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MIDWEST PRINTING &PUBLISHING

We specialize in advertisement for small Businesses 

Suit 202

West Capitol Dr

P.O.BOX 1322

Milwaukee,WI 53201

We Provide Printing services to businesses :

 Photography

In addition:  My business consist of the supply chain Model.

Learn Your New Business
Supply-Chain Model
The Promotional Product Industry employs a text book Supply-Chain model. Before you begin taking and placing orders, it is important to understand what a Supply-Chain model is. This concept is very simple, but many times is not something that everyone is familiar with. So let's review. The Supply-Chain model in the Promotional Products Industry is made up of three companies. Think of each company as a link in a chain - each one carrying out a responsibility to take a product from start to finish.

The first company in the chain is the manufacturer. This manufacturer is the company that physically produces a good in their shop and can be considered the starting point of where and how a product is created.
The second company in the chain is the Distributor - which is now you, thanks to your motivation and dedication to start and build your own business. This Distributor (you) is simply a middle-man in this chain and basically links the End-User to the Manufacturer. The Distributor (you) never gives away who their manufacturers are, but orchestrates the production of the goods and the delivery of them to the End-User.
The third and final company in this chain is the End-User - as you probably already guessed. The End-User simply uses the goods how they see fit. Sometimes they may even the sell the goods to a consumer thereby creating a fourth chain in this link. Either way, that's what a Supply Chain model is. Pretty simple, right. Now you know and now you're educated and empowered even more.

Software Included with Package
At this point you might asking yourself, "How am I going to find manufacturers to use to produce products for my customers?" Well, we've got an excellent answer to that question for you....We already have a full database of manufacturers. However, that's the just the beginning.
 You have been given a Full Business Management Program that includes all the tools, resources, forms, data, and more to run your business. You literally will need nothing more to manage this business besides a phone and a computer that can connect to the Internet. This Business Management Program will allow to create all the orders and forms you need to make and process purchases, as well as comes with all the contact management and tracking capabilities to easily organize and manage all aspects of your business. So, don't worry about any of that one more minute - we've got you fully covered!

How to access
To access this Full Business Management Program, simply go to http://admin.epromo.com and login using the username and password you were given in your activation email. If you've lost that email, simply email our support team at support@earnmicrosoftcash.com and ask to have it re-sent to you.

How to use
Learning how to use this comprehensive and robust program is going to take time - that should be expected. But, don't worry about that. We are here to help you along the way and have provided completed online guides along with the support team mentioned above to assist you as you go. The important thing to remember is that this program has everything you need and we will show you how to use each and every aspect of it as needed.

First things First
Before we get into the whole Business Management Program and all that that entails and includes, let's educate and teach you more about how your new business will operate and make sure you understand all the ins-and-outs of it.

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Midwest Printing & Publishing

want to purchase from someone who knows what they are talking about, so give them the information that proves that person is you.

Explain how using your product will enhance their lives. Explain what makes your product better than its competition. And as always, explain "what's in it for them".

Emphasize the benefits, but do NOT make offers you can't stand behind. Remember you want them excited to buy, but not disappointed when you don't deliver what you promised! Give real information, quote real statistics, use testimonials from satisfied customers. The more information you give them, the more comfortable they'll feel about buying from you.

LET THEM KNOW YOU ARE A REAL PERSON

Establish a rapport with your customers by letting them know who you are and how you came to be the expert that you are. Tell stories that explain how you came by your experience. Let them see that you are a real person, like them. Help them to develop trust in you and your product. The more comfortable they are with you and your site, the more willing they will be to buy from you. You don't want them thinking that you are just another internet scam!

FOCUS ON YOUR TARGET MARKET

Make sure that you keep your target audience in mind. You need to focus on what this audience needs and the benefits that will help them. Keep in mind what they want, how old they are, the education they would have, etc. Do they have any specific needs that you can focus on? Your sales copy will be directed toward this audience, so make sure it is appropriate for them. Don't waste your time selling to the entire world; keep the target in mind when you write your sales copy.

KEEP IT SIMPLE!

Be clear and to the point when you write your sales copy. Don't use large words or long sentences. Explain everything. You cannot assume that every reader will know what you are talking about. Make sure your copy makes it clear exactly what you are trying to say.

Keep your language informal, as if your were talking to someone. Use a casual "tone of voice" and speak to your customers as if they were there with you. You want them to feel like you are giving them your personal attention; like you were thinking of them when you wrote it. Read the copy aloud when you are finished. Does it sound like you are talking to a friend? It should.

WHY ARE THEY HERE?

Your site should have one all-encompassing focus that is immediately apparent to your visitors. They should know why they are at your site. Even if you are selling lots of products, you need to make it clear what the overall focus of your site is. Are you selling beauty products, communications devices, craft supplies? Make sure that all of your website text agrees with this focus.

BOLD, UNDERLINE & BULLETS

Make your copy easy to read. You don't want to use a lot of different fonts or colors. Also, don't use all CAPS - it's distracting and hard to read. Use bold or italics to emphasize an important point, but don't get carried away.

Underlining in text on a website can be mistaken for a hyperlink, so use it sparingly, if at all. Use

SEO

A search engine optimized (SEO) listing can generate far more interest than one that is not. The reason for this is simple. Google allows spiders or bots to crawl the listing pages. It finds keywords within the description that are relevant to the keyword that was searched on the search engine and then determines whether or not that page (your listing) is a good page to list in the search engine results page (SERF).

In the past this was a tactic left only to World Wide Web pages. Online merchants and information sites would use it to get an "organic" placement near the top of the search results. Organic results are results that are listed solely on the content of the website and are usually more trusted than the sponsored links which are paid for by advertisers.

Now, with this in mind it's easy to see why you should optimize your listing descriptions. If done right you may have a shot at showing up within the organic listings on Google, MSN, or Yahoo (just to name a few). This means that you can potentially reach millions of web surfers who weren't even on Google to begin with! Now isn't that just amazing? The best part is that there is no additional money involved. It just takes some critical thinking, research, and good ad copy writing skills.

First you need to find relevant keywords for your item. The trick here is to find high ranking keywords that do not have an over abundance of search result competition. You can do this by using the Google Keyword Tool. The use of this tool is described in detail in our "Keyword Research" segment.

Once you have prepared a list of relevant keywords and phrases it's time to write your listing description. The listing description, from here on out referred to as ad copy, should flow nicely and sound just like normal speech. You can skip on some of the standard grammar rules but try not to sound like a robot. The ad copy should have as much relevant information as possible and try to include some of the better keywords. Do not include a keyword if it has little to do with your item. Most search engines will recognize this and this will immediately drop you far down in the search results.

If you would like more information on the use of keywords and phrases we would suggest you review our segment on Keyword Selection and Keyword Research.

Using Keywords

You can find several websites offering keyword suggestions as well as keyword popularity. Google has their own called Google Keywords, which works fine but there are several out there primarily intended to help pay per click (PPC) advertisers choose keywords or phrases to advertise that are very helpful.

You can use these tools to help you find popular products as well as a niche in that market quite easily. For this we are going to focus on Google's Keyword Tool. It is very comprehensive and easy to use.

First you will want to think of a market you are interested in. For our example we will choose "pajamas". After entering pajamas into the keyword tool it gives me a list of the search volume vs. the advertiser competition (see the image below). I have sorted the list by search volume (highest to lowest) by clicking on the "June Search Volume" link at the top of the list.

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you will see on Google. Again it is not entirely accurate but it isn't too far off. We recommend you use this in conjunction with Google to fine tune your searches.

You will notice that the competition is fairly heavy at the top of the list. The supply is way overshadowing the demand. This is because the advertisers tend to advertise more than one keyword or phrase so they can blanket the market. What we want to fin here is a product that is in demand but the supply is fairly low. Although you cannot see it in the screen shot above the keywords "adult feet pajamas", "adult footy pajamas" and "adult pajamas with feet" have a fair amount of searches performed but little to no supply. Since all three of these are essentially the same thing it stand to reason that there is a considerable demand for adult sized "footy" pajamas. This is also supported by the fact a similar search term is located at the top of the list under "footed" and "footie" pajamas. This may turn out to be a nice niche market within the adult pajama market.

Now you have a product that seems fairly promising based on Google's data. The next step is to research the same product on Google as well as try and locate a source for the pajamas. Assuming all is well on Google regarding the supply and demand for this product and you find a good source for the product, you will be well on your way to Google success.

Google is by no means the only source for this data. We have listed some additional sources for your convenience.

Wordtracker

a) Wordtracker (www.wordtracker.com) is a pay service that specializes in finding the right keywords for you particular web site. There is a free trial available on their site and we highly suggest you give it a try. You will be surprised by the power this system has.

Keyword Discovery

a) Keyword Discovery (wwvv.keyworddiscovery.com) is also a pay service much like Wordtracker. This is just an alternate but very similar service.

Google AdWords Keyword Tool

a) The Google AdWords Keyword Tool (click here for link) is a free service that allows you to search for possible keywords. Just like the services above it takes the proposed keyword that you enter in and gives you several results including, variations of the keyword, the competition volume, and the search volume. Quite simply it supplies you with other options and a comparison of supply vs. demand by keyword.

Overture Keyword Selector Tool

a) The Overture Keyword Selector Tool is another free service much like the Google version however you should use both to get as many possible suggestions.

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USP

Creating a unique selling point to set your ads apart from others is a must. You have to set yourself apart from the crowd if you want t have any chance at making more money than the next guy or worse, start to lose money just like everyone else in the market.

The concept here is to make your listing as enticing as possible based on shat services you have to offer. These services could be shipping incentives, bonus items, customer service, or anything you do that the other sellers are not doing. This service you provide will be your unique selling point (USP). The name says it all. This is the selling point that is unique to you and you alone.

So, now you have to review your listings. Find the listings that have the most competition. From here you need to compare your listing to other listings for the same item. What are the other sellers neglecting to offer? Is there a lack of BIN listings? How about the shipping policies? Can you make yours more attractive with free shipping? What about accessories? Can you provide bonus accessories such as including a 10 pack of blank DVD's with the purchase of a DVD burner? Can you somehow show that your customer service is above and beyond what the others are selling?

These are all good questions but are not in any way the extent of the options you have. The options will change for each type of product you are selling or market you are selling in.

Once you have found your USP you need to make it a point to advertise it. It is no good to create and set up a USP and then not inform the buyers of what you offer. All that work would be for nothing if you don't advertise your USP as much as possible. Make it a part of your listing description. Use a secondary description if you need more room. Put the info at the top of your listing page and in your online store. You could even market it through some of you other marketing efforts such as email lists or promotional boxes.

