A. It depends. The sole proprietorship, or a business owned by a single individual, is the simplest and most common form of ownership, accounting for 94% of all businesses in the US. As the owner of a sole proprietorship, you are personally responsible for all the business debts and liabilities. By comparison, a corporation, the most complex type of business organization, forms business into a separate legal entity, fully distinguished from its owners, known as stockholders or shareholders.

One of the biggest advantages of a corporation is that stockholders' personal assets are protected from creditors of the corporation. Thus, as a stockholder, your liability is limited to the capital that you have invested in the purchase of stock. The size and the risk of everyday potential exposure will determine what form of legal ownership is best for you and your business. Learn more about ownership structures.

A. The IRS uses the Employer Identification Number (EIN) to identify taxpayers who are required to file various business tax returns. You can print an IRS SS-4 form here, or you can pick one up at the UNI RBC.

A. A business name is often referred to as a trademark, trade name, or service mark. Trade name or trademark protection is usually good for a specified period of time, usually five to ten years. Once that time period has elapsed, you will be responsible for reregistering your business. There are two ways to register your business name and/or trademark. Sole proprietors and partnerships may register it with the county recorder in the county where the business is located. This provides protection of your name and trademark at the county level. The fee for this registration varies from county to county. If you incorporate or operate as a LLC, you will need to register your name with the Iowa Secretary of State. The fee for this is $10 and is good for a period of five years. If you do business in other states, it may be to your benefit to obtain a federal trademark registration through the U.S. Patent and Trademark Office. For more information, click here.

A. Bank loan officers are looking for good investments for the bank's money. They want loan portfolios that generate the most profit at the least risk to the bank and its investors. So, you must convince the bank that you are a reliable individual with a business concept that offers little risk of financial loss. You can do this by carefully researching and building a solid business plan, and documenting all forms of collateral and equity that will be included.

A. The Federal and State government have, over the years developed programs that grant (or gift) monies to particular businesses or individuals. If you are a woman or a minority in Iowa for example, there is a program called the Targeted Small Business Program (TSB) offered through the Iowa Department of Economic Development which boasts low interest loans or grants to help targeted businesses start or expand in the state. Potential business owners with very low incomes can also apply to receive loans of up to $10,000 at a very low interest rate from the state. Certain veterans, individuals with disabilities and those with value added agricultural processing ideas can also benefit from some of the state and federal programs available.

The staff at the Regional Business Center understands all these programs and has the supporting information a business will need to apply. Call to speak with a consultant, or attend one of our Smart Start classes at the RBC to get all the latest information on these, and other grant and loan programs available for small business.

A. As a sole proprietor, all business profits will be taxed at the personal income level. Profits of a sole proprietorship are taxed annually and reported as part of the proprietor's personal taxes with an attached IRS Schedule C. As a C corporation, profits are subject to dual taxation - as corporate profits and as dividends distributed to stockholders or shareholders. The S corporation has a special tax status with the IRS and many states, most notably the avoidance of double taxation. S corporations avoid this dual taxation because all losses and profits are passed through the corporation to the shareholders and are declared only once to the IRS as part of each shareholder's income. For more information, please see our discussion on taxes, or contact us at the UNI RBC.

A. Reading financial statements is considered by many to be an art. All good businesses should keep records - and these records are usually compiled into Income Statements and Balance Sheets. Many small businesses also track their sales and expenditures with monthly cash flow statements. Learning to read them can be tricky, but they are important as these records reflect the inherent health of any business, large or small.

The Income Statement (often called a Profit and Loss statement) records the overall sales and expenses of a business over a period of time. The Balance Sheet records the assets of the business, such as inventory and equipment and compares those assets to the amount of debt and owner investment into the company. In short, a Balance Sheet records where the money invested into a business is. Cash flow statements tell us how much money the business needs, typically over the course of a year to sustain itself. A clothing store for example, may do 90% of it's sales during October, November and December. The cash flow will tell us how much money needs to be laid aside to pay the rent and other bills during the other nine months.

The UNI Regional Business Center offers mini-workshops each month, which provide insight into reading financial statements.

Management

Q. How do I go about hiring someone to help me? What should I pay them? Are there any laws I need to be aware of? How can I be sure I don't break them, or how can I avoid them?

A. When you are ready to hire help, the first step is to identify just what their job will be and what skills they must have in order to perform the tasks you desire. Develop a job description for the position. Describe the tasks they will be performing, the scope of their decision making, who they will be getting their assignments from and what your expectations will be. You can then define what skills you think a person will need to do a good job at these tasks. This may include previous work experience, education, and personal talents. With this in hand, you can solicit applications by placing newspaper ads, by contacting your local state Workforce Development Office, or by using a private job placement service. Workforce Development should be able to help you develop pay guidelines as well as understand current employment laws. For more information, click here.

Marketing

Q. How do I get the word out on my businesses' services or products? How do I get more customers/clients?

A. You need a marketing plan, which includes research, advertising, sales, product/service development or delivery, and public relations benchmarks that you can follow to get your word out. You can develop the plan yourself with your employee and partners’ input, or delegate the task to a capable subordinate, or have it done by an outside agency or consultant. An individual experienced in marketing your type of business would be most suited. But, common sense and good research are the most important elements in a workable plan. Define your end goal, and then research various ways to accomplish it. Start by identifying your businesses’ strengths and weaknesses, your competition and challenges you face, and the current and potential market segments and areas you serve. Often by identifying these factors, the answers for how to increase your business will become obvious.