Frequently Asked Questions

What is a small business? The Office of Advocacy defines a small business for research purposes as an independent business having fewer than 500 employees. Firms wishing to be designated small business for government programs such as contracting must meet size standards specified by the U.S. Small Business Administration (SBA) Office of Size Standards. These standards vary by industry; see www.sba.gov/size.

How important are small businesses to the U.S. economy?
Small firms:
° Represent 99.7 percent of all employer firms.
° Employ half of all private sector employees.
° Pay more than 45 percent of total U.S.private payroll.
° Have generated 60 to 80 percent of net new jobs annually over the last decade.
° Create more than 50 percent of nonfarm private gross domestic product (GDP)

How do I know if I should start my own business?
A business counselor at the SBDC has a small business readiness assessment tool that can assist you in determining if you are ready to start a business.

Where can I get a tax identification number?
Partnerships and corporations with or without employees and sole proprietors with employees must obtain Form BT-1 from the Indiana Department of Revenue. Forms are available online at https://secure.in.gov/apps/dor/bt1/.

How do I know what taxes are required for my business?
Once you start your business, you will have to start paying certain taxes to both the federal government and the state of Indiana. The specific taxes you are required to pay depend on your type of business. The Indiana Department of Revenue provides an online guide at www.in.gov/dor.

Once I’ve chosen the name for my business, how do I find out if anyone else is using it?
The Secretary of State’s office will do a name search for Indiana only. Check online at http://www.in.gov/sos/.

How do I register my business name?
If you have formed a legal entity, you may register the business name, trademark or service mark with the Indiana Secretary of State’s Office at http://www.in.gov/sos/business/forms.html.
To register you name locally, go to your local recorder’s office.

Do I need a Employer Identification Number?
Sole proprietorships without employees can use the proprietor’s social security number as a business identification number, providing he or she uses his or her own name in the business. If using a different name and or hiring employees, obtain a employer ID number from the IRS (Form SS-4, Application for Employer Identification Number). You can file the form online at http://www.irs.gov/businesses/small/article/0,,id=102767,00.html.

What is a corporation?
A corporation is a separate legal entity that exists under the authority granted by state law. A corporation has substantially all of the legal rights of an individual and is responsible for its own debts. It must also file income tax returns and pay taxes on income it derives from its operations. Typically, the owners or shareholders of a corporation are protected from the liabilities of the business. However, when a corporation is small, creditors often require personal guarantees of the principal owners before extending credit. The legal protection afforded the owners can far outweigh the additional expense of starting and administering a corporation.

How much money will I need?
Writing the business plan is a good way to determine the answer to this question. The detailed analysis of expense and income will enable you to test the feasibility of the business, the break even point and the potential profitability of the business. The counselors at the SBDC will provide the guidance needed to write your plan.

What insurance should I have?
Types of insurance you should consider include:
Property, Liability, Product Liability, Automobile, Workers’ Compensation, Disability, Business Interruption, Health and Life Insurance.