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WAYS TO LEGALLY STRUCTURE A BUSINESS

AND REGISTERING A BUSINESS NAME

In choosing the legal structure for your business, a number of considerations may affect your decision. The

following definitions show the advantages and limitations of the most common legal structures. Choose the

structure that meets the needs of the business now or in the immediate future. Do not undertake a more

complex legal structure than is currently necessary. You can always choose another structure as the

business expands or changes.

The size of the business is perhaps the biggest factor in selecting the legal structure. If you personally are

the business, then sole proprietorship is most likely the legal structure of choice. If your business consists

of two or more persons and you want the business to be relatively simple and unregulated, then a

partnership may be your choice.

Incorporation should be undertaken if the business has the following: assets sufficient to warrant the costs

of incorporating; stockholders needing the provision of limited liability; and the ability to profitably

withstand the added governmental regulations and related reporting requirements.

Such decisions should not be made without obtaining all needed information. You, your partners, or

potential stockholders may or may not be able to provide this. If necessary, the professional advice of an

attorney and an accountant should be obtained.

CHOOSING A BUSINESS NAME

Filing your business name with a local county clerk's office or the Bureau of Commercial Services,

Corporation Division, creates no substantive rights to a name. You may wish to exercise care in selecting a

name, however, to avoid infringing on names filed by other businesses or being used by another entity as a

trademark, service mark or trade name. To protect any rights a business claims to its name, the business

entity must monitor its name and respond to anyone who infringes on its rights. To learn more about

selecting a business name, refer to the "Choosing a Business Name" publication of the Department of Labor

& Economic Growth online at www.michigan.gov/corporations or call 517.241.6470.

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SOLE PROPRIETORSHIP

A sole proprietor is an individual who owns and operates the business. There is no legal separation

between the individual and the business. A person benefits from 100 percent of the profits and is

personally responsible for 100 percent of all the debts and liabilities of the business. A sole proprietor who

wishes to conduct business under a name other than the real name of the person must file a Certificate of

Assumed Name in each county where the business is located. For more information about an

assumed name or "DBA" (doing business as) contact the local county clerk's office (see

Appendix A).

Advantages Disadvantages

 

Easy to establish Unlimited liability

All profits retained by owner Difficult to raise capital

Owner controls decision making Inexperience of single owner

Low start-up costs Limited continuity in case of illness/death of owner

Tax advantages

Easy to terminate business

GENERAL PARTNERSHIP

A partnership exists when two or more persons join together in the operation and management of business

for profit. Partnerships, like sole proprietorships, are subject to relatively little regulation and are fairly easy

to establish. A formal partnership agreement is recommended in order to address potential conflicts before

they arise. Under a general partnership, each partner is liable for all debts of the business. All profits are

taxed as income to the partners based on their percentage of ownership. A general partnership, like a sole

proprietorship, must file an assumed name certificate with the county clerk's office in the counties in which

the business is located. For more information, contact your local county clerk (see Appendix A).

Advantages Disadvantages

 

Easy to establish Unlimited liability for at least one partner

Larger pool of expertise Partnership terminates with incapacity or

withdrawal

More sources of capital Difficult to raise capital

Partners control decision-making Divided authority

Tax advantages Difficulty finding suitable partners

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LIMITED PARTNERSHIP

Like a general partnership, a limited partnership has two or more participants. In a limited partnership,

there are two types of partners. A general partner has the same rights, powers, and restrictions as a

partner in a general partnership. A limited partner is typically not liable for the obligations of the

partnership. General partners may receive cash or other assets as provided in the partnership agreement

and also incur unlimited liability. Limited partners can only receive a share of profits based on the

allocation in the partnership agreement, and they do not have a voice in the management of the business.

In order to form a limited partnership, a Certificate of Limited Partnership is filed with the Department of

Labor & Economic Growth, Bureau of Commercial Services, Corporation Division. Additional information

and assistance is available at the Corporation Division website under Forms and Publications online at

www.michigan.gov/corporations. Copies of forms, statutes, and publications are available at that site or

customers may call 517.241.6470.

Advantages Disadvantages

Easier to establish than a corporation Partners personally liable for contractual

obligations and debts

Lower start-up costs

Not liable for associates negligence or malpractice

Tax advantages

"C" CORPORATION

A corporation is a legal entity having its own rights, privileges and liabilities, apart from those of the

persons forming or owning the corporation. It is the most complex form of business organization and is

comprised of three groups of people - shareholders, directors, and officers. The corporation can own

assets, borrow money, and perform business functions without directly involving the owner(s) of the

corporation. The corporation is subject to more government regulation than proprietorships or

partnerships. Corporate earnings are subject to "double taxation" when they are passed through as

stockholder dividends. However, corporations have the advantage of limited liability. In order to form

either a profit or nonprofit corporation, "Articles of Incorporation" must be filed with the Department of

Labor & Economic Growth, Bureau of Commercial Services, Corporation Division. Additional information

and assistance is available online at the Corporation Division website under Forms and Publications at

www.michigan.gov/corporations. Copies of forms, statutes, and publications are available at that site or

customers may call 517.241.6470.

Advantages Disadvantages

Limited liability Closely regulated

Easier to raise capital Extensive record keeping

Ownership is transferable Expensive to organize

Business continues if owner is incapacitated Double taxation

Large pool of expertise

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SUBCHAPTER "S" CORPORATION

A special section of the IRS Code permits a corporation to be taxed as a partnership or sole proprietorship,

with the profits taxed at the individual rather than the corporate rate. To qualify as a Subchapter "S"

Corporation, a business must meet certain requirements. For information about this status and how to

apply, contact the IRS at 800.829.4933 or online at www.irs.gov for the appropriate forms. The Articles of

Incorporation are filed with the Department of Labor & Economic Growth, Bureau of Commercial Services,

Corporation Division. Additional information and assistance is available at the Corporation Division website

under Forms and Publications online at www.michigan.gov/corporations. Copies of forms, statutes, and

publications are available at that site or customers may call 517.241.6470.

Advantages Disadvantages

Avoids double taxation Some restrictions

Losses can be offset against income by owners Must operate on calendar year for

reporting

PROFESSIONAL SERVICE CORPORATION (PC)

A PC, as the name implies, is a corporation made up exclusively of licensed professionals. Licensed

professionals are those people who have been legally authorized to provide such a professional service.

The professional service corporation may be formed by one or more persons to render professional

services.

These entities are formed by filing Articles of Incorporation with the Department of Labor & Economic

Growth, Corporation Division. Additional information and assistance is available at the Corporation Division

website under Forms and Publications online at www.michigan.gov/corporations. Copies of forms, statutes,

and publications are available at that site or customers may call 517.241.6470. The annual information

update filed by a professional service corporation must list the shareholders and attest that all are licensed

or authorized to provide the professional service.

Professional service corporations are formed to give professionals the benefits of a corporation, while not

altering the law involving liability of the individual licensed person.

Advantages Disadvantages

Owners protected from negligence of associates Ownership restricted to licensed

practitioners of a specific occupation

Higher start-up costs and more

paperwork than a sole proprietorship

or partnership

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LIMITED LIABILITY COMPANY (LLC)

The LLC may be treated as a partnership or sole proprietorship for U.S. income tax purposes and also

provides the limited liability of a corporation. This option may be the preferred choice for certain new

operations and joint ventures. Owners of LLCs are called "members." These are comparable to

stockholders in a corporation or limited partners in a limited partnership. To create a LLC, Articles of

Organization are filed with the Department of Labor & Economic Growth, Bureau of Commercial Services,

Corporation Division. The LLC must have an operating agreement. The operating agreement is a written

agreement by the member of a limited liability company that has 1 member, or between all of the members

of a limited liability company having more than 1 member, pertaining to the affairs of the limited liability

company and the conduct of its business. If an LLC fails to adopt an operating agreement, the member or

members will be unable to take full advantage of the benefits of forming an LLC and default provisions in

the act will determine distribution and voting rights. Additional information and assistance is available

online at www.michigan.gov/corporations along with copies of forms, statutes, and publications or by

calling 517.241.6470.

Advantages Disadvantages

Limited liability Transfer of ownership more difficult than a

corporation

Tax advantages Filing procedures vary from state to state

Lower start-up costs than a corporation Newest form of business structure and some

persons or practitioners may not be completely

familiar with proper organization and operating

issues of a limited liability

Greater flexibility in management than a corporation

Less formal than a corporation

No restriction on number or type of members

NONPROFIT CORPORATIONS (NPCs)

NPCs are a type of corporate entity that limits payment or distribution of any part of its assets, income, or

profit except in conformity with the purposes of the corporation. Members of the corporation may only

receive profits in conformity with the purposes of the corporation. Generally, a NPC is created under the

Michigan Nonprofit Corporation Act. However, there are many special acts that permit the formation of a

wide variety of NPCs. Some purposes for which NPCs are commonly formed are those involving religious,

educational, and charitable activities. To create a NPC, Articles of Incorporation must be filed with the

Department of Labor & Economic Growth, Bureau of Commercial Services, Corporation Division. Additional

information and assistance is available at the Corporation Division online under Forms and Publications at

www.michigan.gov/corporations. Copies of forms, statutes, and publications are available at that site or

customers may call 517.241.6470.

Some NPCs may be eligible for exemption from federal income taxes. Contact the IRS at 877.829.5500 or

access Publication 557 "Tax Exempt Status for your Organization" on-line along with the accompanying

package "Application for Recognition of Exemption" - Form 1023 under Section 501(C) (3) online at

www.irs.gov.

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An application for exemption from the Michigan sales tax may be obtained from the Michigan Department

of Treasury at 517.636.4660. Please note that the sales tax exemption, if approved, applies only to

purchases made by the exempt organization for their own use. Sales of products by the exempt

organization to the general public are NOT tax exempt. More information on nonprofits and the sales tax

exemption is available at the Department of Treasury online at www.michigan.gov/treasury. You may also

wish to contact the Department of Treasury, Single Business Tax Division, at 517.636.4700 to determine if

your organization will be exempt from the state Single Business Tax.

If a nonprofit organization is soliciting charitable contributions from the public, it may need to be licensed

and/or registered with the Department of Attorney General's Charitable Trust Section, Post Office Box

30214, Lansing, Michigan 48909; telephone 517.373.1152. When contacted, the Attorney General's Office

will mail you (at no charge) an "Initial Charitable Trust/Charitable Solicitation Questionnaire," or online you

may download it from the Attorney General's website at www.michigan.gov/ag.

The Michigan Non-profit association has a "Getting Started" packet for non-profit organizations. For more

information, call 517.492.2400 or visit http://www.mnaonline.org/. For the latest nonprofit news, visit

http://www.michigannonprofit.com.

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LICENSES, PERMITS AND OTHER

REGULATIONS

The State of Michigan does not have a generic business license. Several occupations and

industries/services are required to be licensed by the State of Michigan. Michigan has several hundred

licensed occupations and services ranging from doctor to manicurist to wildlife exhibitor to veterinarians.

