How to start a Clothing Company » Jon

Interview with Mark Capicotto of Glamour Kills

Jon — Tue, 02 Jun 2009 19:59:05 +0000

I had the opportunity to ask Mark Capicotto of Glamour Kills a few questions about starting a clothing company and this is what he had to say.

Jon: How much money did you start your clothing line with?
Glamour Kills: I started off with $300.00-$400.00. I really didn’t have alot of capitol to start off with. I was working as pizza delivery boy while living at my parents house. Late at night, I worked on the company. I invested all the money that I made while delivering pizzas into Glamour Kills Clothing.

Jon: What were the biggest set backs when you were starting out?

Glamour Kills: The biggest set back I faced was the lack of capitol. In a way, having a lack of capitol helped me. It forced me to learn inexpensive-new forms of marketing and advertising. Still, until this day I use many of the same techniques to market and advertise.

Jon: What are some of the things that you wish you knew when you started? Glamour Kills: Everything… haha. I literally went into this with only knowing how to design. I didn’t know how to run a business, print a shirt, or even make an invoice…let alone, know anyone in the fashion and music industry to help me out. I still learn something new everyday.

Jon: My friend Ryan Miller from Carraway clothing wrote an article about Sponsoring Bands, is there anything you want to add?

Glamour Kills: He hit the nail on the head with that article! I love Ryan Miller .

Jon: How important has sponsoring bands been for the growth of your company?

Glamour Kills: Very importantant. The exposure gained through sponsoring a band is astronomical. When fans of a certain band can associate your company with the band, they then in return, become fans of your company. If it wasn’t for the bands that we sponsor, Glamour Kills Clothing wouldn’t be where it is today. Overtime, we have grown extremely close with All Time Low, Boys Like Girls and The Maine. Not only do we work with these bands on a professional level, but we have also built lasting friendships.

Jon: What do you wish you were better at when you started?

Glamour Kills: I would have to say talking like a businessman, even now I have trouble. Sometimes, you have to do the occasional “Big” meeting and for some reason, I have trouble with using the word “dude” or any word along that lines. Oh yeah, and not to mention… negotiating. When I first started Glamour Kills I learned quickly that you have to haggle(so to speak) to get stuff done. I wasn’t very good at that.

Jon: How important is doing something unique in the clothing market?

Glamour Kills: When I first started Glamour Kills Clothing, companies such as Atticus and Famous Stars and Straps printed on dark/muted color tees with 1-2 color print for their designs. Atticus and Famous were worn everywhere. I even grew up wearing Atticus and Famous myself. When I decided to start my company I wanted to do something new and different other than design something that catered to the stigma of “emo” kids, who wore all black (for the lack of a better term). I started doing big prints with bright colors to break the norm. Now this trend has become very popular. I will always try to do my best and push the envelope. If you notice, Glamour Kills is trying to go for a different feel from previous lines with a more serious approach. It is EXTREMELY important to develop your designs as your brand grows because everyone isn’t going to want to wear bright pink forever.

Jon: How effective have the MTV ads been?

Glamour Kills: Haha. I wouldn’t really say they were effective, but they weren’t a waste. We were offered the opportunity to run a bunch of ad spots nationally for the holidays. We wanted to do something fun and humourous for our fans and customers to see and say “Oh sh*t Glamour Kills is on TV”!

Jon: What is the most effective marketing you have done?

Glamour Kills: Using social networking sites. They’re free and help you reach your target demographic directly. On a side note, Tumblr and Twitter are going to be huge. Get on it !

Jon: What is the best way to go about getting your brand into a retail store?

Glamour Kills: You have to first work hard at getting your name out there. Once you develop your own customer base, you will start being noticed by larger retail companies. You can attend fashion trade shows until the cows come home, but if your sell factor isn’t there, then your product won’t sell.

Jon: When did you have your first taste of success and felt like you made it?

Glamour Kills: Well, there are a few moments.

When Zumiez picked up Glamour Kills and started distributing our goods nationally. It made me take a step back and really say “Wow, I did this”.

When I saw Cartel wearing Glamour Kills on MTV. A band that I grew up loving. Seeing my designs being worn by them on national TV really knocked my socks off!

I sold shirts at a local show a few years back and one of my personal idols, Mike Kinsella was performing his solo project, Owen. He walked over to my table and said “This is some of the best looking band merch that I have ever seen”. Haha, well it wasn’t band merch, but it was still awesome.

Jon: Are there any words of wisdom you want to give to any entrepreneurs trying to start a clothing line?

Glamour Kills: You have to play the game to change the game.

