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  • Guide to Starting a Business in PA

    Important Note: This is an account of the steps I followed to start my business.  Your business may have different requirements.  This guide is not a replacement from sound advice you should seek from a business advisor, attorney, payroll specialist, tax advisor, and accountant.
    1. Take a business course or at the very least read a book about starting a business.  This background information is very important and your resource should be current. When I got started I had lots of great ideas, vast knowledge in your area of experience, but little business knowledge.  I took a course at my local community college on small business management.  I also read the book Home-Based Business for Dummies and Effective Small Business Management .  The advice from Professor Rech combined with the Edwards' book were extremely useful in getting me started in the right direction.
    2. Research your market.  Find out what other people who are doing that are running businesses similar to yours.  Also interview potential customers and find out their needs. I am takiing every opportunity to talk to business owners in my field and outside of my field.  It is amazing how much people want to share.  Business owners take a lot of pride in what they do.
    3. Evaluate your personal financial position and estimated business startup and operating expenses. MyFICO provides credit score and credit check services.  If you are going to need a loan to start your business, you may want to apply for it before leaving your current job.
    4. Choose a form of ownership.  Each form of ownership has its pros and cons.  Make sure you fully understand your options and seek advice if needed.
      1. Sole Proprietorship – A business owned and managed by a single individual.  Very simple to form, but carries unlimited personal liability.
      2. Partnership – Two or more people who co-own a business.  Make sure you establish a partnership agreement.
      3. C Corporation – An entity created by the state to conduct business. It is taxed separately.
      4. S Corporation – A corporation where all profits and losses are passed to the shareholders and is only taxed once at the individual tax rates.
      5. Limited Liability Company – A cross between a partnership and a corporation.
    5. The next step I took was to write a solid business plan.  Think of a business plan as a script for a play. This script will go over the mission (your vision), goals, objectives, strategy, actors (key players that will help you start and run your business), product/services, marketing (Who, What, Where, When, Why, and How you will get your word out), plan of operation, the stage (location and layout), and finances (the capital to finance your business).  The Small Business Administration has a number of guides that can help you write your plan.  Once you have written your plan get feedback.  Friends, Family, and professional organizations like SCORE can give you insight and point things you may have missed. 
    6. Inform your friends, family, and employer about your choice to start a business.  Even if you are only pursuing the business part time it is good to let the people who rely on you know your plans.
    7. Unless you are starting a sole proprietorship you will next need an EIN (Employer ID Number), essentially this is a social security number for your business.  Almost all forms you fill out from this point forward will require it.  Getting an EIN number takes less than an hour through IRS Form SS-4 and can be done online on the IRS Website.
    8. If you haven't done so already, I highly suggest you identify key professional advisors for your business.  This would include an accountant, attorney, financial advisor, insurance agent, payroll specialist, and mentors (sales, technical, management, HR, etc.).
    9. Establish your business as a legal entity.  This is done through your state government.  If you are starting a sole proprietorship or partnership this step may not be required, but you may still want to protect your business name by registering a fictitious name.  To establish a corporation you'll need to file Articles of Incorporation.  For a LLC the document is called Articles of Organization.  In Pennsylvania you can file these documents electronically at the PA Open for Business site.
    10. Complete all business forms with your state.  In PA this is the PA-100 Combined Registration. This form can be completed online at
    11. Enroll to pay federal taxes.  The easiest way to do this is on the EFTPS Site .
    12. If you are establishing a corporation you should write your Bylaws.  I found the Anthony Mancuso's Book Incorporate Your Business invaluable in completing this step.  You may find it easier to have an attorney help you with this process.
    13. After you have completed your Bylaws I suggest purchasing stock certificates and a corporate seal.  Although neither is required, it will help establish your corporation and assist you in keeping good shareholder records.  I purchased both for less than $75 at Blumberg's Law Products .
    14. Next figure out where you would like to do your business banking.  You should have a separate business account from your personal account, even if it is at the same bank.  Setup a DBA account for a sole-proprietorship and a business account for all other businesses.  At this point do not setup the account if you are establishing a corporation, just pick the bank.  You need to get your shareholders permission to setup the account at your First Meeting of the Board of Directors.
    15. If you are starting a corporate you need to conduct a First Meeting of the Board of Directors.  During this meeting the board reviews and accepts the Bylaws, Articles of Incorporation, Principle Office Location, Appointment of Officers (CEO, CFO, President, Secretary, Treasurer, etc.), Corporate Seal, Stock Certificate, Location and Name of Bank, Fiscal Year, Compensation for startup expenses, and the Issue of Initial Shares of Stock.
    16. Bring your Articles of Incorporation, EIN, and Photo ID to the bank and establish a business banking account.
    17. Secure additional financing through lenders and additional sale of stock.  Remember that selling stock to outside investors gives them ownership and potential control over your company.  Talk to a representative at your bank before using credit cards to finance your business.  They can provide advice in addition to loans.
    18. If you are establishing an S-Corporation.  File an election for S-Corp status. Federal Form 2553.  You may also need to file a similar form with your state once your Federal election is approved.  In PA you are automatically considered a S-Corporation if you are approved for Federal election after Jan. 1, 2006 otherwise you should file REV-1640 in duplicate with the PA Department of Revenue.
    19. Complete any local requirements to establish your business location.  Often this isn't much more than registering with your local tax authority. In my area it is Berkheimer. You should also check with your local zoning board.
    20. Join your local Chamber of Commerce.  I joined the Central Bucks Chamber of Commerce.
    21. Secure Insurance: Health, Disability, Workers Compensation, Liability, etc.
    22. Get business cards.  Vistaprint has a number of pre-made template cards and also allows you to upload custom designs.  They did a fantastic job with my cards.
    23. Setup an accounting method.  Quickbooks provides many different solutions for bookkeeping and can be integrated into almost any aspect of your business.
    24. Establish a website.  I can help you get started.  I have contacts with a few web design firms depending on your needs.
    25. Market, Market, Market.  Go to business card exchanges, become active in your community, talk to other business owners, and advertise.
    26. Open your doors!
    Best of luck to you on your exciting business venture.  If you would like help with any hurdles while setting up or running your business please contact me.
    Jason Wood
    Immersion Technology Inc. 

    Update: Ruth wrote a great post on expanding your team on my blog.