The industries and services connected with these occupations often require specific regulations as well as

legal, educational, and examination requirements. In several cases, there are also licensing fees that are

required for a specific occupation or profession.

Depending on the specific type of business or manufacturing operation, some type of certification, license

or permit may be required. Access the Michigan licensed occupations information online at

www.michigan.org/medc/services/license/. Check with the county, city, or township clerk (see Appendix A)

to determine if any local licenses or registrations are required and to obtain the necessary forms.

Michigan Timely Application and Permit Service (MiTAPS) was created to streamline the State of

Michigan's permitting and licensing process for both individuals and businesses. The website is a single

point of entry allowing Michigan businesses access to a faster, simplified and more efficient permitting

and licensing process.

This service will allow a company to access and use an ever expanding list of online permitting services

24-hours a day, seven days a week. Services provided include the following:

- Search all permit and licensing requirements for doing business in Michigan.

- Help for individuals or businesses to determine whether a particular permit/license is

required.

- Allow individuals/businesses to customize their account profile to include those

permits/licenses that are of interest.

- Complete permit application forms with an easy-to-follow permit wizard, step-by-step instructions,

and a submission checklist.

- Enter personal and company data once, with the ability to route data to multiple permit

applications, avoiding the need for data re-entry and the use of duplicate forms.

- Make fee payments online.

- Monitor the permit/license application status.

MiTAPS provides a more concise manner for state agencies to share information and process applications.

The MiTAPS website is www.michigan.gov/mitaps.

For more information, please contact the Michigan Economic Development Corporation, Customer

Assistance Center at 517.373.9808.

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ENVIRONMENTAL CONSIDERATIONS

Small businesses operate in an increasingly complex legal environment. Concerns about consumer

protection and environmental preservation have received increased attention in recent years. As these

concerns are brought forth to be enacted into laws and regulations, it is often translated into a maze of

paperwork and restrictions for many business owners. Take heart - government provides a wide-range of

assistance to businesses. One key to surviving the "regulatory jungle" is to be aware of the legal and

business environment in which your business operates. No one is expected to become a legal expert.

However, you should know which laws affect your business.

A business involved in activities that may affect the environment (incinerators, boilers, spray paint booths,

coat processes, certain manufacturing processes and solvent cleaning, and other water, sanitary sewage

and cooling water; solid waste generated by the business) may need one or more permits issued by the

Department of Environmental Quality at 800.662.9278 or online at www.michigan.gov/deq. Of particular

interest are businesses that are involved in:

�� Air emission

�� Solid waste disposal/processing

�� Hauling of hazardous waste

�� Major alterations to the landscape

�� Building near waterways or wetlands

Resources:

Michigan Clean Air Assistance Program call 800.662.9278 or online at: www.michigan.gov/deq (click on

"Air" then "Clean Air Assistance").

Michigan Manufacturers' Guide to Environmental, Health and Safety Regulations (a general and

informational reference that provides an overview of three regulatory programs that apply to many

businesses - not just manufacturers) is available online at www.michigan.gov/deq (click on "DEQ

Publications").

Permit Applicability Checklist (an easy to use checklist for determining if your project requires

environmental permitting) is available online at www.michigan.gov/deq (click on "Key Topics").

Environmental Permit Guidebook is available online at www.michigan.gov/deq (click on "Key Topics").

The possibility of environmental contamination should be considered when looking at the lease or purchase

of an existing building or property for conducting business. In Michigan, a Baseline Environmental

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Assessment (BEA) allows people to purchase or begin operating at a facility without being held liable for

existing contamination. For more information on BEA's and Due Care, go online at www.michigan.gov/deq

(click on "Land").

Business owners should also check with county and local authorities about permits and licensing. Even

though the costs of adhering to regulations can be burdensome for a business owner, the cost of

noncompliance, including fines, penalties and even closures, can be much greater.

ZONING AND BUILDING CODES AND ORDINANCES

It is important for start-up and expanding businesses to make sure that the occupied facility is in

compliance with all the local laws and regulations. Contact the city assessor, township or village clerk to

assure compliance with all the local zoning codes. Also, contact the local building inspector to assure

compliance with regulations affecting construction (e.g., building, electrical, mechanical and plumbing

codes; rules about construction, alterations, demolitions, occupancy and use of buildings).

A home-based business is subject to many of the same local laws and regulations. Check with your local

unit of government to determine if any special permits are required.

Be aware of your city, county and village zoning regulations. If the business operates in violation of the

local government's laws and regulations, you could be fined or closed down.

Certain products cannot be produced in the home. Most states outlaw the home production of fireworks,

drugs, poisons, explosives, sanitary or medical products and toys. Strict rules apply to the processing of

food/drinks and the manufacturing of clothing.

For information about the laws and regulations at the city, county or village level you should contact your

local government agency.

BARRIER FREE DESIGN

A special part of the building code, Barrier Free Design, has been public policy in Michigan since 1966. In

1992, the Americans with Disabilities Act (ADA) mandated federal requirements concerning barrier free

design. These regulations are intended to ensure that public facilities and facilities used by the public are

accessible to and usable by all citizens, including elderly persons, wheelchair users and individuals with

permanent or temporary conditions that reduce coordination, mobility or make walking difficult or insecure.

While local units of government have the option of either enforcing the state construction code or adopting

and enforcing another acceptable code, businesses must conform to the barrier free design requirements of

the state code. Only the Barrier Free Design Board can make exceptions to the state requirements. The

Board has established guidelines that describe the conditions under which it may grant exceptions. A

person requesting an exception must demonstrate reason, either technical or economic, to warrant the

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exception. For additional information and a publication providing more detail about barrier free design

requirements, contact the Department of Labor & Economic Growth, Bureau of Construction Codes & Fire

Safety, Plan Review Division/Barrier Free Design at 517.241.9328 or online under Construction Codes and

Fire Safety at www.michigan.gov/dleg.

TRADE AND SERVICE MARKS

A trademark is the "brand name" by which products are identified by a particular manufacturer or

distributor. A trademark is a word, phrase, symbol or device, or any combination other than a trade name

adopted and used to identify products and to distinguish them from similar products made or sold by

others. A service mark is similar to a trademark and is used to identify and distinguish between services

sold or advertised by a person from similar services of others.

Registration of a mark used in Michigan gives the owner of the mark certain limited legal protection.

Trademarks and service marks adopted and used in Michigan are registered with the Department of Labor

& Economic Growth, Bureau of Commercial Services, Corporation Division at 517.241.6470. The

registration fee is $50 and is in effect for ten years and can be renewed for an additional ten years prior to

the end of each ten year period. Trademarks and service marks may also be registered for use throughout

the United States with the United States Patent and Trademark Office, (USPTO), USPTO Contact Center,

Post Office Box 1450, Alexandria, VA 22313-1450 or by telephone at 800.786.9199 or 571.272.4100 or

available online at www.uspto.gov.

COPYRIGHTS

A copyright enables its owner to exclude others from reproducing certain works, such as books, musical

compositions, technical drawings and computer programs, for the author's life plus 70 years. A copyright

may be obtained by filing an application with the U.S. Copyright Office, Library of Congress, 101

Independence Avenue SE, Washington, D.C. 20559-6000; telephone 202.707.3000 or online at

www.copyright.gov.

24

BUSINESS TAXES

Understanding your tax obligations and preparing taxes can be confusing and complicated. If returns are

neglected or filed improperly, penalties and excess payments may be levied. This document gives an

overview to assure you are filing and paying the appropriate taxes. Consult with a tax advisor or an

accountant to help you understand your obligations and/or prepare your returns.

EMPLOYER IDENTIFICATION NUMBER (EIN)

An EIN identifies the business for federal and state tax purposes. Many financial institutions will not open a

commercial banking account under an assumed name without the EIN. Sole proprietorships with no

employees DO NOT require an EIN. This type of business uses the owner's social security number for

 

tax purposes. However, using a social security number to identify your business could cause problems with

respect to identity theft.

An EIN must be obtained if the business is set up as a partnership, a corporation for profit or nonprofit,

limited liability company, trust or estate, or a sole proprietorship that pays wages to one or more

employees. Remember: if services are performed for a corporation, the owner is an employee of the

corporation and subject to all employment taxes. An EIN is required on any return, statement, or other

document if you are an employer. Individuals who file Schedule C or I must use EINs when filing excise,

employment, alcohol, tobacco or firearms returns.

It is important to note:

�� Becoming the new owner of a business, you cannot use the EIN of the previous owner.

�� An existing business adding, opening or acquiring a second operation of similar type may use its

current EIN for both the existing and the new operations. However, the new establishment must

obtain its own EIN if its line of business is different from the existing operation.

An EIN form (SS-4) can be obtained at the IRS online at www.irs.gov or call 800.829.4933. The application

should be completed early enough to allow processing time for an EIN number to be issued.

EMPLOYER TAXES

Any employer of one or more persons must withhold federal, state and possibly local income taxes from the

wages paid to employees. Employers are also responsible for paying into the Social Security and Medicare

systems as well as withholding a matched amount from the employee's wages. State and federal

unemployment insurance payments must be paid entirely by the employer and not from an employee's

wages. For detailed information about hiring employees and your obligations, refer to the "Hiring

Employees" section.

 

25

SELF-EMPLOYMENT TAXES

Just as employers must withhold tax and report it to various government agencies, so must individuals who

work for them or are self-employed. You are considered self-employed if you operate a trade, business, or

profession, either by yourself or as a partner. To learn more about your obligations, refer to the "Being

Self-Employed" section.

 

PERSONAL INCOME TAX

As a sole proprietor or a general partner, the owner pays taxes on the income from the business on a

personal income tax return with the state and federal governments. You will also file an additional

schedule that identifies income and expenses of the business. Partners file a partnership return in addition

to the personal income tax return that distributes profits and losses between the partners according to the

partnership agreement. Corporations pay taxes on the business income at corporate tax rates.

Shareholders and employees (including paid corporate officers) pay individual income tax on any salary and

dividends received from the corporation.

Most businesses are also required to make "Estimated Tax" payments on a quarterly basis for Michigan

income tax, federal income tax and self-employment tax.

For more information about your tax obligations and the proper forms, contact the Michigan Department of

Treasury at 800.487.7000 for state taxes and the IRS at 800.829.4933 and online at www.irs.gov for

federal taxes.

STATE BUSINESS TAXES

In Michigan, it is easy to register for taxes. Fill out one form-Registration for Michigan Taxes (Form 518).

This form allows a business to register for sales, use or withholding taxes, the single business tax, motor

fuel or tobacco products tax. It can be obtained by contacting the Michigan Department of Treasury,

517.636.4660 or 800.367.6263 or access the tax information online. Questions and answers about

registering a business can also be accessed online at www.michigan.gov/taxes.

