Starting a Business
Financing, Business Plans and Business Organizations
A prospective business owner will be concerned with financing the new business, setting up a business plan and choosing the best type of business organization. The options for pursuing ownership of a business vary widely. An attorney from Spinella Owings & Shaia, P.C. in Richmond, Virginia, can help you sort out these matters. The following synopsis will help you start thinking about the important decisions you will have to make.
Financing and the Development of a Business Plan
A potential new business owner must always be aware of the costs involved in starting a business. All startup costs and one-time expenses must be considered. The business owner will want to contact a financial institution or investors to obtain financing.
Typically, a business plan is required and includes the following:
- A description of the venture, including the primary features of the business
- What service or product the business will provide
- Research indicating that there is a need for the business
- A marketing plan that shows who the potential customers are and how they will be targeted
- A staffing plan showing how the business owner will run the business
- A management plan showing how the staff will be organized
- Financial plans including the costs of building, operating and maintaining the business and expected profits
What Is a Business?
The distinction between a business and a hobby is important for a variety of reasons, one of which is tax implications. Under the federal tax code, for example, business losses are generally tax deductible, whereas hobby losses are not.
A business is a commercial enterprise with an expectation of profit. In general, businesses are run in a continuous and systematic manner and are governed by commercial principles. These principles define the profitable purpose of the business. In comparison, a hobby is an activity that is carried on in a casual manner, with no real business purpose. A hobby is not solely focused on earning a profit; its purpose may simply be for the enjoyment of the hobbyist.
Business Organizations
A potential business owner should be aware of the options for structuring the business and the laws that will affect the organization. Armed with this knowledge, the potential business owner can determine the best choice. The help of an attorney can be extremely valuable in making this decision.
There are many forms of business organization. Most businesses, however, are well served by a variation of one of the four major organizational forms. These major forms include the sole proprietorship, the partnership, the limited liability company (LLC) and the corporation. Each form has specific advantages and pitfalls. A focus on personal liability and tax implications should guide the new business owner in his or her selection.
Contact an Attorney
Securing financing, building a business plan and choosing the correct business organization are important steps in starting a new business. An experienced attorney from Spinella Owings & Shaia, P.C. in Richmond, Virginia, can offer guidance and advice.
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