Small businesses work wonders for Pennsylvania in

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2 A Message From The Senator Small businesses work wonders for Pennsylvania in fat, they are the mainstay of the Commonwealth's eonomy. However, starting up a new firm and trying to omply with state and federal laws and ageny regulations an be onfusing. Fortunately, the Department of Community and Eonomi Development has published the Entrepreneur s Guide. This booklet ontains everything you need to know to start a small business in Pennsylvania. The guide provides information on state lienses and taxes, federal requirements, employee protetions and building inspetions. It guides you through the whole proess of establishing your business, inluding a heklist of everything you need to onsider before setting up shop. If you are planning to start or expand a business in Pennsylvania, I urge you to read this booklet. I think you'll find it answers many of the questions you may have about undertaking a new enterprise here. Sinerely, State Senator

3 The Entrepreneur s Guide: Starting and Growing a Business in Pennsylvania was prepared by the Pennsylvania Department of Community and Eonomi Development (DCED). The information ontained in this guide is subjet to hange. Every effort has been made to ensure the auray of this information at the time of publiation. DCED is not responsible for deletions, omissions or errors. Comments and inquiries on the subjet matter should be addressed to the DCED s Small Business Champion Network at the Pennsylvania Department of Community and Eonomi Development, Commonwealth Keystone Building, 400 North Street, 4th Floor, Harrisburg, PA or by alling

4 Table of Contents Introdution Chapter I Preparing to Start a Business Four Keystones for Suess Qualified Entrepreneur: How to Assess Yourself Profitable Idea: How to Assess Your Business Conept Comprehensive Business Plan Business Plan Outline Startup Costs Worksheet Operating Costs Worksheet How to Choose a Site for Your Business Adequate Finanes: Funding Your Business Chapter II Legally Establishing a Business in Pennsylvania Four Keystones to Legally Establishing a Business in Pennsylvania Cheklist for Legally Establishing a Business in Pennsylvania Business Name Business Struture Summary Table Registering Business Struture and Name Taxes, Employment Obligations, EIN and Bank Aount Tax Information, Inentives, Legal Considerations and Forms Pennsylvania Labor and Employee Laws Laws, Lienses and Regulations Chapter III Managing and Growing a Business Four Keystones to Growing a Business Enterprise Audit Cheklist Growth Strategy Reord-keeping Human Resoures Template: Position Desription How to Seure Contrats with Government Agenies How to Develop International Markets Chapter IV Important Small Business Resoures Advoay Finaning Tehnial Assistane Tehnology Workfore Development Federal Resoures Chapter V Diretory of State and Federal Agenies Important State and Federal Telephone Numbers Diretory of Pennsylvania State Agenies

5 How to Use the Guide Whih One are You? OR First-Time Entrepreneur Existing Business Owner These symbols are used to denote whih setions are more useful for new entrepreneurs and whih ones ontain information geared toward existing business owners. Setions not designated by either ion ontain information that is relevant for both types of entrepreneurs. How This Guide is Organized The guide onsists of five hapters that address the ommon questions that first-time entrepreneurs and existing business owners ask: Chapter I Preparing to Start a Business. This hapter disusses the evaluations, researh and steps one should take before deiding to start a business. Chapter II Legally Establishing a Business in Pennsylvania. This hapter disusses the steps to legally establishing a business in Pennsylvania suh as obtaining a bank aount and EIN. Chapter III Managing and Growing a Business. This hapter disusses areas suh as human resoures, finanial management and other issues that determine a well-managed business and help to keep a business growing. Chapter IV Important Small Business Resoures. This hapter has a list of important publi and private organizations that an help your business thrive. Helpful Tips Chapter V Diretory of State and Federal Agenies. This hapter has a list of ontat information for important state and federal organizations. Keep a look out for the tip ions for quik, useful information.

6 Introdution Starting a business is an exiting adventure on whih many Pennsylvanians embark every year. Eah entrepreneur is unique. No matter what level of business experiene or expertise, the Entrepreneur s Guide: Starting and Growing a Business in Pennsylvania will provide you with valuable information that will help with business startup and growth. Taking your ideas and ingenuity to reate something new is a rewarding and hallenging endeavor, as is the undertaking of building a business that an grow and ompete loally and globally. Pennsylvania is an exellent plae for an entrepreneur to do all of this, and more. Making Entrepreneurship Aessible This guide is about more than just providing you with rules, regulations and telephone numbers it is intended to make the entrepreneurial mehanis as aessible as possible for all Pennsylvanians. As you read, you will be able to: draft a professional business plan, ensure your business is properly registered and liensed and prepare yourself for the hallenges to grow and manage your business. Guide Struture The guide is designed to prepare you to start your business and walk you through the proess you will undertake to determine when and how you will grow that business. You will find ontat information for tehnial and business support organizations throughout the guide that will be able to assist you with a variety of business ativities inluding finaning, identifying new markets and developing professional growth strategies. Questions The Pennsylvania Department of Community and Eonomi Development s (DCED) Small Business Champion Network is here to assist and answer questions. Visit to learn about DCED programs, follow us on for the latest DCED announements, or ontat us at

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8 CHAPTER I Preparing to Start a Business 3

9 ENTREPRENEUR S GUIDE Four Keystones to Suess Four keystones influene a suessful business startup: > Qualified Entrepreneur > Profitable Business Idea > Adequate Finanes > Thorough Business Plan 4