SALES, USE AND WITHHOLDING TAXES

Anyone who engages in the retail sales of tangible personal property (defined as any good that one can

possess or exchange) from a Michigan location needs a sales tax license. The Michigan sales tax is 6

percent of retail sales receipts.

When selling or leasing tangible personal property to a Michigan customer from an out-of-state location and

the business has no retail location in Michigan one must register for use tax, which is also 6 percent. Also,

register with the Michigan Department of Treasury if a Michigan resident buys or rents tangible property

26

from an out-of-state source or when selling telephone, telegraph or other leased wire communication

services.

Every business in this state that employs one or more employees is required to withhold federal income tax

under the IRS Code. Businesses must also withhold Michigan income tax from wages paid to employees.

When liable for sales, use or withholding tax, an application should be filed with the Michigan Department

of Treasury. This application for registration can be accessed online at www.michigan.gov/taxes (under

"How Do I Find", click "Registration Information for New Businesses"). This document is the Michigan

Business Tax booklet and contains information and various forms. As of June 1, 2002, no fee is required.

For further information about sales, use and withholding taxes, contact the Department of Treasury at

517.636.4660 or access the business tax information online.

MICHIGAN BUSINESS TAX

As of December 31, 2007, Michigan's Single Business Tax will end. Currently, various replacement plans

are being considered. Please visit the Department of Treasury web site at www.michigan.gov/taxes, or

consult with a tax specialist or accountant.

MOTOR FUEL TAXES

Motor fuel tax is levied on highway, marine, and aviation fuel. International Field Tax Agreement

(IFTA)/Intrastate Motor Carriers should contact the Department of Treasury, Special Taxes Section at

517.636.4600 or online at www.michigan.gov/taxes, click on "motor Fuel Tax". For additional information,

please refer to the Department of Labor & Economic Growth, Public Service Commission, Motor Carrier

Division online at www.michigan.gov/mpsc, click on "Motor Carrier".

LOCAL TAXES

Local governments in Michigan levy property taxes. Recent reforms have slashed business property taxes

significantly. Since property tax rates vary by locality, it is important to consult your local city, township or

village treasurer's office. The local treasurer's office can also provide information about other local taxes

that may apply along with information about registration and payment requirements.

27

BEING SELF-EMPLOYED

The majority of people who pay into Social Security work for someone else. Their employer deducts Social

Security taxes from their paycheck, matches that contribution, and sends wage reports and taxes to the

Internal Revenue Service and Social Security. But self-employed people must fill out the forms and pay the

taxes directly to the government.

You are considered self-employed if you operate a trade, business, or profession, either by yourself or as a

partner, or report your earnings for Social Security when you file your federal income tax return. If your

net earnings are $400 or more in a year, you must report your earnings on Schedule SE.

PAYING SOCIAL SECURITY AND MEDICARE TAXES

The Social Security tax rate for 2006 is 15.3 percent on self-employment income up to $94,200. If your net

earnings exceed $94,200, you continue to pay only the Medicare portion of the Social Security tax, which is

2.9 percent, on the rest of your earnings. There are two income tax deductions that reduce your tax

liability. The deductions are intended to make sure self-employed people are treated in much the same

way as employers and employees for Social Security and income tax purposes.

First, your net earnings from self-employment are reduced by an amount equal to half of your total Social

Security tax. This is similar to the way employees are treated under the tax laws in that the employer's

share of the Social Security tax is not considered income to the employee.

Second, you can deduct half of your Social Security tax on the face of the IRS Form 1040. This means the

deduction is taken from your gross income in determining adjusted gross income. It cannot be an itemized

deduction and must not be listed on your Schedule C.

If you have wages as well as self-employment earnings, the tax on your wages is paid first. But this rule is

important only if your total earnings are more than $94,200. For example, if you have $20,000 in wages

and $30,000 in self-employment income in 2006, you pay the appropriate Social Security taxes on both

your wages and business earnings. However, if your 2006 wages are $70,000 and you have $25,000 in net

earnings from a business you do not pay dual Social Security taxes on earnings above $94,200. Your

employer will withhold 7.65 percent in Social Security and Medicare taxes on your $70,000 in earnings.

You must pay the 15.3 percent in Social Security and Medicare taxes on your first $24,200 in selfemployment

earnings and 2.9 percent in Medicare tax on the remaining $800 in earnings.

28

EARNINGS CREDITS

You need earnings credits to qualify for Social Security benefits. The number of credits you need depends

on your date of birth, but no one needs more than 40. You can earn up to four credits per year.

If your net earnings are $3,880 or more, you earn four credits--one for each $970 of earnings. (If your net

earnings are less than $970, you still may earn one or more credits by using the optional method described

later.)

All of your earnings covered by Social Security are used in figuring the amount of your Social Security

benefit. So, it's important that you report all of your earnings up to the maximum as required by law.

FIGURING YOUR NET EARNINGS

Net earnings for Social Security are your gross earnings from your trade or business, minus all of your

allowable business deductions and depreciation. Some income does not count for Social Security. Do not

include the following in figuring your net earnings:

1. Dividends from shares of stock and interest on bonds, unless you receive them as a dealer in stocks

and securities.

2. Interest from loans, unless your business is lending money.

3. Rentals from real estate, unless you are a real estate dealer or regularly provide services mostly for

the convenience of the occupant; or

4. Income received from a limited partnership.

OPTIONAL METHOD

If your actual net earnings are less than $400, your earnings can still count for Social Security under an

optional method of reporting. The optional method can be used if your gross earnings are $600 or more or

when your profit is less than $1,600. You can use the optional method no more than five times. Your

actual net must have been $400 or more in at least two of the last three years, and your net earnings must

be less than two-thirds of your gross income.

Here's how it works:

If your gross income from self-employment is between $600 and $2,400, you may report two-thirds of your

gross or your actual net earnings if $400 or more; or,

29

If your gross income is $2,400 or more and the actual net earnings are $1,600 or less, you report either

$1,600 or your actual net.

Special Note for Farmers: If you are a farmer, you can use the optional method every year. You do not

need to have had actual net earnings of at least $400 in any preceding year.

HOW TO REPORT EARNINGS

You must complete the following federal tax forms by April 15 following any year in which you have net

earnings of $400 or more:

Form 1040 (U.S. Individual Income Tax Return)

Schedule C (Profit or Loss from Business)

Schedule F (Profit or Loss from Farming)

Schedule SE (Self-Employment Tax)

These forms can be obtained from the IRS online at www.irs.gov and most banks and post offices. Send

the tax return and schedules along with your self-employment tax to the IRS. Even if you do not owe any

income tax, you must complete Form 1040 and Schedule SE to pay self-employment Social Security tax.

This is true even if you already get Social Security benefits.

FAMILY BUSINESS ARRANGEMENTS

Family members may operate a business together. A husband and a wife may be partners or a joint

venture. If you operate a business together as partners, you should each report your share of the business

profits as net earnings on separate self-employment returns (Schedule SE), even if you file a joint income

tax return. The amount each of you should report depends upon your agreement.

MORE INFORMATION

For more information about being self-employed, visit Social Security online at www.socialsecurity.gov or

call them at 800.772.1213 or TTY at 800.325.0778. To speak with a representative, please call between

7:00 a.m. and 7:00 p.m. any business day.

30

BUYING A BUSINESS

Buying a business can give a person a head start over starting a new business. It provides an established

market, trained employees, proven profit potential, and experience. But, are there any "hidden

liabilities?"

 

Obtaining sound professional assistance, from an accountant, an attorney, and even a local MI-SBTDC (see

Appendix D), can be helpful in identifying pitfalls to be avoided when buying a business. Remember,

professional help will not necessarily make a purchase free of obstacles. If you know what to look for, and

how to protect yourself, an educated buyer can save time and money.

Many experts will advise the purchaser to require a statement from the seller stating that all taxes have

been paid and that the buyer assumes no liability for any unpaid taxes. As the purchaser of even a portion

of a business, you may be held responsible for the previous owner's liabilities, regardless of any contractual

language to the contrary. You should also make sure that the seller of the business provides proof that

there are no hidden liabilities. The seller of the business should contact the Michigan Department of

Treasury at 517.636.5260 to obtain a form to request a Conditional Tax Clearance letter or access the

information online at www.michigan.gov/taxes. The Department of Treasury will only provide the

Conditional Tax Clearance letter to the existing business owner. As the buyer, you may not request the

letter yourself. However, it is wise to obtain a copy of this Conditional Tax Clearance letter from the seller

prior to the closing date or signing any purchase agreements. If you are in a hurry to purchase the

business, request that the seller obtain the Conditional Tax Clearance letter and escrow sufficient monies to

cover any potential tax liability until the letter is received.

Does the business have employees? Has the business had employees (payroll) at any time over the last

two years? If there are or were employees, the purchaser may soon encounter "successorship." What

does this mean to an entrepreneur? MONEY ... potentially a lot of money over the next FIVE YEARS. New

employers (those who do not buy an existing business) pay an unemployment tax rate in their first two

years of liability of 2.7 percent of the first $9,000 of every employee's wages in a year-except for a new

construction employer, which may be higher. A successor employer (one who buys an existing business),

however, "inherits" the account of the former owner. If benefits have been paid over the last five years, or

if the account has a "negative balance," chances are the successor will have a rate in excess of 2.7

percent-in fact, as much as 10.3 percent. Since the annual rate is based on the benefits charged over the

last five years, and the balance in the account, it is possible that the rates will be high for five years.

How can you avoid this? You can request from the seller a "disclosure of account" and then contact the

Unemployment Insurance Agency (UIA) at 800.638.3994 and ask for the amount of the benefits charged

over the past five years and the reserve balance (positive or negative). The request should be in writing

and should be accompanied by some form of commitment to purchase the business (a purchase order

contingent on the report from the UIA, for example). Once the purchaser has received the information

from the UIA, what do they do? If the report is bad, should you look for another business? Not necessarily.

The higher costs should be included in the cash flow and profit projections. If the business still looks like a

winner, buy it! But, you may want to offer less since the purchaser will be assuming a long-term liability.

31

One more note-any benefits currently being paid, or those resulting from the sale, will be charged to the

successor's account. Find out from the seller if any employees are, or will be, collecting benefits. If

possible, hire these employees! The purchaser will get employees who already know the job and will save

money.

For further assistance, call the UIA at 800.638.3994 or a local MI-SBTDC (see Appendix D).

Both of these agencies have information and advice that can be very valuable in buying a

business.

32

HIRING EMPLOYEES

Employees add another layer of complexity to your business that requires careful consideration and

planning. It is important to hire the right people, train them well, keep them happy so they will stay, and

be aware of taxes and legal requirements. It is wise to consult an accountant and attorney to ensure that

good record keeping systems are in place, all the necessary paperwork is completed and legal requirements

are met before hiring employees. Hiring outside contractors or temporary help is also an option. However,

be sure to satisfy IRS requirements for contractors.