Post from: How to start a Clothing Company

Interview with Mark Capicotto of Glamour Kills

We are going to launch soon!

Jon — Fri, 15 May 2009 00:15:33 +0000

It’s been a ton of of hard work and I still have a website redesign for our website and store, a photoshoot to do, and get everything in order before we launch.

Here is a mockup of the design so far. Let me know what you think. It reminds me of the 300. This is SPARTA!!!!

Thanks for everyone who has been so supportive. The designs are amaing, we have some great band support behind us, and I am just really happy with everything we’ve done. I can’t wait to get these back from the printer.

All of this great info about starting a clothing company is going to be removed when we launch. Don’t worry all of these articles are going to be posted on my blog www.howtostartaclothingcompany.com.

Thanks again, I would love to hear any feedback you guys have.

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We are going to launch soon!

Printing it yourself VS hiring it out

Jon — Tue, 28 Apr 2009 07:44:16 +0000

My buddy David Murray over at SEIBEI wrote this great article about doing screen printing vs hiring it out.

I get e-mails all the time from people who want to learn screen printing and start their own t-shirt line. It’s always a very tricky issue for me to tackle, because the way I came into this business is a bit atypical and, while in retrospect things worked out nicely, it was very seat-of-my-pants, and I owe more to kindness and luck than shrewdness.

A brief introduction to how I started: I started learning from books and worked on a home made press. I screwed up a lot. I borrowed some money to get a starter set of home equipment, and screwed up a lot. Tired of screwing up, I started working in a screen printing shop, where I learned more in a week than I had in months of “teaching myself”. I kept printing on home equipment out of my basement. Eventually, my boss offered to let me use their equipment after hours. I did this for a while, then moved to NY, where I started at another shop, and worked out a similar deal with them (don’t think this is the norm – I was very lucky to find such trusting bosses TWICE). Now, I no longer work in a shop, and have hired out my printing to the last shop I worked for, because I know they do great work, and they’re nearby.

Screen printing is a rewarding craft, and I do miss not being behind a squeegee anymore (I think one day, I’ll have to set up a small studio for poster printing), but learning screen printing in order to start a clothing line is putting a bit too much on your plate at once. When I first started, I told my Uncle Phil my plans on having a well-stocked screen printing studio, and how it would save me money in the long run as I wouldn’t have to hire out printing work, and he told me basically what I tell people now: there are plenty of people out there who know how to screen print. Focus on being a good designer. Of course, I didn’t listen to the man who has a MBA and years of business experience. After all, I have a BA in Japanese Lit, so I’m pretty good at everything (right?).

As an entrepreneur, there’s a lot on your plate: marketing, designing, keeping the books, day to day operations…you want to take the time to learn to print, too? In this business, there’s no room for people who aren’t awesome at something. Focus on becoming an awesome marketer, an awesome salesman, an awesome creative director, or an awesome designer – THERE ARE PLENTY OF AWESOME PRINTERS OUT THERE WHO WILL GLADLY WORK FOR YOU.

Becoming a good screen printer takes a lot of time and practice, not to mention money for supplies and equipment. Furthermore, you can only teach yourself so much through books and practice. For those of you that have a shirt from my early days, and one from, say, any time in the past year, just compare the two. The differences may not be apparent – after years in the screen printing industry, my eye for a good print is sharper than most – but they are very different beasts. It took me YEARS to be a really good screen printer, and this was after years of working in two extremely professional screen printing shops.

read the rest of his article on here his blog

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Printing it yourself VS hiring it out

No spec please: why asking for spec work is bad

Jon — Fri, 13 Mar 2009 23:00:33 +0000

Here is a post that was recently on an online forum. I changed the name of the company to disguise their identity.

Hey, you think you got what it takes to make a shirt or hoodie design for Paper Clothing? Then bring it!!!
Email designs to paperclothing@gmail.com
Looking for bright, hand drawn art that is intricate but compelling and clean.
If we like it, we’ll compensate.

Good luck!

I have seen companies asking for spec work countless times on the emptees and other forums and it’s not the way to hire the best designers. If a designer is established they will not do spec work, it’s as simple as that. Posts like this make a lot of designers mad because they are devaluing what they do. They ask for work without guaranteeing payment and often times the payment details are very unclear. When someone says I’ll pay $50 – $150 for a design, I usually take it to mean they will pay me $50. What is the criteria for how much a designer gets paid? All of these things are really shady and most designers don’t want to deal with it and those that will are probably aren’t the cream of the crop.

Here is an article from www.no-spec.com

What is “spec?

“Spec” has become the short form for any work done on a speculative basis. In other words, any requested work for which a fair and reasonable fee has not been agreed upon, preferably in writing.