10 CHAPTER I PREPARING TO START A BUSINESS Qualified Entrepreneur: How to Assess Yourself An important step in your entrepreneurial journey will be to evaluate who you are, what you want to be and how to bring the best of yourself into your new venture. As an entrepreneur, you are the fae, the brain and the brawn behind your business. You and your ideas will drive the initial stages of the projet. What are my entrepreneurial skills? The sum of your life experiene has given you many qualities and skills that will be an asset to your new enterprise. It is important to evaluate the skills you have as you begin to develop your business onept in order to maximize your preparedness and effetiveness. While many studies and ountless books have been written on what the right stuff is for entrepreneurship, the list below ontains the most ommon harateristis and traits that are part of a suessful entrepreneur s bakground. Entrepreneurial Skills Assessment Take some time and honestly evaluate yourself by plaing a hek next to the traits you are onfident you possess: Problem-solving: explores innovative ways to respond to opportunities Goal-oriented: envisions a desired outome, as well as plans and implements the ativities required to ahieve it Self-onfidene: believes in own ideas and abilities and onveys that belief to others Risk-taking: abandons status quo, explores options and pursues opportunities Deision-making: makes prudent hoies even in a stressful environment Organization: keeps trak of deadlines, ritial paperwork, orrespondene and tasks to be ompleted, as well as those already done Persistene: tenaiously pursues goals regardless of the energy and ommitment required Communiation: speaks, listens and writes effetively Interpersonal skills: inspires, motivates and understands the wants and needs of others Leadership: direts others effetively and empowers their performane Continual Self-Improvement is Key Chanes are you left one or a few of the above traits unheked. Even if you feel you adequately exhibit all of the traits above, it is important to remember that ontinual self-improvement is ritial to your growth as a business owner and a hallmark of suessful people. Finding ways to improve is a good test of your abilities, whether by seeking out useful books and artiles or enrolling in business eduation ourses. Consider seeking advie from a mentor or other suessful entrepreneurs in your ommunity. The persistene and reativity you exhibit in improving your abilities will make you a better business owner and bring you loser to your goal. Responsibilities of Entrepreneurship As an entrepreneur, your skills and abilities will be tested as you take on managerial responsibilities. Although you an hire skilled employees, engage qualified onsultants and develop a orporate advisory board, the ultimate responsibility for deision-making and determining the strengths and weaknesses of your business rests with you. The managerial responsibilities of entrepreneurship inlude finanial planning, personnel, marketing and prodution skills you will ontinue to refine alongside your personal abilities. When you find yourself onfident in both your personal and managerial skills, you will have a solid foundation on whih to begin building your business. 5

11 ENTREPRENEUR S GUIDE Profitable Idea: How to Assess Your Business Conept As you ontinue to develop onfidene in your personal and managerial skills, you also need to assess your business onept. Begin analyzing your onept by taking a moment and putting yourself in the shoes of a potential ustomer. Do Your Researh One you have identified what your potential ustomers will be looking for, you an begin to plot a path to reah that goal. Early-stage businesses see failure rates exeeding 50 perent beause too often an individual will spend vast amounts of money and time on a onept they did not fully evaluate. Take time to test your onept and researh similar businesses. Rely on your drive and ambition to work through disouraging moments. Review the list below and give yourself a hek next to eah statement as you identify how your business will address eah topi. Business Conept Assessment The produt or servie satisfies the needs of the prospetive ustomer, not simply the desire of the business owner. The produt or servie has an identifiable advantage over ompetitive soures. The advantage is of signifiant relevane to the ustomer. The quality of the produt an be maintained to a level that enourages ustomers to make repeat purhases. The neessary materials for initial setup, long-term prodution and delivery of the produt or servie are all readily available. The number of ustomers in the market is suffiient for your business and ompetitors. The produt or servie is ompatible with existing beliefs, attitudes and buying habits of prospetive ustomers. The benefits of the produt or servie are easily ommuniated to the target ustomers. The prie of the produt or servie is within an affordable range for the intended ustomers. The most ost-effiient methods of targeted ommuniation between the merhant and potential ustomers are identified. The projeted sales potential, based on the number of ustomers and their average expenditure for the produt, is suffiient to generate a profit after all expenses are paid. The sales generated will be suffiient during peak periods to support the business expenses for the entire year. 6

12 CHAPTER I PREPARING TO START A BUSINESS Comprehensive Business Plan Like all entrepreneurs, you will need to do a great deal of researh and planning before opening your business. A business plan is a doument that learly desribes your vision, inluding all the details of your business operation. A well-written business plan not only puts your business on a solid foundation, but is ritial in your quest for funding. This will beome your owner s manual guiding your daily operations and ativities. Even if you deide not to write out a business plan, it will still help you to at least researh and think through all the areas that are disussed in a plan (see "Business Plan Outline.") Although a business plan is time-onsuming, it is important to business suess. Completing one allows you to apply your researh to your deision-making and fores you to examine all deisions of management, marketing, personnel and finane in an objetive and organized way. Another important benefit of the planning proess is that it will require you to projet the amount of finaning needed for the startup and the early-stages of your business. Among other things, the business plan desribes: the produts and servies you will sell your ustomers, the prodution, management and marketing ativities needed to produe your offerings the projeted profit or loss that will result from your efforts A omplete outline of the ontent of the plan is disussed in the next setion: "Business Plan Outline." When you adequately over all the outline elements, your business plan will answer these questions: Who are you? A personal resume outlining the eduation and experiene that will allow you to start and manage your business suessfully. What are you going to do? A desription of your business onept, the produts and servies you will be providing, the market whih you will serve, where you will be loated, how muh money you will invest and how muh additional money you will need (if any). Where are you going? The short- and long-term goals you have set for your business. How are you going to get there? The strategies that will allow you to meet your finanial responsibilities, ompete with others in the marketplae, learn new management skills, ommuniate with your ustomers, et. Business planning is an ongoing ativity. Both new and existing businesses will benefit from reating and updating their goals, plans and ativities. Although plans differ in some ontent elements depending on whether the firm is a retail, manufaturing, distribution or servie enterprise, the following outline should provide a solid framework for preparing your business plan. 7

