereafter.
šH[l_[m YecfWdo feb_Y_[i$ If you have not yet
developed company policies regarding the
application, hiring, and termination, call the
Montana Department of Labor & Industry or
your local Job Service. Make a checklist of your
procedures. Make sure that you have followed
the rules in the firing process. If you have not
yet completed your checklist, YOU SHOULD
NOT TERMINATE THE EMPLOYEE YET. Take
care to finish all steps in the process to alleviate
any questions and possible legal repercussions.
š>Wl[ W ijWj[Z YeZ[ e\ [nf[Yj[Z [cfbeo[[
behavior. Many employers face problems due
to unclear expectations of conduct. It is easier
to prove reasons for termination if such a code
is in place. This documentation will be helpful
if you are faced with paying restitution because
it will show that you had a sufficient cause to
terminate the employee.
š9edZkYj Wd [n_j _dj[hl_[m$ This allows you to
tie up any loose ends. Final paychecks can
be issued, and company property (e.g. keys,
paperwork, and files) can be returned. Ask the
employee what he/she liked or disliked about
your company. Ask for feedback on aspects
of your company of which this person has
knowledge. This person might be a bit more
forthcoming with problems or constructive
criticisms than someone who still works there.
šA[[f j[hc_dWj_ed e\ Wd [cfbeo[[ X[jm[[d
you (management) and the employee. The
fired employee will appreciate your decision
on this matter. Termination should not be
8 ? =I A O ; 9 E D E C ? 9 : ; L ; BE F C ; D J š 9 H ; 7J ? D = C E D J7 D 7 8 K I ? D ; I I E F F E H J K D ? J ? ; I
24
discussed with other employees. Privacy
can help you avoid harsh feelings and legal
repercussions.
š>Wl[ [cfbeo[[i i_]d W h[b[Wi[$ If you are
offering the fired employee severance pay
or anything else of values, have him/her sign
a release of liability to the company. This
may protect you in case of legal action.
W H E R E T O F I N D YO U R L A B O R
SOURCE
T
here are many resources through which
one can find employees. The first things
that typically come to mind are the
classified advertisements in local newspapers.
You can place ads in these publications for
week long and even month long periods.
Contact the publication you wish to use for
more specific information. The Montana
Department of Labor & Industry at your local
Job Service is an agency that can assist you in
finding employees.
R e s o u rc e :
Billings Job Service
2 1 2 1 - B R o s e b u d D r.
Billings, MT 59102
Phone 40 6 - 652-30 80
w s d . d l i . m t . g ov/ l o c a l / b i l l i n g s
R e s o u rc e :
A s s o c i a te d E m p l oye r s o f M o n t a n a
2 7 2 7 C e n t r a l Ave n u e , S u i te 2
Billings, Montana 59102
P h o n e : 4 0 6 -24 8 - 6 1 7 8
w w w. a s s o c i a te d e m p l oye r s . o r g
S till h ave q u e s tio n s? R ef e r b e low a n d
c o n su lt o u r R e so u r c e D i r e cto r y to f i n d
th e a n swe r !
Additional Resources
BUSINESS PLANNING RESOURCES
Montana Manufacturing Extension Center
Dale Detrick
222 N. 32nd St. Ste. 200
Billings, MT 59101
406-256-6871
www.mtmanufacturingcenter.com
Small Business Development Center at Big Sky
Economic Development
222 N 32nd St. Ste. 200
Billings, MT 59101
406-254-6014
www.bigskyeda-edc.org/small-businessdevelopment.php
SCORE (Senior Core of Retired Executives)
207 N Broadway
Billings, MT 59101
406-294-4422
www.score.org
BUSINESS DEVELOPMENT RESOURCES
Big Sky Economic Development
222 N. 32nd St. Ste. 200
Billings, MT 59101
406-256-6871
www.bigskyeconomicdevelopment.org
Business Expansion and Retention
at Big Sky Economic Development
222 N 32nd St. Ste. 200
Billings, MT 59101
406-256-6871
www.bigskyeda-edc.org/bear.php
Billings Chamber of Commerce
815 South 27th Street
Billings, Montana 59101
406-245-4111
www.billingschamber.com
Laurel Chamber of Commerce
108 East Main St.
Laurel, MT 59044
406-628-8105
www.laurelmontana.org
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N E W B U S I N E S S S TA RT U P
N E W B U S I N E S S S TA RT U P
3 : A D D ITI O N A L R E S O U R C E S c o nt .
Montana Chamber of Commerce
P.O. Box 1730
Helena, MT 59624-1730
406-442-2405
Fax: 406-442-2409
www.montanachamber.com
Billings Job Service
2121-B Rosebud Dr.