What’s so wrong with that?
In a nutshell, spec requires the designer to invest time and resources with no guarantee of payment.
Isn’t it wise for a client to “try before they buy?”

On the surface it may seem so. But, digging a bit deeper, one realizes that professional graphic design is about creating custom solutions, not cookie-cutter concepts.
But, with today’s computers and software, how long could it take?

This is a common point-of-view for many who confuse the professional with his or her tools. The “process” is more than simply tapping at a keyboard or clicking a mouse. It’s about understanding the nature of a communication challenge and then using one’s brain to find the appropriate solution.

At the end of the day, there is a certain irony in spec work. A prospect requesting it is ultimately saying, “My project isn’t important enough to hire a professional who will take the time to understand my situation and goals and invest the time needed to create a suitable solution.”

So please do your research. Find artists that fit the style of what you want. Read the previous article about How to properly contact an artis t and send the artist an email.

You may get a lot of work by getting artists to do spec but by contacting artists and paying them up front for work both parties will win and ultimately the designs will turn out better.

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No spec please: why asking for spec work is bad

Art Direction

Jon — Wed, 11 Mar 2009 01:27:26 +0000

You need to be a part of your company and give proper art direction for a design to succeed. The worst jobs I’ve had were when the client didn’t really know what they wanted and couldn’t even answer my basic question about where they want the designs direction to go. The saying “I’ll know what I want when I see it” is very painful for a designer because they can be working hours on a design only to find out that it wasn’t what the client wanted.

Usually after I’ve talked with the artist I send them my idea for the design along with any pictures or visuals that I think will help them. I look over the art that they’ve done for previous projects and tell them what designs I like the most and why I am hiring them for the job. I make it clear in the first emails that I want rough sketches in the beginning. I can see great composition with just a few lines and tell if a design is going the right way by just a simple sketch. I really want to make any changes at the early stages because I don’t want to waste the artists time. Trying to fix problems after the art has been inked and colored is a lot more time consuming than fixing a sketch.

Ways to Art Direct
You can tell them exactly what you want but one thing that really helped me as a designer was to just get a lot of thoughts and ideas about a design. When I get a bunch of feedback usually something clicks and I can see it in my head. It depends on the artist and the design but sometimes I just throw out a bunch of ideas and see if anything sticks.

Use Design terminology
If you want to communicate what you want you need to know the correct way to say it. Read this article on Elements and Principles of Design for more information

Here are some thumbnails of the notes I sent to our artist Mathew Skiff. In the end I thought the text wasn’t working an I am going to try and find another artist to finish this design.

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Art Direction

How to properly contact an artist

Jon — Fri, 27 Feb 2009 02:15:49 +0000

I have gotten a lot of emails being a freelance designer myself and most people don’t know how to properly contact artists. The worst is when I get an email that say “how much for a design”. Really… that’s all I have to go on. I don’t even know who the person is, what their company does, or if I am even the right person for the job. Please don’t do this if you expect to get any kind of response.

Here is a check list I follow when emailing artists and designers.

Introduce yourself
Tell them about your company
Tell them about your project
Let them know how you work and what’s expected
Payment details

Before I get any further here were some of the answers I got from fellow designers about the subject.

“The best experiences I have had are with people who are down to earth, yet approach me in a personal way. Those who are open minded and send me a message on myspace or shoot me an email are always great to work with. I am not a fan when a band will message me and be like how much for a design? and that’s all they say.”

“When contacting a new artist I give a brief introduction to myself, the business I work for and express an interest in hiring them for some freelance work. I’ll give a general idea of how we prefer to invoice but leave it open if the artist prefers another way (flat fee, kill/approval fee, hourly, etc.) I’ll also explain our business’ workflow so the artist and I can reach an understanding of the process and schedule accordingly. Then once the details are agreed upon I’ll give as much direction as possible and we’ll get to work.

It is best to keep it somewhat personal yet still professional and keep an open dialogue. People that just email you “How much?” are probably not the kind of people you want to work with. Never be afraid to ask questions no matter how dumb they may seem.”

Basically the more information you give an artist the better they will understand your business and in turn the design will usually turn out better. Let me break down that checklist I wrote in the beginning.

Introduce yourself
Who the hell are you? I want to know who I am dealing with. When I send out emails to artists I usually tell them about my clothing company, blog, and that I am a designer myself. It’s an easy way to connect with people by showing them that I am a designer to and this is the work I’ve done, it makes me credible.

Tell them about your company
What’s your demographic, age group, who is going to buy your designs? Hype your clothing company and make the artists want to be a part of your clothing line.