13 ENTREPRENEUR S GUIDE Business Plan Outline The following is an outline and disussion of the ontent of a business plan, inluding key areas of a business enterprise. Not every plan disusses every area or disusses them in the order listed. However, if you follow the order listed and disuss as many areas that you an, you should be able to prepare an aeptable business plan. 1. Title Page All ontat and ownership information is inluded on the title page. Some entrepreneurs like to add a very brief business desription, slogan or mission statement. business name, address, telephone, and website name of owner(s) 2. Table of Contents The table of ontents should list all setions of the business plan and the appropriate page numbers. Graphs, diagrams and other visual representations should also be identified. Items inluded as exhibits at the end of the plan (example: owner resume) should be learly identified so that the reader an referene them while reviewing the plan. 3. Mission Statement The mission statement should desribe why your ompany exists in the marketplae. Many entrepreneurs find it useful to make the mission statement brief and general enough to allow potential growth of produt lines and servies. Consider the differene between desribing yourself as a ompany in the automobile business and a ompany in the transportation business. 4. Exeutive Summary The exeutive summary is an overview of the ontent of your business plan meant to allow managers, strategi partners, investors or lending agenies to quikly grasp your onept and business diretion. The exeutive summary should mention the most important information about your proposed business. You will find many uses for this summary as you move forward to promote your ompany, network in the business ommunity and work with vendors of business produts and servies. brief desription of the ompany history purpose of the plan goals of the business desription of the produts and servies ustomers management team experiene amount required from lender* other soures of funds/ollateral* method of repayment* (*) Items marked with an asterisk are added to the business plans being used to seure finaning. 5. Introdution/Overview This setion typially onsists of a few paragraphs introduing your business/business idea and yourself. This usually means presenting what the business is and naming the key people involved in the startup and ownership. Also mention how your business is strutured (LLC, Sole Partnership, et.). 6. Produts and Suppliers This setion should list and disuss the produts and servies you are selling and the priing of those produts and servies. When priing your produt, you must onsider ompetition and ustomer expetations, as well as all expenses. It is not unommon for businesses to: believe they an sell at the lowest prie misunderstand the importane of establishing prie poliies at levels other than the end user level overlook the relationship between priing and other elements of marketing You should also disuss where you are getting your produts from or the raw materials to make them, listing your key suppliers and information on those suppliers. 7. Industry Speifis This setion disusses the business environment in whih you will be operating. Entrepreneurs often wish to gloss over this setion beause the fators are onsidered external to the ompany and unontrollable. Gathering this information is important beause it an help you determine limitations or opportunities impating your profit. You may even disover information that hanges the type of business you are starting, or the ways in whih you expand operations. Be sure to study both positive and negative fators. Information to researh and disuss inludes: national/regional eonomi growth or deline industry outlook projeted opportunities regulatory environment tehnologial influenes 8

14 CHAPTER I PREPARING TO START A BUSINESS 8. Target Market/Customer Base In this setion, you should desribe the most likely ustomers for your produt or servie. Who are they? Where are they? When and why will they buy from you? An error in the determination of your target market(s) will not only adversely affet all other setions of your business plan; it will inrease your advertising and promotion expense. For some businesses, it is the differene between suess and failure. Often your entire market of purhasers an be divided into segments, or groups of purhasers with ommon needs. Segmenting your market allows you to define and desribe buyers needs and habits as ompletely as possible. Aurate information about the size of your market and expeted market share helps you predit potential inome. Information that should be disussed inludes: harateristis of the target market: demographi profile (age, inome, sex, eduation) business ustomer (industry, size, purhaser) geographi parameters size of the market/expeted market share market segmentation ustomer buying habits (seasonality, quantity, average expenditure) To be thorough, you must also desribe the target market between you and the end user of your offerings. For example, if you are a manufaturer, you may need a retailer or distributor. Without the retailer or distributor purhasing your produt, the end user will never have the opportunity to purhase. 9. Competition This setion should examine the ompetitors and their produts and servies and disuss how your offerings are unique. If you are tempted to dismiss ompetition, ask yourself how your potential ustomer urrently solves the same problem your offerings are intended to solve. What are the ustomers hoies when spending their finanial resoures? It an be helpful to develop a matrix that lists all your major ompetitors, their produts, servies, pries, methods of promotion and loation. By inorporating your own marketing information on the matrix, you an identify your firm s strengths and weaknesses. 10. Marketing This setion desribes all ativities involved in selling. Marketing does not involve just advertising and promotion ativities. Although these ommuniation elements are extremely important, they are ineffetive if you have not hosen produts and servies wanted and needed by your potential ustomers. The marketing plan should inlude a omplete desription of all offerings. Names, olors, assortments and other details are important to ustomer hoie. If you have multiple produts for multiple target markets, this is the setion where those distintions must be made. You should also be able to desribe your ustomer servie poliies, as small businesses often have an opportunity to differentiate themselves from larger firms by offering flexible, ourteous, ustomer-entered servies. The loation element of business planning one foused on a physial business site, ustomer aess to that site and transportation (logistis) related to the site. With advanements in tehnology, both startup and existing businesses must examine whether the loation for interfae with ustomers is a physial loation, the internet, or both. A website an be used to simply promote a business and its offerings, or it an be the atual marketplae where sales are ompleted. Website development, performane, delivery systems and payment ativities are now a neessary part of the marketing plan. Few businesses exist without advertising expense. The hoies of strategy and media are many, but the hoie to eliminate advertising says the entrepreneur annot afford to ommuniate with ustomers. A lak of ommuniation is diretly related to a lak of ustomer spending, and a lak of ustomer spending ritially impairs the business s survival. Sine advertising and other elements of promotion are legitimate business expenses, they must be inorporated in the prie of the produts and servies. To summarize, this setion should disuss most, if not all, of the following: sales goals desription of all produts and servies priing objetives/methods wholesale and retail disounts and speial allowanes prie sheets seasonality in priing redit terms loation where produts/servies will be sold website analysis of advantages/disadvantages plant/store atmosphere transportation promotion ativities advertising marketing materials publi relations publiity trade or business shows 9