EMPLOYEES VS. CONTRACT LABOR

Individuals may provide services to a business as either an employee or a contractor. Whatever status an

individual has as an employee affects the taxes, liability, benefit costs and many other areas of a business.

The question of an employee vs. contractor is a very critical issue and does NOT have a simple answer.

There are many different tests the IRS may apply to determine whether an individual is an employee or

contractor. Improperly classifying someone whom the IRS considers an employee as a contractor can

result in very stiff penalties. When using contractors instead of employees for your business, it is important

that you consult with a competent tax advisor prior to making a decision.

PLAN YOUR HIRING

Hiring employees is expensive and should not be approached casually. Make sure your decision to hire

employees fits in with your goals as outlined in the business plan. Write out a job description that indicates

exactly what is expected of each employee. Interview several people and select the one with the best

qualifications. The majority of employers consider attitude of potential employees as the number one trait

in their hiring decision. It is a good idea to have a 30- or 90-day trial period before taking someone on

permanently. The wrong employee can cause a great deal of damage to your business. You may wish to

order a copy of the publication, "Employees: How to Find and Pay Them" available through the federal

Small Business Administration's (SBA) On-Line Library online at www.sba.gov/library/pubs.html.

TRAINING AND WORKING WITH EMPLOYEES

Training is expensive but necessary. You want well-qualified employees who will do things the way you

need them done. A well-defined company policy handbook plus a job description outlining duties,

responsibilities, ethical standards, and criteria for success will be valuable. You may want to invest in your

employees by sending them to special training. Small business owners should pay special attention to

cross-training employees in areas other than those specifically defined in their individual job descriptions.

Open lines of communication are necessary to keep employees motivated and involved with the business.

Many business owners find it beneficial to allow employee participation in the process. Follow up with

employees with constructive feedback - positive as well as negative - on the employee's progress toward

those goals helps assure everyone understands what goal-setting is expected.

33

Employers have a legal as well as an ethical obligation to provide a safe and equitable workplace. You may

wish to contact the Department of Labor & Economic Growth, Bureau of Safety & Regulation, Consultation,

Education and Training Division (CET) at 517.322.1809 or online at www.michigan.gov/cis/0,1607,7-154-

11407_15317---,00.html. Listed below is additional information about other programs:

AMERICANS WITH DISABILITIES ACT (ADA)

The ADA protects people with disabilities from discrimination in employment, government services and

public accommodations. To order ADA publications, call 800.514.0301 or TDD 800.514.0383 or order

online at www.usdoj.gov/crt/ada/adahom1.htm.

DRUG-FREE WORKPLACE

Many employers are becoming interested in issues involving employees' use of drugs and alcohol and its

relationship to work. For additional information about programs to make the workplace drug and/or alcohol

free, contact the Substance Abuse and Mental Health Services Administration (SAMHSA) at 800.967.5752 or

online at www.samhsa.gov.

EQUAL EMPLOYMENT OPPORTUNITY (EEO)

The goal of this program is to provide equal opportunities for all qualified people in employment. To learn

more, contact the Michigan Department of Civil Rights at 313.456.3700 or TTY 877.878.8464 or online at

www.michigan.gov/mdcr.

PAYROLL TAXES

Any business with employees of any type must comply with federal and state payroll requirements. This is

true even if you are the sole employee of a corporation that you own. It is critical that you understand the

various deadlines and requirements, or that you use the services of someone who does. The major types

of payroll taxes in Michigan are:

�� Income Tax Withholding (federal, state, and, if applicable, local)

�� Federal Social Security Tax (FICA)

�� Federal Unemployment Tax Act (FUTA)

�� Michigan Unemployment Tax

34

UNEMPLOYMENT INSURANCE

Unemployment Insurance protects workers who lose their jobs through no fault of their own. The funds

used to pay workers who are covered under this type of insurance are accumulated from taxes on the

wages of employees during their employment. Both state and federal unemployment taxes are paid by

employers. No deductions can be made from an employee's wages to cover these taxes.

Any business that employs one or more persons in Michigan is considered a contributing employer and

required to register with the Unemployment Insurance Agency (UIA). A contributing employer is required

to file tax reports with the UIA at the end of each calendar quarter, and pays a state unemployment tax on

the first $9,000 of wages paid to each worker in a calendar year. The amount of the tax is determined by

the employer's state unemployment tax rate. You can contact the UIA at 313.456.2180, or 800.638.3994

The UIA produces an Employer Handbook which contains a wealth of information which covers

everything you need to know about unemployment insurance, from the employer to the claimant. To

receive a copy of this handbook, an order form can be found at the UIA web site at www.michigan.gov/uia;

or you can call 800.638.3994; there is a $15.00 cost for the handbook

FEDERAL UNEMPLOYMENT INSURANCE ACT

The Federal Unemployment Insurance Act gives authority to the IRS to collect fees and for the U.S.

Department of Labor to pay administrative expenses of operating the state unemployment systems. When

filing an "Application for Employer Identification Number" with the IRS, indicate that employees will be

hired. The IRS will mail a packet of information - there will be coupon forms for FUTA tax deposits and an

Annual Report form. For more information about the FUTA tax, forms and deposit requirements, contact

the IRS at 800.829.4933 or online at www.irs.gov.

INCOME TAX WITHHOLDING

Any employer of one or more persons must withhold federal and state income taxes from wages paid to

employees. A city income tax may also apply. To find out if a city levies a tax, contact that particular city

tax assessor or city treasurer.

Each employee should complete the following forms: a Withholding Exemption Certificate (W-4) from the

IRS 800.829.4933 and a MI-W4 from the Michigan Department of Treasury at 800.367.6263. Based on the

certificate's information, a certain amount of taxes are withheld from the employee's wages.

You may be required to deposit the federal taxes collected. One must file quarterly returns with the IRS

and file an annual reconcilement of the quarterly returns. If returns are neglected or filed improperly,

penalties and excess payments may be levied. For more information about federal income tax withholding,

contact the IRS at 800.829.4933 or online at www.irs.gov.

35

In addition to federal income taxes, federal law also requires that employers withhold (and deposit) Social

Security taxes from employees' wages. The employer must also pay an equal amount. Tax rates and

maximum earnings subject to tax may vary from year-to-year, so employers should contact the IRS at

800.829.4933 for the latest information.

State filing requirements may vary based on the amount of state taxes withheld. An employer must file

Form 518, an "Application for Registration" with the Michigan Department of Treasury if employees are

hired. They will then notify the employer of filing deadlines and provide the needed forms. An annual

return is also required. Michigan's withholding tax tables are available from the Michigan Department of

Treasury at 517.636.4660 or online at www.michigan.gov/taxes .

Contact the City Treasurer to determine if a city income tax is applicable for the new employees. If the City

does have an income tax, the City Treasurer can provide the required registration forms and any

information that is needed.

WORKERS' COMPENSATION

There are a number of organizations involved in Workers' Compensation. It is important to understand

who they are and what they do. First of all, Workers' Compensation benefits ordinarily are not paid by the

State of Michigan. Workers' Compensation is the responsibility of an employer. Benefits are paid either

directly by an employer or through an insurance company on behalf of an employer.

All employers that regularly employ three or more part-time employees at one time, or employed one or

more persons for at least 35-hours per week for at least 13-weeks during the preceding 52-weeks, are

required to have Workers' Compensation insurance.

The majority of employers in Michigan obtain Workers' Compensation through policies sold by commercial

insurance companies. Self-insurance is an alternative for large companies that have been granted the

privilege of paying Workers' Compensation benefits from general company operating funds. Companies

with $200,000 or more in an annual premium program frequently investigate the self-insurance approach

as a possible coverage alternative.

The premium rates for Workers' Compensation insurance are competitively determined. Insurers use about

500 different rating classifications based on the type of business an employer operates. Since premium

rates for a given classification vary widely among insurers, it pays to shop carefully. Insurers

 

also have different merit and experience rating plans, schedule-rating plans, and premium discount tables,

which can affect an employer's final premium cost.

36

There are two excellent publications available to help new business owners understand Michigan's Workers'

Compensation system. The "Michigan Business Guide to Workers' Compensation", available online at

www.michigan.org/medc/services/workerscomp/, and "General Information Regarding Rights and

Responsibilities Under the Act" provide an easy to understand overview of Michigan's Workers'

Compensation system. Additional information and assistance is also available at the Workers'

Compensation Agency of the Department of Labor & Economic Growth at 888.396.5041 or online at

www.michigan.gov/wca.

FOREIGN EMPLOYEE

The Immigration Reform and Control Act of 1986 not only makes hiring or recruiting "unauthorized aliens"

illegal, but it also places the responsibility for enforcing the law on the employer. The law applies to ALL

employers, no matter what the size of the business. Under the law, an employer is required to check the

 

citizenship status of every employee and to have proper documentation for those employees with

temporary residency. Contact the U. S. Citizenship and Immigration Services online at

www.uscis.gov/graphics/index.htm or call 800.375.5283 for more information or 800.870.3676 to obtain

forms.

It should be noted that many of the visas that authorize entrance to the United States do not authorize the

holders of those visas to accept employment here. Usually these visas must be obtained from the U.S.

State Department in the country of origin, though in some cases an application for a change in status can

be secured from within the United States. The visas vary in eligibility requirements and in the duration of

their viability. It is the employer's responsibility to ascertain whether employees are legally entitled to

work. Consult an attorney who specializes in immigration matters or call the U. S. Citizenship and

Immigration Services for assistance at 800.375.5283 or TTY 800.767.1833. Additional information may also

be found at Michigan's Foreign Labor Certification Program online at www.michigan.gov/mdcd, select

"Workforce Programs", then click "Foreign Labor Certification".

NEW HIRE REPORTING

A provision of the Federal Welfare Reform Act requires employers to report to the Michigan Department of

Treasury basic information on all newly hired or rehired employees within 20 days of hiring. The purpose

of collecting the information is to build a strong partnership between employers and child support programs

across the country, with the intent of obtaining better compliance with child support orders. Employers

may report electronically or by mail. Required information includes: the business name, address and

Federal Employer Identification Number; employee name, address and Social Security Number. For further

information or to obtain forms, contact the Michigan New Hire Operations Center at 800.524.9846 or online

at www.newhire-usa.com/mi.

Refer to Appendix B for a quick list of employer information and Appendix C for information

regarding required workplace posters.

37

FINANCING A BUSINESS

All businesses must incorporate into their financial plan money to pay rent and utilities; acquire inventory,

equipment, and fixtures; pay employees' salaries and benefits; make payments for vehicles;

market/advertise products and service; pay taxes and needed insurance; and most importantly to pay his

or her own salary.

There are several options available for obtaining money to start a new business or expand an existing one.

