Small Business

You can request a report from a search company that will check records in the US Patent and Trademark Office, state registers and various other business sources. There usually is a fee for this service. Some companies are: CSC, The US Corporation Company, 1090 Vermont Ave NW, Washington DC 20005, 800 241-6518. Thomson and Thomson, 500 Victory Road, North Quincy MA 02171-3145, 800-692-8833.

A college professor was overheard telling his class, "There are three basic principles for a successful business, location, location, location". You can have the best business in the world, but if it is located in a desert, your business will probably fail. Time and effort devoted to selecting your business location will mean the difference between success and failure. The kind of business you are in, the potential market, the availability of employees and the number of competitive businesses in your neighborhood should all be determining factors in your choice of location.

The Dun & Bradstreet Corporation is located at One Diamond Hill Road, Murray Hill NJ 07974, or at www.dnb.com. 800.234.3867 (Monday – Friday from 8 a.m. to 6 p.m. Local Time)

There is no simple answer or formula for evaluating the price of your business. There are business brokers or appraisers that specializes in valuing a business. Some brokers believe that cash flow is the most important factor to consider. Some brokers use one of three possible calculations to determine cash flow. Earnings plus Interest plus Taxes = cash flow. Earnings plus Interest plus Taxes plus Depreciation plus Amortization = cash flow. Earnings plus Interest plus Taxes plus Depreciation plus Amortization plus Owner's Salary = cash flow. Other important factors to consider include competition, industry trends, balance sheet, income statement, gross margins, type and condition of equipment, customer base, growth opportunities for company, owner's role, financial needs and goals, difficulty of someone else learning the business and how other companies of similar size in the industry perform. Speak to your local CPA or business broker to assist you in selling your business.

You should initially apply online. Go to www.irs.gov/businesses and click on employer ID numbers. Your local IRS service center can also assist you in getting a Federal ein. The phone number is 1-800-829-4933:

The address is www.irs.gov

The importance of keeping adequate, legible, complete records cannot be stressed enough. Without records you cannot see how well your business is going and where it is going. All business transactions should be documented with checks or credit cards. Undocumented cash transactions should be avoided if possible. At a minimum, records are needed to substantiate your tax returns under federal and state laws, including income tax and social security and sales tax laws. It also is necessary to substantiate your request for credit from venders or loans from lending institutions. It also is necessary to substantiate your representations and claims about the business should yo wish to sell the business. Speak to your local CPA to set you up on a good bookkeeping system.

The Gross Profit Margin measures the percentage of each sales dollar remaining after the business has paid for its goods. The higher the gross profit margin the better and the lower the relative cost of merchandise sold. Sales minus cost of goods sold divided by sales = Gross Profit Margin.

The P/E Ratio reflects the amount investors are willing to pay for each dollar of the business's earnings. The higher the P/E Ratio, the greater the investors confidence in the firm. The P/E ratio represents the "multiple" that the stock market places on the earnings of a company. Market price per share of common stock divided by Earnings per share of common stock = P/E Ratio.