15 ENTREPRENEUR S GUIDE ommere pakaging ustomer servie poliies sales training, management and methods growth strategies 11. Faility and Loation The loation(s) and failities of the business should be disussed, inluding the following: lease or purhase size and floor plan zoning, loal regulations, taxes renovation/expansion plans loation and any signifiant features or advantages of the loation 12. Prodution and Operations Lak of prodution and operations planning auses entrepreneurs to underestimate startup, maintenane and growth expenses. The deisions in this setion onsider the physial health of the business. If the business is started at home, the entrepreneur should set riteria suh as inome, number of employees or produt expansion that will neessitate moving to a business site. Deisions made in this setion affet the extent of ompany indebtedness, as well as the ollateral of the business when it seeks out loans or investments. Use the Operating Costs Worksheet to help understand your osts. Issues that should be addressed in this setion inlude: equipment mahines/tools owned/needed lease or purhase maintenane proedures and osts vehiles teleommuniations and data prodution proess and osts suppliers/redit terms transportation, shipping aess and equipment sheduling for ompletion of researh and development 13. Management and Human Resoures The people in any business are an important and expensive resoure. Before developing this setion of the plan, the entrepreneur must identify how the business will grow and what workfore skills will be needed for that growth. If additional loations are planned, new managers will need to be hired or trained. If growth omes from development of new produts, researhers and engineers may be needed. If growth will result from selling intensively to a small number of lients who buy on multiple oasions, employees that are apable of developing good relationships and delivering exellent ustomer servie are needed. 10 The obvious expense of human resoures is salary and benefits. Less obvious is the ost of reruitment, seletion and training when turnover ours. This setion should also disuss any signifiant state and federal regulations governing employer and employee relationships, espeially if suh regulation partiularly targets the ativity of the business, suh as liensing or safety requirements. Issues that should be addressed in this setion inlude: key managers responsibilities training reporting proedures personnel number of full- and part-time employees speial skills/eduation required/ontinuing eduation job desriptions and evaluation methods benefits wages, ommissions, bonus plans use of subontrated personnel poliies organizational hart lists of stokholders and board members amount of authorized stok and issued stok professional assistane (attorney, aountant, banker, insurane representative, et.) 14. Lawyer, Aountant, Other Professionals In this setion, you should list, if known, the names and roles of those who will be advising the business, inluding lawyers, aountants, bookkeepers, onsultants and other professionals. You should also give a brief desription of any signifiant experiene, aomplishments, reognition et. of eah professional. It should be noted that many businesses start without having any outside professionals involved. However, for almost all entrepreneurs, it is important to at least talk to and designate a bookkeeper or aountant, if only for doing taxes and payroll (if employees are involved), before launhing a business. 15. Insurane By definition, entrepreneurs are risk-takers. They launh a new enterprise in a ompetitive environment with less than adequate apital and work more hours in the day than their orporate employee ounterparts. One the deision has been made to beome an entrepreneur, risk management beomes a part of the job desription. As a firm grows, the wise entrepreneur develops a risk management program with advie from an attorney, aountant and insurane agent.

16 CHAPTER I PREPARING TO START A BUSINESS Young firms are vulnerable and protetion omes from evaluating and prioritizing risks and insuring against them. You an start by making a list of the perils your business faes. Identify whih are most atastrophi, suh as loss of life, damage to property, employee or ustomer injury resulting from a faulty piee of equipment or produt. Take ation to protet your business against these atastrophes first. Risks differ depending on your industry and speifi offerings, and gaps in overage an our as the business grows. Your risk management program should be evaluated annually. produt liability personal/business liability business interruption vehile disability workers ompensation unemployment fire theft 16. Finanial Foreast and Assumptions Books and software pakages an be purhased with formatted worksheets to produe the douments you need for your finanial plan. The numbers used for eah expense should be as aurate as possible based on urrent researh. Identify any flutuations that an be predited suh as inreases in raw materials or lease and utility osts. Estimate the month and year when additional employees will be hired and what they will be paid. A break-even analysis helps you understand at what point the business beomes profitable and allows you to set goals realistially. Without a finanial plan, you will find it nearly impossible to interest lenders or investors in helping you start and grow, beause you have no fats to bak up your enthusiasm and ommitment to your venture. Use the "Startup Costs Worksheet" to help assess your osts. startup osts (all one-time expenses suh as equipment, deposits, fees, et.). See "Startup Costs Worksheet" operating osts (ongoing expenses for lease, insurane, utilities, et.). See "Operating Costs Worksheet" soures and uses of funds* balane sheets projeted ash flow profit and loss foreast or statement break-even analysis existing business (historial statements for three years)* personal finanial statement of owner(s)* assumptions used in preparation of finanial projetions Sample business plans and finanial foreasts and assumptions an be viewed or downloaded from Exhibits The following are items and douments that should be inluded in the business plan: managers resumes advertisements, news artiles and other promotional douments ontrats, leases and filing douments (Fititious Name, Employer Identifiation Number, Artiles of Inorporation) letters of support/interest from prospetive ustomers/buyers/lients pitures of the produt or servie marketing researh patents, trademarks, opyrights, liense agreements inome tax returns (three years)* invoies or estimates for faility or equipment purhases* (*) Items marked with an asterisk are added to the business plans being used to seure finaning. 11

17 ENTREPRENEUR S GUIDE Startup Costs Worksheet Startup osts are those expenses that you will inur before you establish your business. These osts will vary based upon the type of business. This worksheet will help you begin the proess of assessing your finanial needs so that your venture is not underapitalized at the outset. For more information about your finaning and assumptions you should make, review setion 16 of the Business Plan Outline. STARTUP COSTS Deposit, offie or building lease $ (Faility/loation expense) Deorating/remodeling/build-out $ (Changes in faility required for business operation) Furniture/fixtures Equipment Installation Teleommuniations/data Utilities Initial inventory Offie supplies Advertising and promotion Signs Lienses, permits and fees Insurane Legal/professional servies Working apital Total Startup Costs $ $ (Prodution, offie mahines, seurity, et.) $ (Fixtures, equipment) $ $ (Installation and deposits) $ (Stok, supplies for manufaturing) $ $ (Business ards, stationery, brohures, grand opening) $ (Vehile, interior and exterior for faility) $ $ $ $ (Cash reserve for early months of business before sales are suffiient to pay bills) $ $ $ $ 12

18 CHAPTER I PREPARING TO START A BUSINESS Operating Costs Worksheet One your business is started, operating osts are expenses (other than the ost to purhase or make the produts or servies you sell) that are regular and repeating expenses, whether they repeat monthly, bimonthly or annually. It is neessary to estimate all of your operating osts so that you are realisti about the revenue your firm will need. This worksheet inludes some basi onsiderations. Completing it will help you develop ash flow projetions. In the olumn adjaent to the operating expenses, make notes of those that inrease or derease in partiular months. OPERATING COSTS Monthly Expense Possible Variations Rent/Mortgage Payment $ Equipment Lease $ Maintenane and Repairs $ Advertising $ Offie Supplies $ Delivery $ Postage $ Vehile Expenses $ Legal/Professional Fees $ Insurane(s) $ Teleommuniations/Data $ Other Utilities $ Travel $ Dues/Memberships $ Materials $ Payroll $ Payroll Taxes $ $ $ Total Monthly Expenses $ 13