Tell them about your project
Give them a solid idea to design off of. Sometimes I work with a designer to come up with good subject matter but usually the idea is already polished in my head and just needs to be given to the right artist to get it down on the computer.

Let them know how you work and what’s expected
I spell it out that I want to see rough drafts and sketches before they start inking. For some reason a lot of beginning designers will just go on their own and give you a finished design without you okaying anything. This is a recipe for disaster because the designer put tons of time into the work that may or may not be what you intended. Just make sure the designer knows that you want to see his progress to fix any problems along the way.

Payment details
50% up front? Paypal? Check? Make sure everything is clear before they start

Now you have no excuse for emailing a designer for a quote.

Post from: How to start a Clothing Company

How to properly contact an artist

Backflip Gone Wrong

Jon — Thu, 26 Feb 2009 21:33:43 +0000

Post from: How to start a Clothing Company

Backflip Gone Wrong

Choosing the right business partners

Jon — Wed, 11 Feb 2009 00:11:22 +0000

Starting your own business is a huge decision. After deciding to start your own business you should ask yourself a very important series of questions: “Do I want to take this idea and do it alone?” And “Does it make sense to work with business partners?” Figure out what is best for you and then take the next step.

If you decide that working with partners/associates would be beneficial, the next question that is often posed to me is: “Where do I find these other people?” Honestly, you can find them anywhere. One of the biggest concepts in business is networking: your ability to meet and connect with people on not just a business level but a personal level. When making the decision whether to delve into a partnership over going solo you must be prepared to search actively. Be aware, that in order to find a business partner you must see eye to eye in the business sense as well as have meshing personalities.

Some Advice

I have individually headed the development of business opportunities, however, in others I have decided to work with partners. I will tell you upfront that I enjoy partnerships more than flying solo. If there is one red flag to mention about partnerships it is that some people get greedy and want all the rewards. Sharing makes a business work.

The first piece of advice I am going to give is: Don’t just look at money signs, look at the pleasure you are going to get from building this business and seeing it succeed with the people you are sharing this adventure with. It is very important that if you are only focused on money you are missing out on the big picture of what will truly make you successful.

The Story

I am constantly reading articles on the internet to educate myself and stay up to date on current happenings in the fashion industry. While perusing through articles, stumbled across a link which led me to Jonathan Kruse. I was immediately astounded and impressed by his work and at the stroke of 3 a.m I sent Jon an instant message to chat about him doing some work for my screen-printing company. Three characteristics about Jon became clear to me during our early morning conversation. First, was that Jon was very professional in the way he conversed. Second, from his work I could see that he had really good work ethic. Third, his portfolio proved that he has a lot of work under his belt to show off his talent as well as his passion. I personally was looking for something new and Jon had so many great ideas it was just meant to happen.

Finding the right people for you to work with is first figuring out what traits and or experience would help to compliment you and benefit what you are trying to do. A big one for me with Shred Clothing was that I am great at business management and innovative thinking as well as marketing and partnerships. Jon has a true talent for the arts as well an advertising side. He compliments me in the fact that he has the power to design work and create designs that just blow my mind, a talent that I do not posses. Jon is also aware of the business end, which allows us to open a dialog about trends and demographics.

Looking at many different sides of a situation is important so do not be so eager to jump the gun. Tony and I met while I was inspiring and showing young students that they have the knowledge and the knack to take a risk and step out of their comfort zone: (teaching a class on entrepreneurship). After one day of thinking, Tony went for it and hasn’t looked back ever since. It has been a great opportunity to work with him and to bring him on board for this epic journey.

Ben Gardner is single handedly one of the most energetic people I have ever met. Ben incredibly enthusiastic about everything he does. I got to see first hand that Ben is great at communicating to different types of people in any situation. For example, I saw him pitch to a customer in Spanish and he made a sale. I was sold as soon as I saw that. The four of us have come together as a team, a group of friends, and a family to create Shred Clothing.

Get It Started

Now you have all your business partners what do you do with them? Time to brainstorm on what is the focus of your clothing line and formulate some sort of semi organized structure or plan of attack. Along with this comes the whole part of deciding who is going to do what. I focus on one area at a time whether it be content on a website, setting up a myspace, or writing a blog. Focus 120% of your efforts on one specific task and make sure that you don’t spread yourself too thin or you won’t get the results that you want. Also don’t jump the gun, what has to get done before you can make any real moves. Make sure this happens but allocate effectively to your partners to make sure that they are all doing their part. The decisions you make in the brainstorming process will tell you if your group of partners is going to work well together. The biggest thing I stress to people when they start anything is stay focused and set goals so you have something to reach too otherwise you will procrastinate. Have a big picture but think small. This is where we currently stand with shred, we have a plan and now we are starting to execute the beginning stages of what will become something great when we launch in the next two months. Get excited and make sure to constantly check for updates as we progress through this journey we will constantly be giving updates as well as advice and some tricks that you won’t hear from anyone else!