Most businesses begin with the owner's own capital or loans from friends and family. Some are successful

in obtaining bank financing or using a government sponsored loan program. Although there is a lot of

information on the internet and other media regarding grants, start-up grant finance is highly unlikely.

Regardless of the path you choose, it is wise to take time out to put together a credible business plan.

SHORT-TERM DEBT FINANCING

Short-term financing/credit sources are usually grouped into two basic categories: unsecured and secured.

Unsecured credit is obtained without the borrower's pledge of specific assets to serve as collateral.

Examples include:

�� Personal credit cards, savings, stocks and bonds, and/or cash value of life insurance policies. Funds

borrowed from family members and/or friends.

�� A short-term, unsecured transaction loan is a direct, single payment financing arrangement with a

bank. The maturity on this type of loan is usually between one and six months, but may extend up to

a year.

�� A company's line of credit is a commitment from a bank to its regular creditworthy business customers

to provide a stated maximum amount of short-term financing for a specified time period. The credit

line is often granted with a compensating balance requirement, and the floating or variable rate

method of interest payment is used.

�� Trade credit is credit extended by one firm to another in conjunction with the sale of goods or services

that are used in the normal course of business. For the purchasing firm, using trade credit is the

equivalent of a consumer charge account at a department store - goods are purchased but payment

can be delayed to the extent of the specified credit terms.

�� Accruals are services that are provided for a business on a continuing basis but are not paid for at the

time the services are rendered. For example, employees provide services to the business each day

they work; however, they are not paid until some specified future payroll date.

38

Secured short-term credit for new or existing businesses, businesses with a marginal credit rating, or

businesses that have exhausted unsecured collateral may offer a financing opportunity that would

otherwise not exist.

The primary sources of secured short-term financing for business borrowers are:

�� Commercial banks

�� Commercial finance companies

�� Factoring accounts receivables∗

�� U.S. Small Business Administration (SBA) "guaranteed" loan obtained through a private lending

institution. (The SBA does not make direct loans.)

EQUITY CAPITAL FINANCING (Venture Capital)

Equity capital is the financing made available for investment in promising firms but with a risk greater than

what is acceptable to traditional institutional lenders. Financing is provided by sophisticated investors who

seek investments that hold the prospects for large capital gains.

Such investors are referred to as venture capitalists or Angel investors. Venture capitalists may

be: privately owned firms licensed and regulated by the U.S. Small Business Administration or nonregulated

firms. The former group is known as Small Business Investment Companies (SBICs). SBICs

provide financing in the form of equity capital, debt financing with an equity sweetener, and in some cases,

straight long-term loans. The non-regulated firms, which specialize in equity financing, are referred to as

Venture Capital Companies (VCCs).

Venture Capital firms can be found online at Michigan Venture Capital Association (MVCA)

www.michiganvca.org. Established by venture capital and private equity investors in the state, the MVCA is

the state's premier public policy advocate for the private equity/venture capital industry, working to

promote entrepreneurship and private equity investment. The MEDC is a founding member of the MVCA.

For further details, please contact them at info@michiganvca.org.

Angel investors are high net worth investors who make investments in high-growth potential companies.

The MEDC has aggressively supported the growth of angel networks to create and fill the gap for seed

stage financing. Three angel networks are actively looking at investment opportunities in Michigan:

Ann Arbor Angels -- www.annarborangels.org/ is based in the Ann Arbor area.

Grand Angels -- www.grandangels.org/ is based in Grand Rapids.

Great Lakes Angels -- www.glangels.org/ is based in the Bloomfield Hills area and is Michigan's oldest angel

network.

∗ Factoring is a financial institution that purchases "at a discount" the accounts receivables of a business, assumes

the title and risk of those receivables and in return provides that business with funds.

39

Businesses with the following investment characteristics are attractive candidates for equity financing:

�� Growth potential. The business has the opportunity and is capable of exploiting a clearly-defined

market niche, or has an advantage over competitors. The products/services should: represent a new

or revolutionary idea (i.e., fuel cell technology); be evolutionary by representing the next version in a

series (i.e., camera cell phones); or be a better or lower cost substitute product (i.e., universal remote

control).

�� Low cost. The business should have a product/service with low production cost.

�� Large profit margins. The product/service should have the ability to provide a gain to their investors.

�� Competent management. The business should have an experienced and capable management team.

�� The equity investor should be able to easily withdraw at a given future date from a business and

liquidate its investment with an expectation of a 20-30% rate of return.

STATE LOAN PROGRAMS

There are financing programs available to aid Michigan businesses with growth and expansion. These

programs are generally used to provide the private sector with financing assistance through partnerships

that meet program criteria and to encourage the formation to address unmet financing needs. This

"private institutions" approach makes it possible to use limited public resources to leverage large amounts

of private capital.

CAPITAL ACCESS PROGRAM (CAP)

CAP is one of the Michigan Economic Development Corporation's (MEDC) innovative programs available

to assist most businesses with financing needs. The exceptions are construction, renovation, purchase of

residential rental housing, or rental property. Similar to a loan loss reserve fund, the bank, the company,

and the MEDC pay a small premium into a reserve that makes it possible for the company to receive fixed

asset and working capital financing.

CAP loans are private transactions between the bank and the borrower. MEDC plays no roll in the bank's

decision to make the loan or in setting its terms.

CAP loans can be long- or short-term, term loan, or line of credit financing. The bank has the flexibility

to recast, extend, or refinance the loan to address the needs of the business owner.

For a list of participating banks, go to www.michigan.org/cap.

INDUSTRIAL DEVELOPMENT REVENUE BOND PROGRAM (IDRB)

IDRB's are tax-exempt bonds issued on behalf of the borrower by the Michigan Strategic Fund (MSF) and

purchased by private investors. These loans can be made for manufacturing, not-for-profit corporation

projects and solid waste facilities. Bond proceeds can only be used to acquire land, building and

equipment. Working capital and inventory are not eligible for this type of financing. These bonds are

generally used when financing of $1 million and higher is required. The company for which the bond is

issued must be credit worthy enough to attract a buyer for the bonds, because the state does not

guarantee the bonds. For more information call the Michigan Economic Development Corporation at

517.373.9808.

40

U. S. SMALL BUSINESS ADMINISTRATION (SBA) FINANCING PROGRAMS

The SBA's loan guarantee programs provide a key source of financing for viable small businesses that have

real potential, but cannot qualify for loans from traditional sources. Guarantees are provided through

private lenders and nonprofit lending institutions giving small businesses access to the same kind of

reasonably priced long-term financing available to large businesses by virtue of their size and economic

clout. SBA's Michigan Small Business Resource Guide detailing all of SBA's programs in Michigan is

available by calling the SBA at 313.226.6075. It's also available online at www.sba.gov/mi/, or can be

requested by e-mailing SBA at michigan@sba.gov.

The following outlines the major programs offered by the SBA:

SBA 7(A) GUARANTY PROGRAM

The 7(a) Loan Guaranty Program is SBA's primary loan program. The SBA reduces risk to lenders by

guaranteeing major portions of loans made to small businesses. This enables lenders to provide financing

to small businesses when funding is otherwise unavailable on reasonable terms. The maximum loan size is

$2,000,000.

The eligibility requirements and credit criteria of the program are very broad in order to accommodate a

wide variety of financing needs. When a small business applies to a lending institution for a loan, the

lender reviews the application and decides if it merits a loan on its own or if it requires additional support in

the form of a SBA guaranty. SBA backing on the loan is then requested by the lender. In guaranteeing

the loan, the SBA assures the lender that the government will reimburse the lending institution for a portion

of its loss, in the event the borrower does not repay the loan. Interested applicants should contact their

local lender for further information and assistance in the SBA loan application process. Most lenders are

familiar with SBA loan programs.

Specialized Programs Under 7(a):

There are a number of special loan programs under the 7(a) program that address specific needs of startup

or established businesses. They are governed for the most part, by the same rules as the regular 7(a)

loan guaranty. Your lender can advise you of any variations.

SBA EXPRESS

SBAExpress is available for loans up to $350,000. The SBA guarantees up to 50% of the loan. Like most

7(a) loans, maturities are usually five to seven years for working capital and up to 25 years for real estate

and equipment. Revolving lines of credit are allowed for a maximum of five years.

41

COMMUNITY EXPRESS

This program is for loans of $250,000 or less and couples technical assistance with financial assistance.

Before securing the loan, borrowers work with local business counselors to help increase their chances of

success. This program was developed to help revitalize low income areas (as designated by Census

Bureau) through business investment. Eligible businesses must be located in one of these pre-designated

geographic areas. To find out which areas are eligible and to learn more about the program, call

313.226.6075 or visit www.sba.gov/.

CAPLINES

CAPLines program is designed to help small business owners meet their short-term and cyclical working

capital financing needs. There are five loan programs under the CAPLines umbrella which may be used to

finance seasonal working capital needs; finance direct costs for construction, service and supply contracts;

finance operating capital by obtaining advances against existing inventory and accounts receivable; and/or

consolidate short-term debt.

EXPORT WORKING CAPITAL PROGRAM (EWCP)

The EWCP provides pre- or post-shipment working capital financing for export activities. It is transactionbased

and can be a revolving line of credit or structured for each purchase order, shipment, or contract.

The loan funds may be used for pre-shipment inventory, materials and labor, financing foreign receivables,

and standby letters of credit used for performance bonds, bid bonds, or payment guarantees to foreign

buyers. The loan may not be used for refinancing, fixed assets, marketing, or setting up operations

abroad. With EWCP, SBA will guaranty up to 90% of the loan amount up to $1,666,666 with a maximum

loan amount of $2,000,000. For more information, contact the SBA's Senior International Credit Officer at

313.226.3670.

SBA 504 PROGRAM

The 504 is the SBA's economic development instrument that supports Michigan small business growth and

helps communities through business expansion and job creation. This program provides long-term, fixedrate,

subordinated mortgage financing for acquisition and/or renovation of capital assets including land,

buildings, and equipment. Projects are typically financed 50% private lender, 40% SBA (debenture) and

10% by the small business. The maximum dollar amount of the SBA debenture is $1.5 million for

businesses that create a certain number of jobs or improve the economy of the locality; $2 million for

businesses that meet a specific public policy goal; and $4 million for manufacturers.