19 ENTREPRENEUR S GUIDE How to Choose a Site for Your Business Choosing the right loation for your business will require you to onsider a number of fators. The type of business you have will often be the primary fator in the type of loation you hoose. Another important fator to onsider is how you want to present your business to your ommunity and ustomers. Do you want a main street storefront? Do you require extra spae for storing finished produts? Does the loation need to be near your targeted ustomers or satisfy speifi logistial needs? Can your business operate as a web presene without the need for a physial struture for ustomer interations? These are just some of the questions you may find yourself asking when looking at potential loations. Ultimately, you may deide that you an start your business at your home. This is an inexpensive and onvenient option for many entrepreneurs. If you deide to work from home, you will want to balane the effiienies of being at home with your need to projet the business image that you desire. The loation of your business an affet more than just your operations and finanes it an also be an asset for your marketing plans and growth strategy. As you explore potential loations for your business, investigate the zoning, traffi, parking, signage and building regulations in eah prospetive loation s muniipality. Cheklist for Business Loation Analysis If home is not the best plae for your business, the heklist that follows will help you weigh the benefits of potential loations. Begin by reviewing the list and rossing out the fators that are not important to your business. Next, add any new fators that apply to your business. Finally, identify multiple potential loations and onsider eah of the following fators: Appropriate zoning for the type of business Cost of land, building, failities Building odes Cost of utilities (installation) Availability and ost of utilities (monthly estimate) Cost of monthly lease or mortgage payment Cost of renovation or leasehold improvements Availability and ost of seurity system Availability of polie and fire protetion Availability of the types of employees needed by firm Availability of transportation for ustomers and employees Oupany permit requirements Aess for ustomers with disabilities Tax strutures and payment methods of loal and regional government Proximity/distane from ompetition Maintenane osts for property, building and parking area 14

20 CHAPTER I PREPARING TO START A BUSINESS Expansion potential Availability/restritions on parking Condition of neighboring properties Convenient proximity to primary highways Transportation and availability of raw materials Convenient proximity to entrepreneur s home Small Business Inubators Desription and Advantages Small business inubators are failities where young businesses an start and grow. Some inubators offer businesses the opportunity to lease spae at a lower-than-market rate. Most failities provide tenants with free or low-ost business ounseling and training and shared offie equipment and servies. These eduational opportunities and servies help redue osts and inrease profits. After the startup firm is nurtured for the first few years, it is expeted to graduate or leave the inubator to move into a business loation in the ommunity. Graduation normally ours in 3 5 years. Inubators may speialize in the types of firms they an assist, i.e., manufaturing, tehnology, life sienes, distribution. In summary, the following are ommon advantages of loating in an inubator: reasonable lease rates for startup firms shared finanial, management and other servies established entrane and exit poliies aess to apital and other startup resoures For more information ontat DCED s Small Business Champion Network at or 15

21 ENTREPRENEUR S GUIDE Adequate Finanes: Funding Your Business A leading ause of small business failure is inadequate startup apital. Before you begin your new venture, you must realistially projet not only your startup osts for suh things as equipment, renovations and promotion, but also your ash flow requirements for the early-stages of operation. It often takes time to build sales levels, yet rent, utilities and other osts are immediate. During this time, when bills are often arriving faster than the ustomers, ash reserves an help the business survive. Neessary funding for the startup and operation of a business is available in three forms: debt apital through borrowed funds equity apital (funds generated through the sale of stok or by the investment of the owner) friends, family and personal assets Equity vs. Debt Finaning Should you deide that your own resoures are insuffiient, the traditional soures of finaning are: banks, loal, state and federal agenies, angel investors and venture apital firms. Raising apital through the sale of stok is omplex and highly regulated if you wish to pursue it, you should seek legal advie first. Many businesses are started with apital invested by the owner or the owner s family. If you would like more information, ontat the Pennsylvania Department of Banking and Seurities. Loans: Bank The vast majority of loans are made through banks. As mentioned previously, government-sponsored loan programs, suh as SBA loans, are still administered by banks and require ontating and applying through them. In many ases the most fundamental doument you will need for a loan appliation is a business plan (previously disussed), beause it shows the lender your ability to researh and envision the establishment and operation of the firm. In the previous setion of this guide, the business plan outline ontains several items marked with an asterisk (*). These items are essential additions for a business plan being used with a loan appliation. In addition to the plan, lenders onsider several fators in evaluating a business loan: management experiene: your bakground ompared to the skills required for your hosen business repayment ability: your realisti projetion of business inome allows you to maintain loan payments ollateral: your pledge of assets toward business stability and loan repayment redit: your histori and urrent reord of repayment of obligations Obtaining a loan requires preparation and redit worthiness, but a bit of sales ability an help. You will be ompeting with many other business owners, and knowing what the lender needs when requesting a loan is just as important as knowing what a ustomer needs when selling your produt. Many lenders want assurane that: You have something at risk in starting and operating this business. (Do not ask them to go out on a limb to bak you if you are not out on the limb yourself. You must have resoures ommitted to your own venture to seure the support of others.) Your proposal is a sound one based on the 5 C s of redit: apaity, apital, ollateral, harater and ondition (industry). The terms on repayment of a bank loan may vary, and there is room for negotiation between lender and borrower. Loans: Government Sponsored For debt finaning, there are a number of government-sponsored loan programs. Below are some links to explore what loan programs might be available to you: state business finaning programs ( finaning for tehnology-oriented ompanies ( U.S. Small Business Administration finaning programs ( 16

22 CHAPTER II Legally Establishing a Business in Pennsylvania 17

23 ENTREPRENEUR S GUIDE Four Keystones to Legally Establishing a Business in PA Find out the basis of legally running your business in Pennsylvania > Business Name > Business Struture > Laws, Lienses and Regulations > Taxes, Employer Obligations, EIN and Bank Aount 18