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Choosing the right business partners

Giant list of T-shirt blogs and T-shirt sites

Jon — Fri, 10 Oct 2008 10:10:14 +0000

Getting traffic to your site is the most important task in order to have a successful online store. A great way to get traffic is through t-shirt blogs and rating sites. Here’s a Giant list of sites you can submit to your site to. Also check out the article How To: Get Your Cool T-Shirts Reviewed by a T-Shirt Blog for tips on how to contact these sites.

The first section is all t-shirt blogs separated by their google page rank.

T-shirt search engine

Please dress me

T-shirt blogs with a Page rank of 5

T-shirt blogs with a Page rank of 4

T-shirt blogs with a Page rank of 3

T-shirt blogs with a Page rank below 3

Multiple Subject Blogs

Foreign T-shirt blogs

T-shirt Rating Sites

http://www.teenormous.com
http://www.shirtseek.com
http://www.teespree.com
http://www.7tshirt.com
http://iloveyourtshirt.com
http://t-shirtcountdown.com

Networking/ Other

Special thanks to hideyourarms.com for documenting these sites

Please leave a comment if I missed a site or if one of the sites is dead. Thanks.

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Giant list of T-shirt blogs and T-shirt sites

How to choose between LLC, Corporation, and Sole Proprietorship. Taxes and fees for t-shirt businesses.

Jon — Sat, 05 Apr 2008 03:52:19 +0000

Originally posted by Binki on t-shirt forums
I wrote this up several years ago but it might be of some help here on starting a business in the USA. It is weak in some areas but should be a good start for someone wanting to start a business. The information was gathered prior to the start of our first business. (Yes, we have had more that one!)

Disclaimer
The information provided is believed to be accurate at the time of this writing and is solely my opinion. I am not an Attorney or CPA and am not offering legal or tax advice. I strongly advise consulting an Attorney, Tax Professional or CPA prior to acting on my opinions. The content provided is derived from existing business codes and published tax sources as well as from organizations mentioned.

I am not affiliated with, retained by or employed by any organization I mention. My opinions are based on a number of years of research in the area of starting and running a business and the unique challenges faced by small businesses. If any specific entity is mentioned that I have done business with a note with the relationship will be part of the text.

My philosophy on small business is for the business owner to have knowledge of tax and legal options as well as to understand aspects of the business that are not part of the core operation. Only then can a business owner make intelligent decisions from advice provided by professionals such as an Attorney or CPA. It is, after all, your business and your responsibility.

Business Organization
Selecting a business organization type is only the beginning. There are a number of one-time and ongoing issues that need attention to keep a business viable.

Formation type
There are three basic types of business entity. The corporation, the limited liability company and the sole proprietorship. Each of these has its own qualities and sub-types for specific situations. An exhaustive review of each sub-type is beyond the scope of this document to explore but it is worth noting the high-points of each.

Corporation
C-Corp: A C-Corp is the type of corporation you think of when any big corporate name is mentioned. Non-Profit organizations normally must be a C-Corp type of organization.

Advantages:

Liability is limited to investment in the company via stock purchases
Funds can be raised by issuing more stock

Disadvantages:

Control of the company can be lost when the principles no longer hold a majority of the stock
There are a large number of regulatory requirements that must be met and with that comes added cost to do business

S-Corp: An S-Corp uses the liability limits and funding mechanics of a C-Corp and the simplicity of operation of a Sole Proprietorship.

Advantages:

Limited liability for the investors and owners
Simpler accounting and record keeping than a C Corp
Operates with the simplicity of a Sole Proprietorship
Similar protections of a C Corp

Disadvantages:

Limited number of shareholders

Limited Liability
Limited Liability Company (LLC) and Limited Liability Partnership (LLP) are only slightly different. The LLC is a relatively new concept and has been adopted in all 50 States and the codes are fairly uniform. Some States even allow a single person to form and LLC. Some business types may not be an LLC but may be and LLP. These are typically business that operated under regulations that are found in financial institutions.
The adoption of the LLC code by all 50 States is a boon for small business and we believe it has made the S-Corp obsolete. An LLC/LLP basically allows all of the advantages of a Corporation that an S-Corp allows without all of the complications of incorporation.
Advantages:

Limits liability of the principles to their investment
Operates with the simplicity of a Sole Proprietorship
Is relatively easy compared to a corporation to start and operate from a Registration, Tax and Accounting perspective

Disadvantages:

Is more limited in its ability to raise capital
Keeps income tax liability as a Sole Proprietorship would

Sole Proprietorship
A sole proprietorship or partnership, also known as a DBA (Doing Business As) is the easiest form of a company and has the least number of requirements to start. It normally only takes filing a fictitious name statement and registration with a local government agency.
Advantages:

Easy to start
Low start up costs
Few regulations and restrictions

Disadvantages:

Personal liability for the actions of the company
Some companies will not do business with a DBA

Insurance
All businesses need liability insurance at a minimum. For a small company a minimum liability insurance policy for $1 million and $2 million aggregate per year is recommended. These policies cover a range of items from your business property to lost income from covered events to liability claims against the company. A business insurance broker can offer this type of insurance. The policies are generally underwritten by major well known insurance companies.

Records
Keeping detailed and accurate records in a business is very important. Even the most trivial items can be helpful to the company. We can generally divide business activities into several categories. Those that are done to support the business, those that are done to satisfy government regulation and those that are done for tax purposes. While only the first of those three should be relevant the fact is the last two are more important because the ramifications of not paying attention to them can be devastating to a business.

Expenses and Taxes
You will hear advertisements that claim by starting your own business you can convert your personal expenses to business expenses and thus pay less in income taxes. This is not entirely true. You are allowed to deduct from your income taxes expenses that you incur as part of your job that are not reimbursed by your employer. There are limits but it can be done. Additionally, only legitimate expenses can be claimed. Generally, your employer must request you to incur these expenses and also not reimburse you. These would show up as miscellaneous deductions on Schedule A of your income tax return. There are limitations but it can and should be done. To convert these to business expenses you must first and foremost have a profit motive. Once you establish the profit motive everything you do for the business is deductible as business expenses.

The biggest impact is having a home office. You can claim this as an employee if your employer requires it otherwise you need to have your own company to have a home office. As long as you have a dedicated space for your office and it is reasonable size in relation to the size of your house you can make the deduction. Dedicated space means just that. You must have 100% business use of the home office. The space doesnt need to have a partition but it must be dedicated. A spare bedroom can be used for your business office if that is the only use of that space. Exclude the closet space if you keep non-business items in the closet. If you claim 5% to 10% of your total house space you should not need to worry about an audit. Additionally, the IRS has relaxed rules on just what you have to do in your home office. If you do your billing, sales calls and accounting in the office but the work is in the field then you can claim a home office.

Now that you have the home office, what can you deduct? The interest on your home loan utility bills you incur by the same percent of the home office. If your home interest is $1000 and your using 5% of your home you can deduct $50 for the home office. Also you can generally deduct travel to a second work site. So if you have a home office, travel to a second work site may be deductible. This allows you to use the standard mileage rate or actual expenses for your vehicle. If your business miles are greater than 50% for your automobile then you can also depreciate the cost of your vehicle. You must use government depreciation schedules and there are limits but it is more than you would get without having a home office.

Banking
A business operates as a legal entity. It is defined and regulated by government agencies and can legally transact business like a person. You must therefore have a way to hold funds and pay bills for the company. Never mix personal and company funds for any purpose. Doing so invalidates the limits on liability enjoyed by the principles of a company. Issue checks from the company for company expenses, payroll and distribution. Deposit money into company accounts as it is received. Fill out expense reports for legitimate expenses related to business and issue expense checks. Do this even if your personal and business accounts are at the same bank. You must always be able to demonstrate that the business is a separate legal entity from your personal affairs.

Where do you open an account? All commercial banks will charge a business more for a checking account than an individual. There will be charges for opening the account, for each check, for each deposit, for each visit to the bank, for each call to the bank and periodic charges to keep the account. Consider using a Credit Union for your company banking. We have found the experience to be more pleasant and the checking account and savings account were not only free but the savings account pays interest and the first 200 checks were also free.

Advisory Board
An advisory board is like a board of directors but without the overall power to set direction, hire and fire executives and set executive compensation. They are also not paid as much as a board of directors or may not be paid at all. An advisory board should consist of someone from at least each of the following areas: Legal, Accounting, Marketing, Financial Capital and Business Executive. Having an advisory board composed of these types of people is invaluable to your business. They bring expertise in their field to your business without the expense of full time employees. Quarterly or semi-annual meetings with the advisory board are usually enough to both keep the business on track and to get the board members to agree to serve.