The SBA 504 lending intermediaries, Certified Development Companies (CDCs), serve your community to

finance business expansion needs. Staff works directly with you to tailor a financing package that meets

program guidelines and the credit capacity of your business. For more information, contact the Michigan

District Office at 313.226.6075 or the nearest CDC listed on the following page:

42

Economic Development Foundation - Certified -Grand Rapids...........................................888.330.1776

Lakeshore 504 (North) - Grand Haven............................................................................616.846.3153

Lakeshore 504 (South) - Holland ...................................................................................616.392.9633

Metropolitan Growth and Development Corporation - Detroit ...........................................313.224.0820

Michigan Certified Development Corporation - Lansing ....................................................517.886.6612

Oakland County Business Finance Corporation - Pontiac ..................................................248.858.0879

SEM Resource Capital - Grand Rapids ............................................................................616.242.5153

SEM Resource Capital - Livonia......................................................................................734.464.4418

MICROLOAN PROGRAM

The MicroLoan Program provides small loans ranging from under $500 to $35,000. Under this program, the

SBA makes funds available to nonprofit intermediaries that, in turn, make the loans directly to

entrepreneurs. Loans may be used to finance the purchase of machinery and equipment, furniture and

fixtures, inventory, supplies and working capital. Proceeds can be used for typical business purposes such

as working capital, machinery and equipment, inventory and leasehold improvements. Interest rates are

negotiated between the borrower and intermediary. The average loan size is $10,000. For more

information, contact the Michigan District Office at 313.226.6075 or contact one of the following approved

microlenders:

Center for Empowerment & Economic Development (Ann Arbor).......................................734.677.1400

Northern Economic Initiative Corporation (Marquette) ......................................................906.228.5571

Rural Michigan Intermediary Relending Program, Inc. (Traverse City)................................231.941.5858

Northside Economic Potential Group (Kalamazoo) ............................................................269.342.5655

Cornerstone Alliance (Benton Harbor) .............................................................................269.925.6100

Small Business Investment Companies (SBICs)

Equity funding is one of several alternatives to traditional bank financing available to smaller businesses.

SBICs fill the gap between the availability of venture capital and the needs of small businesses that are

either starting up or growing. Licensed and regulated by the SBA, SBICs are privately-owned and managed

investment firms that make capital available to small businesses through investment or loans. They use

their own funds plus funds obtained at favorable rates with SBA guarantees and/or selling their preferred

stock to SBA. SBICs are for-profit firms whose incentive is to share in the success of a small business. In

addition to equity capital and long-term loans, SBICs provide debt-equity investment and management

assistance.

SBICs provide funding to all types of manufacturing and service industries. Some specialize in specific

fields; however, most consider a wide variety of investment opportunities.

43

Specialized Small Business Investment Companies (SSBIC) are targeted toward the needs of entrepreneurs

who have been denied the opportunity to own and operate a business because of social or economic

disadvantage.

Contact the SBA at 313.226.6075 or online at www.sba.gov/ regarding participants in this program.

Women's Economic Development Outreach (WEDO)

WEDO is a coalition of women leaders working together to bring information and focused resources that

directly impact women-owned businesses and opportunity for business expansion. WEDO covers issues

that concern women-owned businesses such as increasing profitability, financing growth, accessing new

markets. During the event/workshop women will meet with local resources from banks, chambers of

commerce, women business organizations, SBA business consultants, and others. For upcoming WEDO

events, call the SBA at 313.226.6075 or online at www.sba.gov/calendar.

44

MANAGING A BUSINESS

PROFESSIONAL ASSISTANCE

The importance of professional assistance cannot be overstated. There is no substitute for professional

services to keep a business operating within financial and legal parameters. There are professionals

available to assist with every aspect of a business and able to determine what will best serve specific

business needs. The costs incurred in hiring professional consultants often discourage business people

from obtaining professional assistance, which can be a fatal business mistake. The expense of using skilled

professional consultants is insignificant when compared to the costly after effects of poorly prepared or

incomplete documents. Listed below is a "core group" of professionals most business people need.

PROFESSIONAL SERVICE PROVIDED

Accountant Bookkeeping, taxes, cash flow

Attorney Legal form of business organization, contracts,

agreements, general consultation

Banker Loans, billing services, credit systems

Insurance Agent Needs evaluation and packaging of insurance

RECORDKEEPING

Accurate and complete records help monitor the business and plan for the future based on factual financial

knowledge rather than guesswork. There are a variety of records and recordkeeping systems a business

can maintain. Trade associations can often provide guidelines or simple accounting records tailored to a

specific business or industry.

Professional accountants can be indispensable to a new or growing business. An accountant not only

provides a record keeping service for a business, but can also provide important advice on taxes, cash flow,

credit and systems management and changes within the tax system. Every business should have up-todate

records, which provide the following information:

�� Accurate and thorough statements of sales and operating results, fixed and variable costs, profit or loss

statements, inventory levels and credit and collection totals;

45

�� Comparisons of current data with prior years' operating results and budget goals;

�� Financial statements suitable for use by management or submission to prospective creditors and

investors;

�� Tax returns and reports to regulatory agencies; and

�� A method of uncovering employee theft, material waste or record keeping errors.

Implement a formal accounting system that produces monthly reports. Many computer systems are

available at minimal costs. Compare the reports to the finance plan and adjust the business activity

accordingly. If the business is more or less profitable than the business plan predicts, adjust the business

plan.

MARKETING

The best product or service in the world will not guarantee success for your business. Potential customers

must know your product is available, purchase your product or service, and return to purchase more.

Developing and implementing a marketing strategy is a necessary process for a successful business. This

process begins as you start your business, and it must remain an ongoing process throughout the life of

your business.

Marketing is neither sales nor advertising, although both of these may be part of a marketing strategy.

Instead, marketing is the thought process by which you:

�� Identify the product or service you really sell.

�� Identify potential customers for your product or service.

�� Identify your competitors in selling to these customers.

�� Understand the basis on which those potential customers make buying decisions.

�� Know why customers will choose to purchase your product or service instead of your competitor's.

�� Determine the most efficient and effective methods to reach these buyers before they make their

purchasing decisions.

�� Identify methods to deliver your product or service.

�� Develop an action plan.

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IDENTIFY THE PRODUCT OR SERVICE

The key is to identify your "market niche," not only in terms of the services provided, but in terms of needs

fulfilled. For instance, a residential lawn service provides lawn cutting, fertilization, etc. One need this

business fills is for convenience on the part of "time poor" homeowners.

IDENTIFY POTENTIAL CUSTOMERS

A potential customer is one whose needs may be filled by your product/service, and who may reasonably

be expected to consider your business as a source of this product/service based on price, location and

other factors. Everyone in the world is not a potential customer; you must focus on an attainable and

realistic portion of the market.

IDENTIFY YOUR COMPETITORS

A competitor is a business who delivers the same service, or sells the same product as your business. For

instance, companies providing guard services to warehouses and those selling alarm systems to

warehouses are to some extent competitors, even though they are not in the same industry.

UNDERSTAND WHY CUSTOMERS BUY YOUR PRODUCT OR SERVICE

Customers buy different products or services for several reasons including:

�� Price

�� Quality

�� Convenience

�� Prestige

Also, understand the basis on which customers make buying decisions related to your type of product or

service.

KNOW WHY CUSTOMERS WILL CHOOSE YOUR BUSINESS

Based on why customers buy your product or service, you must determine the nature of your competitive

advantage. If your potential customers buy solely on the basis of price, are your prices the lowest? If not,

how will you compete? Be cautious in this analysis. Your potential customers probably have established

buying patterns that do not include your business. You must give them sufficient reason to break these

established patterns and buy from you if your business is to succeed.

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DETERMINE THE MOST EFFICIENT METHODS TO REACH BUYERS

Having determined why potential customers select your type of product or service, you are in a position to

identify how they make their buying decisions. Do they typically buy because they've seen an

advertisement in the telephone book or because they have driven by your place of business? Is this type of

product or service generally purchased on the recommendation of another individual? Knowing how people

"will" find you ensures that your marketing dollars are spent in the most productive way possible.

DETERMINE EFFECTIVE DELIVERY METHODS

The most enthusiastic purchaser is unlikely to become a repeat customer if the product or service does not

live up to expectations or if it is not delivered in a timely fashion.

GETTING FREE PUBLICITY

Carefully read the publications in your area from front to back every day for a week. Don't forget the

magazines, newsletters, throwaway papers and other publications that cross your desk. After a while you

will begin to see a pattern of reporting that repeats on some periodic basis.

For example, Internet on Monday, stocks on Tuesday, franchise information on Wednesday, staff

promotions on Thursday and so on. Select those sections in which you feel your business information

might fit and start a collection. Ask yourself the following questions: "Why is this here?" Or "For what

audience is this written?" Or "Why is this important to the reader?" While doing this, note how much

space is given to each section and the length of each article or bit of information.

Write a submission: Don't try to write the article for the publication, you're not in that business. Write

information that fits the publication and leave the rest to the editor of the publication. Be sure you tell:

who, what, when, why, where, how and how much.

Use a paragraph for each: Include one or more quotes from you, the president of your company, the

person you are writing about or an authority in the field. Make sure their comment is relevant, and keep it

short and simple. This way, the editor can pick and choose.

Format: Double space everything and leave at least a one-inch margin on both sides. Number the pages,

and center the word "more" at the bottom of each page. Put "end" at the end. At the top of the page

write the name of the person from whom more information can be gathered, and be sure you let your staff

know to notify that person immediately if they get a call.

If the information is time-dependent, put the date and time of the event at the top. Write today's date

there as well. Don't forget the company name, address and phone. When you meet with the editor for the

first time ask how he/she would like the information presented, and follow their guidelines to the letter.

48

Newspapers have very tight deadlines, and if a critical bit of information is needed and you're not available,

your article may not get published or get published with critical information missing. Don't include photos

unless they are dynamic action photos. Most publications have a staff photographer that will visit your

place of business if a photo is required.

49

INSURANCE

It is prudent for any business to purchase a number of basic types of insurance. Certain insurance

coverage is required by law; others simply make good business sense. The insurances listed below are

among the most commonly used and are merely a starting point for evaluating the needs of your own

business. To learn more about the coverage that is best for your specific business, please contact an

insurance agent who writes business insurance. Insurance is a very competitive business. Be sure to

contact more than one agent. Shop around to get the best coverage for the lowest price.

LIABILITY INSURANCE

Businesses may incur various forms of liability in conducting their normal activities. One of the most

common types of liability is product liability, which may be incurred when a customer suffers harm when

using the product. There are many other types of liability related to specific industries. Liability law is

constantly changing. An analysis of your liability insurance needs by a competent professional is vital in

determining an adequate and appropriate level of protection for your business.

PROPERTY

There are many different types of property insurance and levels of coverage available. It is important to

determine the property to insure for the continuation of your business and the level of insurance should

you need to replace or rebuild. You must also understand the terms of the insurance, including any

limitations or waivers of coverage.

WORKERS' COMPENSATION

Most employers are required to provide Workers' Compensation coverage for their employees. This

coverage applies to injuries incurred by workers in the course of their job duties. A Workers' Compensation

policy is purchased from a private insurance company and is required. For further information, go to the

Workers' Compensation web site at www.michigan.gov/wca.