24 CHAPTER II LEGALLY ESTABLISHING A BUSINESS IN PENNSYLVANIA Cheklist for Legally Establishing a Business in PA The following heklist outlines the steps to legally establishing a business in Pennsylvania. Business Name Determine a name for your business that is not already in use. Determine whether your name is onsidered a fititious name and if you need to file a PA fititious name statement. You will need to know what your business struture is, so you may need to jump to the next setion and ome bak after deiding your business struture. Register fititious name, if appliable. Business Struture Determine under what business struture you will operate your business. The most ommon hoies are: Sole Proprietorship General Partnership Limited Partnership (LP) Limited Liability Partnership (LLP) Limited Liability Company (LLC) Corporation, inluding S Corporation Laws, Lienses and Regulations Chek with the loal muniipality (ity, borough or township) onerning taxes, zoning requirements, any required loal lienses and permits and any other regulations and requirements. Taxes, Employer Obligations, EIN and Bank Aount Determine what loal, state and federal taxes your business needs to pay, register for or ollet, suh as sales tax. If your business will employ one or more people, omplete loal, state and federal employer obligations, inluding employment taxes, withholdings and ontributions, suh as unemployment ompensation and soial seurity. Obtain Employer Identifiation Number (EIN). Open a bank aount for your business. 19

25 ENTREPRENEUR S GUIDE Business Name Determine Name Chek the Pennsylvania Department of State database of Pennsylvania businesses to see if the business name you wish to use is available. You an searh that database to see if other businesses already have registered the name you want to use at Fititious Name Determining Fititious Name Any individual, sole proprietorship, partnership, orporation or other form of assoiation onduting business under a fititious business name must register this name with the Pennsylvania Department of State. Questions related to business struture, fitiious name registration, et. an be direted to the PA Department of State Customer Servie at Penalties for Not Registering The penalty for failing to file a fititious name registration is that the unregistered entity may not use the ourts of Pennsylvania to enfore a ontrat whih it entered into using the fititious name. The failure to register the fititious name does not void the ontrat, but merely prevents suh enforement until registration. The entity shall pay to the Department of State a ivil penalty of $500 in these instanes where the entity seeks to enfore the ontrat and subsequently registers the fititious name in an untimely manner. WARNING! Trademark Protetion Registering a name and heking the Pennsylvania database does not give you federal trademark protetion nor mean that others are not using your name in other states. If you desire to trademark your name or other appliable marks, you must apply to the United States Patent and Trademark Offie at 20

26 CHAPTER II LEGALLY ESTABLISHING A BUSINESS IN PENNSYLVANIA Business Struture One you deide to establish a business, your first onsideration will be the type of business organization to use. Legal and tax onsiderations will help to determine your final hoie, as well as personal needs and the needs of the partiular business. There are three prinipal kinds of business strutures: the sole proprietorship, the partnership and the orporation. Several ommon business strutures are desribed below. There are advantages and disadvantages to eah of the legal forms of business you may hoose. As an entrepreneur you must examine all of the harateristis and onsult a knowledgeable legal professional when onsidering the formation of your business. Sole Proprietorship Most small businesses operate as sole proprietorships. This is the simplest form of organization and allows the single owner to have sole ontrol and responsibility. Some advantages of the sole proprietorship are less paperwork, a minimum of legal restritions, owner retention of all the profits and ease in disontinuing the business. Disadvantages inlude unlimited personal liability for all debts and liabilities of the business, limited ability to raise apital and termination of the business upon the owner s death. You should note that a small business owner might very well selet the sole proprietorship to begin. Later, if the owner sueeds and feels the need, he or she may deide to form a partnership or orporation. General Partnership A partnership is similar to a sole proprietorship exept that two or more people are involved. Advantages are that it is easy to establish, it an draw upon the finanial and managerial strength of all the partners and its profits are not diretly taxed. Some disadvantages are unlimited personal liability for the firm s debts and liabilities, termination of the business with the death of a partner and the fat that any one of the partners an ommit the firm to obligations. The partnership is formed by an agreement entered into by eah partner. This agreement may be informal, but it is advisable to have a written agreement drawn up between all parties. While no filing with the ommonwealth is required to form a general partnership, it may nevertheless be required to file a fititious name registration. Limited Partnership A limited partnership (LP) is a partnership formed by two or more persons having one or more general partners and one or more limited partners. The limited partners have limited exposure to liability and are not involved in the day-to-day operations of the partnership. A Pennsylvania limited partnership is formed by filing a Certifiate of Limited Partnership with the Bureau of Corporations and Charitable Organizations, Pennsylvania Department of State. Like with a general partnership, a written agreement should be drawn up between all parties. The agreement does not need to be filed. When applying for funding, lenders may request a opy of your partnership agreement. Limited Liability Partnership A limited liability partnership (LLP) is an existing partnership that files an eletion with the Bureau of Corporations and Charitable Organizations, Pennsylvania Department of State, laiming limited liability partnership status. The effet of beoming an LLP is to provide general partners with additional protetion from liability. Like with a general partnership, a written agreement should be drawn up between all parties. The agreement does not need to be filed. When applying for funding, lenders may request a opy of your partnership agreement. 21