Where do you find these people? The best sources are going to be the Chamber of Commerce, SCORE, Small Business Association and Trade Associations. We have included separate sections for each of these groups and more details are in those sections.

Hold the meetings in a pleasant surrounding. For example, you could hold a quarterly meeting at a local winery. The meeting could be catered with hors d’oeuvres and wine from the winery. Of course the wine is consumed after the meeting. The expense of the meeting is offset by the fact that the board members are all volunteers.

Multi-State business
Multi-State businesses present a problem in just who has jurisdiction over the business activities. As a general rule if you establish a physical presence in a State other than where the business is based you must register with the Secretary of State of the new State as a foreign entity (Corporation, LLC, etc) and will be subject to the same fees and taxes as if you were establishing a business in that State. Additionally, the business will be governed by both jurisdictions and will be subject to laws and regulations in both States. As an example, a business in Nevada that registers in California will be subject to California labor laws for employees that reside in California even if they do not work in California for the business and the business will also be subject to Nevada labor laws. This is often overlooked by small and even large businesses that have employees in more than one State or that have multi-State operations.

Taxes and Fees
Wherever you do business there will be a government agency that wants a tax or fee for the privilege of doing business in their jurisdiction. This has increasing become the case as government budgets across the country have been squeezed and various government bodies have been taking money from those within their jurisdiction. The Federal government pays less to the State governments and the State pays less to the county and city governments. The result is long term programs instituted by State and local governments no longer have enough money to operate and the beneficiaries of those programs protest in public over cutting their programs. We only go into this here because the financial health of a government jurisdiction directly affects what you can expect for a business climate in a State, county or city.

Federal
The federal tax system is probably the easiest to deal with. There will be income taxes for the business if it is a corporation and personal income taxes for a business if it is not.

If you are a principle of a company and do not take W2 wages, and therefore do not have withholdings, you will need to make quarterly estimated tax payments. Each payment must be AT LEAST one quarter of your tax liability for the year. Failure to do so will result in penalties. You cannot make up owed taxes in the 4th quarter if you have a larger than expected income at the end of the year. There are two safe havens to this rule. The first is the 90% rule. If you have paid 90% of your tax liability and each quarterly payment was one quarter of you liability you will not have a penalty. The second is the 100% of previous year rule. If you pay 100% of your previous year liability you will not be subject to penalty. There are some additional rules that relate to income amount and consulting a tax expert is strongly recommended here.

We have enumerated a number of issues around the Federal tax system and running a business in other areas of this paper and do not repeat them here.

IRS publications may be downloaded from the IRS website, www.irs.gov. Type the publication number by itself in the publication search box and all documents relating to that publication will be listed. You will need adobe reader, which is free, to see the publications. You can then download the publications that you are interested in. We have included the publications that should be of greatest interest for a small business.

Tax law changes are detailed in IRS publication 553. This is handy for an overview of what has changed and references to other publications for more details.

Depreciation is detailed in IRS publication 946. This is written in CPA-speak but it does bring out what depreciation schedules can be used for what types of property.

Business expenses are covered in publication 463.

State
Each State government will expect a business to register with the Secretary of State. For foreign business, also known as out-of-State, there is a registration process that is shorter than for a domestic company to establish a presence in the State. The real interest in registration is to collect the fees and taxes that would have been paid if you had started your business in that State. For California specifically not only will a registration and fess for the business be necessary, but also State income taxes will be due from both the company if it is a corporation and from the principles of the company for any income earned in California. The State may even require forced withholdings at the maximum tax rate (9.3% at the time of this writing) or an affidavit from the principles stating that income taxes will be paid in quarterly estimates.

The type of business you are in will also dictate what additional fees will be charged. For instance there is a $1 tax for each tire sold in California and a $2 fee for each tire disposed of. There are fees on soda containers, vehicles by use type and many other proposed fees on consumable items such as diapers and alcohol. In short, the State governments today are desperate for revenue and will tax just about anything at any time. It is impossible to keep track of all of these items. It is important to belong to a trade association in your line of business. Your trade association will keep you up to date on current and proposed legislation that affects your business.

County
Counties in California do not require much in the way of registration and fees but checking with the county office is not a bad idea. Other States may have different regulations. Also consider that a county may defer responsibility to an incorporated city if one exists and if not may act much as a city government would in unincorporated areas. For physical presence the county may charge a property tax on non-real property. For instance, a dentist in San Bernardino County that is also in an incorporated city has to pay property tax on all capital equipment. This includes but is not limited to patient chairs, x-ray equipment (which requires additional permits and registration), computers, other furniture, etc. Any business that generates garbage, and which ones do not, may also be responsible for hazardous waste fees (just about anything may be hazardous), infectious waste fees (nail clippings from a manicurist) and fees on a variety of items that one would never think of. Check with your county for your particular type of business for regulations and fees that you will be subject to.

