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					10 Steps to Starting Your Own Business Provided by the Greater Oklahoma City Chamber of Commerce

10 STEPS TO STARTING YOUR OWN BUSINESS
Step 1: Step 2: Step 3: Step 4: Step 5: Step 6: Step 7: Step 8: Step 9: Write a Business Plan Research Your Market Name and Legal Structure License and Permits Employer Identification Number and Unemployment Insurance State Sales Tax Permit State Withholding Tax Business Insurance Business Financing

Step 10: Select A Business Site Bonus: Tips for the Savvy Business Owner Additional Sources of Information

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10 Steps to Starting Your Own Business Provided by the Greater Oklahoma City Chamber of Commerce

Step 1: I.

Write a Business Plan Business Description and History A. Name, nature of business, history, affiliates, stage of development, unique features of products or services, any proprietary position (patents, experience). Products and Services Description A. Clearly explain all products and services. Describe what you are selling and why. Management Plan A. Personal history of principals (résumés) B. Organization chart C. Duties and responsibilities D. Staff plan: include number of employees, salaries, fringe benefits, training needs, etc. Marketing Analysis and Marketing Strategy A. An in-depth analysis of the market for the product or service to be sold: 1. Who and how large is your market? 2. How will you be competitive? 3. What pricing and sales terms are you planning? 4. Market Plan 5. Detailed descriptions of how the business will obtain its market shares and achieve sales objectives: a. Pricing b. Promotion c. Distribution channels d. Marketing review, monitoring or evaluation Operating Requirements A. Explain how the business will be run on a day-to-day basis, hiring employees, and personnel procedures. B. How will your products and services be produced and made available to the customer? Financial Management/Funding A. Outline for obtaining credit or investment capital: 1. Projected start-up costs 2. Use of proceeds 3. Expected profit or return on investment for the first year 4. Pricing and deal structure (including terms and payback) 5. Projected income statements and balance sheet for two years 6. Projected monthly cash flow statement for 12 months Summary of Risks Involved

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10 Steps to Starting Your Own Business Provided by the Greater Oklahoma City Chamber of Commerce

A.

Discuss contingency plans that have been developed for potential problems and delays. 1. Industry, company, and its personnel 2. Timing 3. Product and market acceptance

VIII. Concluding Narrative A. Summarize your business goals and objectives and include a message that you are committed to the success of your business.

Step 2: I.

Research Your Market A comprehensive marketing plan should be developed and included in your business plan. A. A marketing plan is a detailed, written plan that lays out the steps your company must take to create customers. It includes an analysis of your product/service, business strengths and weaknesses and your market position. B. Marketing Plan Outline 1. Mission statement - what you want your business to be. 2. Marketing objectives - short term and long term. 3. Sales and profit goals - short term and long term. 4. Products/Services - description by product/service lines, including any changes that would affect marketing goals. 5. Target markets - list and briefly describe. 6. Market potential - potential sales, profit or other advantages. 7. Marketing strategies - how will you achieve your goals, including promotion strategies. 8. Potential problems - brief description plus proposed solution. 9. Sales and marketing timetables - implementation and measurement. 10. Review and evaluation schedule - short schedule of important review dates. 11. Miscellaneous documentation - include supporting documents like letters of intent or purchase agreements.

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10 Steps to Starting Your Own Business Provided by the Greater Oklahoma City Chamber of Commerce

Step 3: I.

Name and Legal Structure Businesses generally fall into one of the four general categories: proprietorship, partnership, corporation, or limited liability company or “S” corporation. A. An accountant, financial advisor, and or legal counsel should be consulted before making this decision. 1. Proprietorship a. As the owner of a sole proprietorship, you will be held personally liable for any debts or taxes of the business or other claims against the business. 2. Partnership a. Partnership is similar to proprietorship except there are two or more owners. All partners are legally responsible for the debts, taxes and other claims against the company. b. Law governs a limited partnership in a different manner. A limited partnership must be registered with the Secretary of State, 405-521-3911, www.sos.state.ok.us. 3. Corporation a. Corporation exists as a separate “Legal Person” apart from the people who manage and operate the business. If you are going to operate your business as a corporation, you must receive a Certificate of Incorporation from the Oklahoma Secretary of State Office, 405-521-3911, www.sos.state.ok.us. 4. Limited Liability Company a. LLC’s are treated like corporations for limited liability purposes but are treated as partnerships with the advantages of pass-through taxation for federal tax purposes. 5. “S” Corporation a. An “S” corporation is permitted to be taxed as if it were a general partnership; i.e., the losses and profits flow through to the individual shareholders for tax purposes. If a corporation qualifies, its income will be taxed to the shareholders. “S” status usually avoids the corporate income tax, and corporate losses can be claimed by the shareholders. However, undistributed taxable income is subject to capital gains tax. 6. One other form of business you may want to consider is Franchising. a. The offer and the sale of franchises is regulated at the federal level by the Federal Trade Commission Consumer Line, 877382-4357, www.ftc.gov. For additional information about franchise opportunities, contact the International Franchise Association at 202-628-8000, www.franchise.org. b. The offer of a franchising opportunity is a security, subject to regulation under the Oklahoma Business Opportunity Sales