27 ENTREPRENEUR S GUIDE Limited Liability Company The limited liability ompany (LLC) is a hybrid between a partnership and a orporation, providing the liability protetion of a orporation, with the advantage of being treated as a partnership. A Certifiate of Organization is required to be filed with the Bureau of Corporations and Charitable Organizations, Pennsylvania Department of State, aompanied by a doketing statement. Corporation A orporation is the most omplex form of business organization. Advantages of a orporation are that liability is limited to the amount owners have paid in to their share of stok, and the orporation s ontinuity is unaffeted by the death or transfer of shares by any of the owners. Some disadvantages are extensive reord-keeping, lose regulation and double taxation (taxes on profits and taxes on dividends paid to owners). To form a orporation in Pennsylvania, you must file Artiles of Inorporation with the Bureau of Corporations and Charitable Organizations, Pennsylvania Department of State, aompanied by a doketing statement. Foreign (out of state) orporations must submit an appliation for a Certifiate of Authority, aompanied by a doketing statement to ondut business in Pennsylvania. Pennsylvania S Corporation Closely held orporations may elet to be taxed as federal or state S orporations, whih permit shareholders to pay taxes on orporate net inome personally, as if it were a partnership. Thus, a orporation must be reated first as disussed above. Only after a orporation is reated an S orporation status be sought. S orporation status is limited to orporations that have no more than 75 shareholders. Also, a Pennsylvania orporation annot elet to be an S orporation unless it has also applied for federal S status. Aordingly, the first step to beoming a Pennsylvania S orporation is to seek federal S status by filing IRS Form 2553, Eletion by a Small Business Corporation, with the Internal Revenue Servie (IRS). Several requirements must be met before you an obtain federal S orporation status. For more information on Pennsylvania S orporations, ontat the Pennsylvania Department of Revenue or visit its website at As you are making deisions about your business struture and the potential tax onsequenes of your desired struture, it is advisable to onsult with legal, aounting and insurane professionals. 22

28 CHAPTER II LEGALLY ESTABLISHING A BUSINESS IN PENNSYLVANIA Benefit Corporation A state law enated in 2013 gives entrepreneurs, investors and onsumers the option to build, finane and patronize businesses that pledge, as part of their orporate purpose, to have a material positive impat on soiety and the environment, otherwise known as benefit orporations. Benefit orporations are business orporations organized for profit with a orporate purpose of reating general publi benefit, in addition to any other purposes they have as a business orporation. A benefit orporation may also reate one or more speifi publi benefits. These orporations must file annual statements with their shareholders and the Department of State showing how they are meeting their ommitment to provide publi benefits. For example, a benefit orporation would ommit to praties suh as using reyled materials, requiring energy effiienies in their operations and those of their suppliers, ensuring workers making their produts are paid a fair wage and ontributing to the welfare of the ommunities in whih their failities are loated. Being a benefit orporation is a voluntary ation requiring approval of two-thirds of a orporation s shareholders. The orporation s performane in ahieving its publi benefit is assessed against a third party standard. Lastly, this law permits a orporation s diretors to onsider non-finanial interests when making deisions, without breahing any fiduiary duty to shareholders. For instane, diretors of benefit orporations ould onsider using energy from renewable soures, suh as wind or solar, even if the ost was higher than power generated by fossil fuels. To learn more about additional orporate strutures, visit for more information. 23

29 ENTREPRENEUR S GUIDE Summary Table Registering Business Struture and Name The table below lists the state and non-state forms involved in registering and reating eah type of business struture as well as information on whether a fititious name appliation needs to be filed. State forms an be obtained by ontating the Pennsylvania Department of State or visiting You will be required to publiize the fititious name registration in two newspapers, one legal newspaper or journal and one of general irulation. STATE FORMS NON-STATE FORMS (these are not required to be filed or drafted) NAME REGISTRATION See Business Name Sole Proprietorship No state form required None If fititious name: File Form 311 Appliation for Registration of Fititious Name Partnership No state form required Operating Agreement (alled the Partnership Agreement) If fititious name: File Form 311 Appliation for Registration of Fititious Name Limited Partnership (LP) Limited Liability Partnership (LLP) Limited Liability Company (LLC) Corporation S Corporation Form 8511 Certifiate of Limited Partnership Form 8201a Registration Limited Liability Partnership Form 8913 Organization Domesti Limited Liability Company Doketing statement Form Artiles of Inorporation Doketing statement Same douments as orporation, plus also file the following: IRS Form 2533 Operating Agreement (alled the Partnership Agreement) Operating Agreement (alled the Partnership Agreement) Operating Agreement (alled the Members Agreement) Operating Agreement (alled the Bylaws) Same douments as orporation Business name is registered in the same douments for establishing the LP, LLP, LLC, orporation or S-orp. However, if plan on doing business under a different name than the legal name of the business (exat name listed on the respetive form to reate the LP, LLP, LLC, or orporation), then must file Form 311 Appliation for Registration of Fititious Name. See "Business Name" for more information. Contat the Pennsylvania Department of State with speifi questions regarding when an LP, LLP, LLC or orporation would need to file a fititious name. PA Form REV

30 CHAPTER II LEGALLY ESTABLISHING A BUSINESS IN PENNSYLVANIA Taxes, Employment Obligations, EIN & Bank Aount Taxes Chek with federal, state and loal government (ity, borough, township and/or shool distrit) agenies onerning their tax laws, inluding sales, employment, soial seurity and other taxes and ontributions. For state taxes, visit the Pennsylvania Department of Revenue s website at For federal taxes, visit the Small Business Corner at the Internal Revenue Servie (IRS) website at Employment Obligations If the business will employ one or more people, the following ations are required: Federal Inome Tax and Soial Seurity Tax withholdings: ontat the Internal Revenue Servie, for information, forms or publiations. Unemployment Compensation: Insure your workers ompensation liability by purhasing a workers ompensation poliy through an insurane ompany, or from the State Workers Insurane Fund, , or by seuring approval for membership from a ertified group self-insurane fund if one operates overing your type of business. Additionally, larger businesses that have been operating for three or more years may apply for approval to individually self-insure liability with the Pennsylvania Department of Labor and Industry. For more information on group or individual self-insurane, ontat You may register online at or download the PA-100 from the PA Department of Revenue website at to remit PA personal inome tax your ompany withholds from ompensation paid to Pennsylvania resident employees, and on ompensation paid to non-resident employees for work performed in Pennsylvania. EIN (Employer Identifiation Number) Every employer subjet to employment taxes is required to have a federal Employer Identifiation Number (EIN) to identify his or her business with the Internal Revenue Servie and the Soial Seurity Administration. Some businesses, suh as orporations, partnerships and enterprises that have a qualified retirement plan (suh as Keogh) or pay federal exise tax, are required to have an EIN even if they do not have any employees. If a business does not have employees, a qualified retirement plan or pay federal exise tax, the business may be required to have an EIN by banks or other entities with whom they are doing business. For example, to open a business bank aount, most, if not all, banks will require that the business has an EIN. An EIN an be obtained in a few minutes by registering by telephone or online: Under the Tele-TIN program, an authorized offier or business owner an obtain an EIN by applying over the telephone by alling the IRS Business and Speialty Taxes Hotline at An authorized offier or business owner an obtain an EIN by applying over the internet at For further information on the EIN, ontat the Internal Revenue Servie at TAX How to Open a Bank Aount Contat desired bank and ask for all information and forms required for a business to open a business bank aount. Most, if not all, banks will require that the business has an EIN. 25