City
The city your business is located in will surely want a business license and the fee associated with it. The fees can be charged based on an unlimited number of attributes but will basically fall into one of these categories: revenue, number of employees, type of business, professional licensing required.

If you have a home office your city will generally not tolerate excess traffic caused by your business activities. A daily delivery or pick up of product by a delivery service should not be a problem but if you had your own delivery trucks you could expect a visit from your local code enforcement for your business activities in a residential district. As a general rule, commercial vehicles and traffic is not permitted in residential areas without a variance issued by the city and the requisite fee associated with the permit.

Getting help

Chamber of Commerce
Not all Chambers of Commerce (COC) are created equal. You should go to several mixers that are put on for your COC. A mixer is run by the Chamber and sponsored (paid for) by a member of the COC. Mixers are a way to get to know other business people in your COC and to meet with representatives of large companies that have a presence in your local area. Normally your public utility companies, chain outfits such as business equipment retailers and government agencies will attend the mixers. These can be valuable contacts for your small business and may lead to contracts with some of these companies.

You should be aware that once you join your COC you will be asked, and expected, to participate in the events of the COC as either a chairperson or a member of a committee. After all, the Chamber is made up of its members and there are very few paid employees of the COC. The successful COC has an enthusiastic membership that participates in the activities of the Chamber. Be prepared to be a part of, rather than a spectator of your COC.
Small Business Association

The Small Business Association (SBA) is sponsored by the federal government to promote small business development. There are local chapters at the metropolitan or county level throughout the country. You do not have to use the chapter closest to you or in your county.
Trade Associations

Trade associations are non-profit organizations that give a consolidated voice to a type of business to local, State and federal government. They generally lobby on behalf of the industry they represent and keep members informed of current and pending legislation that affect the member companies. They also may participate in or establish standards of practice for the industry.

SCORE
SCORE is a nonprofit association that provides entrepreneurs with free counseling. This organization uses volunteers from business, quite often retired executives, to provide advice and help with small businesses. You local Chamber of Commerce should be able to arrange a meeting with a local representatives from SCORE or you can contact them yourself. There web site is www.score.org.

You should use this resource to review and validate your business plan, financing options and human resources policies.

Human Resources
Even if you are not going to hire any employees you should be aware of labor laws in your State. If you are going to be a W2 employee of your own company you will need to purchase workers compensation insurance, unemployment insurance and withhold payroll taxes, income taxes and disability payments. It is probably worth the expense to use a payroll service in your local area if you do not have the expertise to manage this part of your business. Accounting for payroll can consume countless hours of your time that should be spent on your core business.

Labor laws are something you should pay particular attention to. Most employees do not know what their rights are and will not give you any trouble even if your business is in violation of some provision of the law. This, however, is no excuse for not knowing, or worse yet for intentionally violating labor codes. Labor boards in most States are the judge, jury, executioner and represent the employee. This is often done by a single agent of the labor department and their decision is binding upon your company. You should always keep good records of all human resources activity, disciplinary actions, time cards and payroll. Having good records will go a long way in a hearing with the labor board.

Before you hire your first employee you should write a policy manual for your company. It is important to establish policy on every aspect of employee behavior. The minimum that should be covered is timekeeping, work hours, expected behavior at work and quality of work expected. It may also be important to have a dress code and policy on handling and use of company property. If your company deals with information or products that have

A patent for an invention is the grant of a property right to the inventor, issued by the United States Patent and Trademark Office. Generally, the term of a new patent is 20 years from the date on which the application for the patent was filed in the United States or, in special cases, from the date an earlier related application was filed, subject to the payment of maintenance fees. Click here for answers to common patent questions.

Copyright is a form of protection provided by the laws of the United States (title 17, U.S. Code) to the authors of original works of authorship, including literary, dramatic, musical, artistic, and certain other intellectual works. This protection is available to both published and unpublished works. Click here for answers to common copyright questions. policies in place. This will aid your business in legal matters if an employee steals confidential information from your company.

Establishing Credit
Dunn & Bradstreet, now D&B is the credit reporting agency for business. Their web site is www.dnb.com. Sign up for a DUNS credit number for free. When you are ready to establish a business credit report you can purchase that service from them. It starts at $499. You will need the credit report if you do business with a government agency and if you want to borrow money. You may also need one to attract investors or non-government business. Since signing up is free and it only takes a few minutes there is no reason not to start out with the number. You can always go back later and pay for the services.
References

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