Billings, MT 59102
406-652-3080
wsd.dli.mt.gov/local/billings
Governor’s Office of Economic Development
P.O. Box 200801
Helena, MT 59620-0801
406-444-5634
business.mt.gov
City of Billings
210 N. 27th St
Billings, MT 59101
ci.billings.mt.us/index.aspx?NID=35
Small Business Administration
Montana District Office
10 West 15th Street Suite 1100
Helena, MT 59626
United States
406-441-1081
Fax: 406-441-1090
www.sba.gov/about-offices-content/3/3126
Downtown Billings Association
2815 2nd Avenue North
Billings, MT 59101
406-294-5060
Fax: 406-294-5061
www.downtownbillings.com
BUSINESS MARKETING RESEARCH
RESOURCES
MSU-B Center for Applied Economic Research
Scott Rickard
406-657-1763
www.msubillings.edu/caer/index.htm
Census & Economic Information Center/Montana
Department of Commerce
301 S Park Ave
PO Box 200505
Helena MT 59620-0505
406-841-2740
Fax: 406-841-2731
TTD: 406-841-2702
ceic.mt.gov
3 : G LO S SA RY O F T E R M S
Montana Department of Labor & Industry/Research
& Analysis Bureau - Workforce Services Division
P.O. Box 1728, Helena, MT 59624
406-444-2430
Fax: 406-444-2638
Toll free: 800-541-3904
TDD: 406-444-0532
www.ourfactsyourfuture.org
U.S. Census
www.census.gov
U.S. Department of Labor
200 Constitution Ave., NW
Washington, DC 20210
1-866-4-USA-DOL (1-866-487-2365)
TTY: 1-877-889-5627
www.dol.gov
Montana Tourism
Montana Office of Tourism
PO Box 200533
Helena MT 59620-0501
406-841-2870
Fax: 406-841-2871
www.travelmontana.org/research
Bureau of Economic Analysis (BEA)
Acquisition Systems, Planning and Policy Branch
U.S. Census Bureau
Washington, D.C. 20233
301-763-1822
Fax: 301-763-4149
E-mail: Dijon.f.ferdinand@census.gov
www.bea.gov/index.htm
OTHER WEB - BASED RESOU RCES FOR
ENTREPRENEURS
All Business
allbusiness.com
Business Finance
businessfinance.com
Business Planning Expert bplans.com
Business Owner’s Toolkit toolkit.com
Duct Tape Marketing
ducttapemarketing.com
Entrepreneur.com
entrepreneur.com
Kauffman Foundation’s Resources for Entrepreneurs
entrepreneurship.org
My Own Business
myownbusiness.org
PriceWaterHouseCooper – Vision to Reality
pwc.com
The Wall Street Journal Center for Entrepreneurs
startupjournal.com
Salary.com
salary.com
Famee Foundation
famee.org
Montana Technology Innovation Partnership (MTIP)
mtip.mt.gov/default.mcpx
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Glossary of Terms
Assets – Resources, owned or
controlled by a company, that
have future benefits.
These
benefits must be quantifiable in
monetary terms.
Balance Sheet – A list of a
company’s assets, liabilities, and
owner’s equity at a particular
point in time; assets=liabilities +
owner’s equity.
Break Even – The unit of volume
where total revenue equals total
cost; there is neither profit nor
loss.
Capacity – The amount of goods
or work that can be produced
by a company given its level of
equipment, labor, and facilities.
Capital – The money, property,
and other valuables which
collectively represent the wealth
of a business: is used to generate
income for that business.
Cash Flow – the movement of
cash into and out of a company;
actual cash received and actual
payments made.
Cash Flow Statement – A
presentation of the cash inflows
and outflows for a particular
period of time; these flows are
grouped into major categories
of cash from operations, cash
investing from activities, and
cash from financing activities.
Collateral – assets pledged in
return for loans.
Conventional
Financing
–
Financing
from
established
lenders, such as banks, rather
than
from
investors;
debt
financing.
Debt Financing – Raising cash for
a business by borrowing, often
in the form of bank loans (See
Conventional Financing above).
Debt Service – Cash being paid out
on a loan; the amount necessary
to keep a loan from going into
default.
Disbursements – Cash paid out.
Equity – Total assets minus
total liabilities; here also called
shareholder’s equity or net worth
or book value.
Expenses – Outflows of resources
to generate revenues.
Fixed Costs – Those costs that
are not responsive to changes
in volume over the relevant time
period.
Income Statement – A matching of a
company’s accomplishments (i.e.
sales) with effort (expenses from
operations) during a particular
period of time (Revenues Expenses = Net Income).
Leasehold Improvements – The
changes made to a rented store,
office or plant, to suit the tenant
and make the location more
appropriate for the conduct of
the tenant’s business.
Letter of Intent – A letter or
other document by a customer
indicating
the
customer’s
intention
to
buy
from
a
company.
Liabilities – Commitments to
payout assets (typically cash) to
or render services for creditors.
Licensing – The granting or
permission by one company
to another to use its products,
trademark, or name in a limited,
particular manner.
Liquidity – The ability to convert
assets into cash.
Market Share – the percentage of
total available customer base
captured by a company.
Net Worth – The total ownership
interest
in
a
company,
represented by the total amount
of assets minus the total amount
of liabilities.
Partnership – A legal relationship
of two or more individuals to run
a company; entity structure.
Gross Profit Margin – What remains
from sales after a company pays
out the cost of goods sold; Cost of
Goods Sold/ Sales (percentage).
Pro Forma Statements – A
financial statement detailing
management’s predictions.
Receipts – Funds coming into the
company; the actual cash paid
to the company for its products
or services; not necessarily the
same as a company’s actual
receipts.
SBA
–
Small
Administration
Business
SBDC
–
Small
Development Center.
Business
Sole Proprietorship – Company
owned by one person.
Variable Costs – Those costs
that are directly responsive to
changes in volume over the
relevant period of time.
Venture Capitalists – Individuals or
firms who invest money in new
enterprises.
Working Capital – The cash
available to the company for
the ongoing operations of the
business.
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