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10 Steps to Starting Your Own Business Provided by the Greater Oklahoma City Chamber of Commerce

Act, and the seller must file a registration statement with the Administrator of the Oklahoma Department of Securities along with a $250 filing fee. The Federal Trade Commission also requires a franchiser to give a prospective franchisee a disclosure statement 10 days before the franchisee signs a contract or pays any money for a franchise. Step 4: I. Licenses and Permits There are local and city licenses and permits, state licenses and permits, and federal licenses and permits. A. City Oklahoma City Business Licenses, 405-297-2606, www.okc-cityhall.org. B. State Capitol Straight Line, 405-521-2011, www.state.ok.us. C. Federal Securities and Exchange Commission: 202-942-8088, www.sec.gov. U.S. Dept. of Transportation, Federal Highway Administration: 202-358-7000, www.fhwa-li.volpe.dot.gov. Food and Drug Administration: 405-231-4544 Treasury Dept., Bureau of Alcohol, Tobacco & Fire Arms: 405-297-5060, www.atf.treas.gov. Federal Communications Commission: 888-225-5322, www.fcc.gov.

Step 5: I.

Employer Identification Number and Unemployment Insurance You will need to obtain an Employer ID Number and make payments for unemployment insurance. A. The form needed for your Employer ID Number is the SS-4. To obtain this form contact: Internal Revenue Service Center ATTN: Entity Control Austin, TX 73301-0102 800-829-1040 www.irs.ustreas.gov B. The Oklahoma Employment Security Commission Act provides that under certain conditions payments of money may be made to unemployed individuals from an unemployment compensation fund contributed to by employers subject to the Act. Apply to the Oklahoma Employment Security Commission, 405-557-7200, for OES-1, Status Report.

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10 Steps to Starting Your Own Business Provided by the Greater Oklahoma City Chamber of Commerce

Step 6: I.

State Sales Tax Permit An Oklahoma State Sales Tax Permit is required for retail sales. A. You must complete form 13-60-R-85 Sales Tax Division before making any retail sales. The permit is $20 with additional locations costing $10 and is renewable every 3 years. Apply at the following: Oklahoma Tax Commission M.C. Conners Building 2501 N. Lincoln Blvd. Oklahoma City, OK 73194 405-521-3279 www.oktax.state.ok.us B. If you are a manufacturer, you may be eligible for a Manufacturer’s Sales Tax Exemption. The exemption permits manufacturers to buy materials and sell wholesale without paying sales tax. Contact the Oklahoma Tax Commission (listed above) and request form 13-82 business registration packet. Upon completion of the information, the Oklahoma Tax Commission will send you a card to file for a Manufacturers’ Limited Exemption Certificate (MLEC).

Step 7: I.

State Withholding Tax You must pay State Withholding Tax. A. Apply to the Oklahoma Tax Commission, Business Tax Division, for Form OW-6-R: Oklahoma Tax Commission M.C. Conners Building 2501 N. Lincoln Blvd. Oklahoma City, OK 73194 405-521-3108 www.oktax.state.ok.us

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10 Steps to Starting Your Own Business Provided by the Greater Oklahoma City Chamber of Commerce

Step 8: I.

Business Insurance Property Insurance A. This protects the owner of the property against loss caused by the actual destruction of, a part, or all of the property by fire, windstorm, explosion, falling aircraft, riot and other perils. Business Interruption Insurance A. This protects a business against loss arising out of legal liability for death, injury or damage to the person or property of others caused by negligence. Bonds A. Fidelity bonds guarantee against loss due to the dishonesty of employees. Surety bonds guarantee the performance of various types of obligations assumed by contract or imposed by law. Contact the SBA for a current list of bonding agents, 405-231-4301, www.sba.gov. Workers’ Compensation A. Workers’ comp provides for payment of compensation benefits, as established by state law, to insured employees of a business. This insurance is mandatory in the state of Oklahoma. This insurance is sold by most major insurance companies, but can also be obtained through the State Insurance Fund, 405-232-7663. Group Insurance for Employees A. This insurance must conform to state standards. For more information, contact: Oklahoma Insurance Department P.O. Box 53408 Oklahoma City, OK 73152-3408 405-521-2828 www.oid.state.ok.us

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Product Liability A. This refers to insurance coverage for any product manufactured by the insured.

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10 Steps to Starting Your Own Business Provided by the Greater Oklahoma City Chamber of Commerce

Step 9: I.