BUSINESS INTERRUPTION

While property insurance may pay enough to replace damaged or destroyed equipment or buildings, how

will you pay costs such as taxes, utilities and other continuing expenses during the period between when

the damage occurs and when the property is replaced? Business interruption (or "business income")

insurance can provide sufficient funds to pay your fixed expenses during a period of time when your

business is not operational.

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"KEY MAN"

If you (and/or any other individual) are so critical to the operation of your business that it cannot continue

in the event of your illness or death, you should consider "key man" insurance. Banks or government loan

programs frequently require this type of insurance. It can also be used to provide continuity in operations

during a period of ownership transition caused by death or incapacitation of an owner or other "key"

employees.

AUTOMOBILE

It is obvious that a vehicle owned by your business should be insured for both liability and replacement

purposes. What is less obvious is that you may need special insurance (called "non-owned automobile

coverage") if you use your personal vehicle on company business. This policy covers the business for any

damage that may result for such usage.

OFFICER AND DIRECTOR

Under certain circumstances, officers and directors of a corporation may become personally liable for their

actions on behalf of the company. An officer and director insurance policy covers this liability.

HOME OFFICE

If you are establishing an office in your home, it is a good idea to contact your homeowner's insurance

company to update your policy to include coverage for office equipment. This coverage is not automatically

included in a standard homeowner's policy.

51

SELLING TO GOVERNMENT

Obtaining government contracts can be the key to expanding and diversifying the marketing and income

potential of any business. Government agencies at all levels contract for the majority of goods and services

needed.

To become a State of Michigan contractor, visit the "Doing Business" website at

www.michigan.gov/doingbusiness. The site will guide you through vendor registration, preparation and

research, find bidding opportunities, and assist with the actual bidding process. In addition, valuable links

are available from the site, including no-cost and low-cost resources available only for Michigan firms.

The Michigan Department of Management and Budget (DMB) competitively bids all solicitations, and

Michigan businesses are preferred in State contracting. DMB and MEDC work closely to provide valuable

tools and training for Michigan businesses that want to become State contractors.

The preferred and quickest method to become a State of Michigan vendor/payee is to log on to the

Contract & Payment Express, (C&PE) online at www.cpexpress.state.mi.us and complete the easy to follow

instructions. When finished, you will be a registered State of Michigan vendor/payee.

Vendor registration includes a list of commodities and services required by state government. When

completing the vendor registration, indicate which products or services you are interested in providing to

the state. Once the registration information is processed, the business will appear on bidder's lists for

those commodities/services indicated. Note that pre-vendor qualification is required for printing, natural

gas, and food vendors. Instructions are provided at the Department of Management and Budget website at

www.michigan.gov/doingbusiness.

PROCUREMENT TECHNICAL ASSISTANCE CENTERS (PTACS)

GOVERNMENT CONTRACT SUPPORT

The Michigan Economic Development Corporation (MEDC) provides support to PTACs located throughout

the state. This network of 13 locally based offices provides government contract assistance. Highly skilled

professionals assist businesses to successfully bid for federal, state and local government contracts. To find

the PTAC office nearest to your business, visit www.michigantac.org/.

The federal government is a major buyer of goods and services, spending more than $230 billion annually.

State and local governments are also major purchasers of products and services. PTAC support includes,

but is not limited to:

52

�� Orientation to the procurement system

�� Linking local companies to federal and state government agencies

�� Bid match for government solicitations

�� Training seminars and conferences

�� Contracting opportunities

�� Subcontracting opportunities

�� Government specifications

�� Bid history and contract award results

�� Bid package assistance

53

PROCUREMENT TECHNICAL ASSISTANCE

CENTERS

1. N.W. MICHIGAN COUNCIL OF

GOVERNMENTS - Traverse City

231.929.5036

FAX: 231.929.5042

2. N.E. MICHIGAN CONSORTIUM -

Onaway

989.733.8548

FAX: 989.733.8069

3A. MUSKEGON AREA FIRST - Big Rapids

231.796.4484

3B. MUSKEGON AREA FIRST - Muskegon

231.722.7700

FAX: 231.722.6182

4. MICHIGAN WORKS! - Marlette

989.635.3561 ext. 227

FAX: 989.635.2230

5. SAGINAW FUTURE, INC. - Saginaw

989.754.8222 ext. 232

FAX: 989.754.1715

6. GENESEE REGIONAL CHAMBER OF

COMMERCE - Flint

810.600.1432, 1433 or 1434

FAX: 810.600.1461

7. SOUTHWEST MICHIGAN TAC - Kalamazoo

269.381.2977 exts. 3243 or 3245

FAX: 269.552.4435

8. TAC OF SOUTH CENTRAL MICHIGAN -

Jackson

517.788.4680

FAX: 517.782.0061

9. DOWNRIVER COMMUNITY

CONFERENCE - Southgate

734.362.3477

FAX: 734.281.6661

10A. MACOMB COMMUNITY COLLEGE MTEC-

Warren

586.498.4039, 4122, or 4163

FAX: 586.498.4101

10B. ECONOMIC DEVELOPMENT ALLIANCE

OF ST. CLAIR COUNTY - Port Huron

810.982.9511

FAX: 810.982.9531

11. SCHOOLCRAFT COLLEGE BUSINESS

DEVELOPMENT CENTER - Livonia

734.462.4438

FAX: 734.462.4673

12. WAYNE STATE UNIVERSITY (CITY OF

DETROIT) - Detroit

313.577.2241

FAX: 313.577.4354

13. STATE OF MICHIGAN-PTAC

PROGRAM Michigan Economic

Development Corporation - Lansing

517.241.2471

FAX: 517.335.0198

54

NOW WHAT?

You've taken the time to read this information and probably learned a lot about starting a business, but

where should you go from here?

Take the time to prepare a comprehensive business plan. Think about what you want out of your business.

How do you intend to meet your goals? What will you need to get started-tax advice, financing,

management assistance, legal advice? Then use your business plan when you meet with your banker,

lawyer, or accountant.

Don't hesitate to contact your local MI-SBTDC (see Appendix D), or other resources listed.

Helping you get your business off to a good start is our number one priority.

55

APPENDIX A

LIST OF MICHIGAN COUNTY CLERK

OFFICES TO OBTAIN A CERTIFICATE OF

ASSUMED NAME (D/B/A)

Alcona, Post Office Box 308, Harrisville, MI 48740.........................................................989.724.9410

Alger, 101 Court Street, Munising, MI 49862 ..................................................................906.387.2076

Allegan, 113 Chestnut Street, Allegan, MI 49010...........................................................269.673.0450

Alpena, 720 West Chisholm, Suite 2, Alpena, MI 49707...................................................989.354.9520

Antrim, Post Office Box 520, Bellaire, MI 49615 .............................................................231.533.6353

Arenac, Post Office Box 747, Standish, MI 48658 ...........................................................989.846.4626

Baraga, 16 North Third Street, L'Anse, MI 49946............................................................906.524.6183

Barry, 220 West State Street, Hastings, MI 49058 ..........................................................269.945.1285

Bay, 515 Center Avenue, Suite 601, Bay City, MI 48708-5122 ..........................................989.895.4280

Benzie, 448 Court Place, Beulah, MI 49617....................................................................231.882.9671

Berrien, 701 Main Street, St. Joseph, MI 49085..............................................................269.983.7111

Branch, 31 Division Street, Coldwater, MI 49036............................................................517.279.4306

Calhoun, 315 West Green, Marshall, MI 49068...............................................................269.781.0730

Cass, 120 North Broadway, Rm. 123, Cassopolis, MI 49031 .............................................269.445.4464

Charlevoix, 203 Antrim Street, Charlevoix, MI 49720 .....................................................231.547.7200

Cheboygan, 870 S. Main Street, Cheboygan, MI 49721 ..................................................231.627.8808

Chippewa, 319 Court Street, Sault Ste. Marie, MI 49783 ................................................906.635.6300

Clare, Post Office Box 438, Harrison, MI 48625 ..............................................................989.539.7131

Clinton, 100 E. State St., Ste. 2600, St. Johns, MI 48879 ................................................989.224.5140

Crawford, 200 West Michigan, Grayling, MI 49738.........................................................989.344.3200

Delta, 310 Ludington, Suite 109, Escanaba, MI 49829.....................................................906.789.5105

Dickinson, Post Office Box 609, Iron Mountain, MI 49801...............................................906.774.0988

Eaton, 1045 Independence, Charlotte, MI 48813 ............................................................517.543.7500

Emmet, 200 Division Street, Petoskey, MI 49770............................................................231.348.1744

56

APPENDIX A (CONTINUED)

Genesee, 900 S. Saginaw, Flint, MI 48502.....................................................................810.257.3282

Gladwin, 401 W. Cedar Avenue, Gladwin, MI 48624 .......................................................989.426.7351

Gogebic, 200 North Moore, Bessemer, MI 49911............................................................906.663.4518

Grand Traverse, 400 Boardman Avenue, Traverse City, MI 49684 ..................................231.922.4760

Gratiot, 214 E. Center Street, Ithaca, MI 48847 .............................................................989.875.5215

Hillsdale, 29 North Howell, Room 1, Hillsdale, MI 49242.................................................517.437.3391

Houghton, 401 East Houghton, Houghton, MI 49931 .....................................................906.482.1150

Huron, 250 East Huron, Huron Co. Bldg., Rm. 201, Bad Axe, MI 48413 ............................989.269.9942

Ingham, Post Office Box 179, Mason, MI 48854.............................................................517.676.7204

Ionia, 100 Main Street, Ionia, MI 48846 ........................................................................616.527.5322

Iosco, Post Office Box 838, Tawas City, MI 48764 ..........................................................989.362.3497

Iron, 2 South 6th Street, Suite 9, Crystal Falls, MI 49920 .................................................906.875.3221

Isabella, 200 North Main, Mt. Pleasant, MI 48858 ..........................................................989.772.0911

Jackson, 312 South Jackson Street, Jackson, MI 49201 ..................................................517.788.4268

Kalamazoo, 201 W. Kalamazoo Ave., 1St Fl., Kalamazoo, MI 49007 .................................269.383.8840

Kalkaska, Post Office Box 10, Kalkaska, MI 49646..........................................................231.258.3300

Kent, 300 Monroe Avenue, NW, Grand Rapids, MI 49503 ................................................616.632.7640

Keweenaw, 509 4th Street, Eagle River, MI 49950 .........................................................906.337.2229

Lake, 800 10th Street, Baldwin, MI 49304.......................................................................231.745.4641

Lapeer, 255 Clay Street, Lapeer, MI 48446 ....................................................................810.667.0356

Leelanau, 301 East Cedar Street, P. O. Box 467, Leland, MI 49654..................................231.256.9824

Lenawee, 425 North Main Street, Adrian, MI 49221 .......................................................517.264-4599

Livingston, 200 East Grand River, Howell, MI 48843 ......................................................517.546.0500

Luce, 407 West Harrie, Newberry, MI

 

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