Guide to Starting and Operating a Small Business | 2018 Guide to Starting and Operating a Small Business - Page 20

5. Complete the Startup Checklist The following tasks are related to forming and finalizing business structure and entity. These tasks may be completed at any time in the startup process, but the recommended sequence is to determine first IF there is a market opportunity for the business (feasibility) before establishing and registering an entity, filing for an EIN, or other registrations. That can avoid the complicated process of having to “undo” those registrations if it is determined not to be feasible. Purchasing an Existing Business (if applicable) If you are considering purchasing a business, it is important to understand what you are getting into by requiring detailed information from the seller regarding its business operations and finances. As the purchaser of even a portion of a business, you may be responsible for the previous owner’s liabilities, regardless of any contractual language to the contrary. Make sure that the seller of the business provides you with proof that there are no hidden liabilities. In addition, the seller of the business should obtain Form 5156, Request for Tax Clearance Application online at www.michigan.gov/taxclearance to request a tax clearance from Michigan Department of Treasury. For further questions you may contact Michigan Department of Treasury/Tax Clearance at 517.636.5260. (It would be wise to obtain a copy of this Tax Clearance Request letter from the seller prior to the closing date or signing any purchase agreements.) Image and Branding A very critical aspect of establishing and growing a business is the marketing message you create, verbally and visually, to attract customers and identify the character of your business. Plan it carefully and consider its staying power. Much of the value of a business accrues from the recognition of the “brand” and reputation you achieve. For more details and guidance on marketing, see the section entitled “Marketing Your Business” starting on page 44. Name and Legal Structure Selecting a name for your business and deciding on legal structure need to be carefully considered: It is important to choose a name that is not already being used by another business; and there are many different forms of legal entity (which is not the same as a license to do business). Selection of entity depends on the type of business and issues of potential risks and liabilities; income taxes; and investment needs. The advantages and disadvantages of various legal structures are outlined in the section entitled “Registering A Business Name and Ways to Legally Structure a Business” starting on page 21. The decision of what legal structure to select may be very complicated, therefore, it is recommended that you consult an attorney and/or tax professional before deciding which structure is best for you. Licensing Not every business in Michigan is required to be licensed by the State of Michigan. Licenses are required for certain vocations or occupations that may be conducted within a business, and local governments may also require business licenses. NOTE: Legal entity registration is not a license. To find out if your new venture could require a state license or permit, visit www.michigan.gov/statelicensesearch See page 26 for more on licenses. Food Business Licensing Licenses are required for different categories of Michigan food service businesses (temporary, fixed, mobile, vending machine, seasonal, and special transitory). Food establishments are governed by The Michigan Food Law and the Michigan Modified FDA Food Code. Food service establishments are licensed via local health departments that are empowered to set their own fees. For most questions related to licenses for these establishments, contact your local health department. • Cottage Food Law allows individuals to make and store certain types of foods for sale in an unlicensed home kitchen. There are specific rules and limitations to making, storing, and selling foods under Cottage Law. A checklist for starting a Cottage Food Business is located at: www.michigan.gov/documents/mda/ A._Cottage_Foods_Checklist_353382_7.pdf • For more detailed information on all food business requirements and licensing, visit the Michigan Department of Agriculture and Rural Development website at http://www.michigan.gov/mdard/ and select the “Business” topic. 18