Business Financing There are numerous sources of financing in the State of Oklahoma. A. Funds for running a business are available in two forms: debt capital, which represents funds obtained from borrowing, and equity capital, which represents funds provided by the sale of stock or increased investment. The raising of equity capital will require consultation with legal counsel. Debt capital is less complicated. Traditional sources of debt capital are banks, venture capital firms, and loan programs. A loan package should contain: 1. Current financial statement 2. Profit and loss statement 3. List of collateral 4. Amount of loan 5. Pro forma 6. 7. 8. Description of business Estimate of amount of personal investment Detailed projection of first year earnings

Step 10: Select A Business Site I. Include the following when selecting a business site: A. Convenience for targeted customers B. Building modification cost C. Whether you want to own, rent, lease, or purchase D. Zoning regulations and compliance with city codes E. Legal review of any leases or purchase contracts

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10 Steps to Starting Your Own Business Provided by the Greater Oklahoma City Chamber of Commerce

Tips for the Savvy Business Owner I. In addition to the crucial 10 steps to get your business started, the following is a list of added details to help you become a successful entrepreneur. A. Determine compliance with the Occupational Safety and Health Act. Contact: Oklahoma Department of Labor 4001 N. Lincoln Boulevard Oklahoma City, OK 73105 405-528-1500 www.state.ok.us/~okdol B. C. File quarterly estimated income tax returns almost immediately after starting business or incorporating. For a sole proprietorship (see Step 3), report to the IRS any selfemployment income on Schedule SE of Form 1040, and report income loss on Schedule C of Form 1040. Partnership (see Step 3), income is reported to the IRS by filing Form 1065. Each partner reports his or her share of self-employment income on Schedule SE of Form 1040, and income or loss from partnership operations on Schedule E of Form 1040, and income loss from partnership operations on Schedule E of Form 1040. For a limited partnership (see Step 3), file a Certificate of Limited Partnership with the Oklahoma Secretary of State and copies in counties where the partnership has places of business and real estate. For a limited liability company (LLC) (see Step 3), file articles of incorporation with the Oklahoma Secretary of State. Generally, file Form 1065 to report partnership income; members report shares for selfemployment income on Schedule SE of Form 1040, and income or loss from LLC operations on Schedule E of Form 1040. For a corporation (see Step 3), file articles of incorporation, adopt bylaws and observe necessary corporate formalities. File federal income tax return Form 1120 (1120-S for a Sub-chapter S corporation). If property is transferred to the corporation tax free under IRS Code Section 351, report required information relating to the transfer on corporation’s income tax return for that year. If your business is a corporation, be sure to obtain federal tax deposit coupons.

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10 Steps to Starting Your Own Business Provided by the Greater Oklahoma City Chamber of Commerce

II.

File annual tax information returns. A. File Form 1096 and the Form 1099 series (for payments of $600 or more for items such as rent, interest and compensation for services) and send 1099’s to the payees. B. C. File Form 1098 for mortgage interest of $600 or more in a year your business receives from an individual. Report any cash payments of more than $10,000 that you receive to the IRS within 15 days.

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Join the Greater Oklahoma City Chamber of Commerce. A. There is more to being a member of the Greater Oklahoma City Chamber of Commerce than community involvement. The Chamber provides many services to help your business, including: 1. 2. 3. 4. 5. 6. 7. 8. B. New business contacts Governmental advocacy Publicity and exposure Networking events Referrals Professional development Guidance and counseling Demographic information

Contact the Membership/Marketing Division of the Greater Oklahoma City Chamber of Commerce at 297-8900 for more information.

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Small business record keeping is essential to operating a successful business. A. B. C. D. Checkbook – funds that pass in and out of your business should be through a checking account set up specifically for the business. Cash Receipts Journal – receipts should be entered in a receipts journal. Cash Disbursement Journal – funds that are paid out should be recorded in a cash disbursements, purchases and expense journal. Petty Cash Fund – keep a petty cash fund with voucher slips to document each expenditure.

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Accounts Receivable – keep an accurate list of credit extended to customers.

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10 Steps to Starting Your Own Business Provided by the Greater Oklahoma City Chamber of Commerce

F. G.

Payroll Records – annual and quarterly reports of individual payroll payments must be made to state and federal governments. Employee records – an employment record should be kept on each employee, including a W-4 form.

V.

Check out the business and marketing information on the World Wide Web. A. Internet 1. 2. Use search engines to locate numerous business Web sites. If you do not have access to the Internet, visit the Business Information Center at 115 Park Avenue. The Business Information Center offers Internet access through its computer lab.

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10 Steps to Starting Your Own Business Provided by the Greater Oklahoma City Chamber of Commerce

Additional Sources of Information for Start-Up Assistance: Business Information Center 115 Park Avenue Oklahoma City, OK 73102 405-232-2376 www.osbdc.org/uco Oklahoma City Business Network (ocbn.org) 123 Park Avenue Oklahoma City, OK 73102 405-297-8971 www.ocbn.org Oklahoma Department of Commerce 900 N. Stiles, P.O. Box 26980 Oklahoma City, OK 73126-0980 405-815-6552 www.odoc.state.ok.us Oklahoma Small Business Development Center 115 Park Avenue Oklahoma City, OK 73102 405-232-1968 www.osbdc.org/uco Service Corps of Retired Executives (SCORE) 210 Park Avenue, Ste. 1300 Oklahoma City, OK 73102 405-231-5163 www.score.org U.S. Small Business Administration 210 Park Avenue, Ste. 1300 Oklahoma City, OK 73102 405-231-4301 www.sba.gov For additional information, please contact: Small Business Division Greater Oklahoma City Chamber of Commerce 123 Park Avenue Oklahoma City, OK 73102 405-297-8900 www.okcchamber.com

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