31 ENTREPRENEUR S GUIDE Tax Information, Inentives, Legal Considerations & Forms Tax Inentives Pennsylvania offers several tax inentives to enourage business growth and expansion. Contat the Pennsylvania Department of Revenue or the Small Business Champion Network for additional information. Beginning in 2014, new businesses an dedut up to $5,000 of startup osts from taxable inome as an inentive for entrepreneurs to reate small businesses and invest these savings into equipment needed to be suessful. For orporations, the ap on orporate net inome tax net operating loss dedutions is raised from $3 million or 20 perent of inome to $4 million or 25 perent of inome in 2014 and to $5 million or 30 perent of inome in This benefits tehnology, biosiene and researh ompanies and large manufaturers by allowing these job reators to smooth business losses over future tax years. The adoption of market souring for servies in 2013 omplements the 100 perent single sales fator for tangible goods and benefits Pennsylvania servie ompanies by not taxing inome from servies performed out-of-state. Manufaturer s Exemption The state also enourages manufaturers to loate and expand in Pennsylvania by offering a manufaturing exemption. The exemption is part of the formula for alulating the apital stok tax, as amended by At For information about these tax inentives, please ontat the Department of Revenue at

32 CHAPTER II LEGALLY ESTABLISHING A BUSINESS IN PENNSYLVANIA Tax Forms and Shedules The Pennsylvania Department of Revenue website ( has forms available for download as well as answers to ommon tax questions. Department of Revenue Contat Information GENERAL BUSINESS TAX INFORMATION SALES TAX Bureau of Business Trust Fund Taxes Sales/Use Tax Publi Transportation Assistane Fund Taxes and Fees Vehile Rental Tax Cigarette Liense and Taxes CORPORATION TAX Bureau of Corporation Taxes Rate and Base Changes for Corporate Taxes Aount - Speifi Payment & Credit Information Estimated Payments on Aount PATAXES PERSONAL INCOME TAX Employer Withholding Requirements MOTOR FUELS TAXES Bureau of Motor and Alternative Fuel Taxes Motor Carrier Road Tax Liquid Fuels and Fuel Tax International Fuel Tax Agreement (IFTA) Inquiries For assistane refer to the blue pages in your loal telephone diretory for the Pennsylvania Department of Revenue Regional and Distrit Offie nearest you or visit the Pennsylvania Department of Revenue s website at Legal Considerations Speifi questions, whih require legal onsideration by the Pennsylvania Department of Revenue and written response, should be direted to: Pennsylvania Department of Revenue Offie of Chief Counsel Department of Revenue P.O. Box Harrisburg, PA

33 ENTREPRENEUR S GUIDE Pennsylvania Labor and Employee Laws Pennsylvania Employee Protetion Laws This setion does not inlude all Pennsylvania laws and regulations. Rather, this setion disusses employee protetion laws, provides information on the workers ompensation law, oupational and industrial safety and Pennsylvania unemployment ompensation law. Additional information is available on the Pennsylvania Department of Labor and Industry website at Following are the abstrats of different employee protetion laws that may affet your small business enterprise. The Pennsylvania Department of Labor and Industry, Bureau of Labor Law Compliane (BLLC) is responsible for administering these laws. To ensure ompliane, the BLLC helps employers and employees understand the provisions of the laws. BLLC also onduts routine and omplaint investigations. BLLC mediates disputes and litigates unresolved issues. Apprentieship and Training At The Apprentieship and Training At establishes poliies and proedures to promote equality of opportunity in apprentieship programs registered with the Apprentieship and Training Counil. These poliies and proedures apply to: reruitment and seletion of apprenties onditions of employment and training during apprentieship review of apprentieship programs registering apprentieship programs de-registering non-omplying apprentieship programs Child Labor Law Minimum Age: Minors under 14 years of age may not be employed or permitted to work in any oupation, exept hildren employed on farms or in domesti servie in private homes. Under ertain restritions, news arriers may be employed at the age of 11, addies at the age of 12 and juvenile performers in the entertainment field at the age of 7. Minors and infants may be in the ast of a motion piture if a speial permit is obtained. Employment Certifiates: No person under the age of 18 shall be employed without a general or vaation employment ertifiate. The employment ertifiates are issued by shool authorities and must be kept on file. Any minor issued a transferable work permit is not required to obtain a new permit or ertifiate eah time he/she hanges employers; however, the employer is required to notify the issuing shool distrit in writing within five days when a minor begins or terminates employment. Work permits an be obtained through your loal shool distrit. Child Labor Law Posting The Abstrat of the Child Labor Law must be posted by every business in Pennsylvania that employs minors. The abstrat is available from the Bureau of Labor Law Compliane (BLLC) Administrative Units. Employers are required to maintain true and aurate shedules for eah minor employed. Additionally, employers must keep detailed reords (or photoopies) of the transferable work permits at worksites where minors are employed. For restritions on hours of labor and onditions of employment and oupational prohibitions regarding minors, ontat the administrative unit serving your area. Some businesses are subjet to the U.S. Department of Labor s Fair Labor Standards At whih ontains hild labor provisions. Aordingly, some businesses are subjet to the overage of both the federal and state governments. In these ases, the businesses must meet the requirement of the law with the striter standard. Refer to the blue pages of your telephone diretory for information on the U.S. Department of Labor. Equal Pay Law The Pennsylvania Equal Pay Law prohibits disrimination in rate of pay between employees on the basis of gender for work under equal onditions on jobs whih require equal skills. Businesses are required to post the Abstrat of the Equal Pay Law. 28

34 CHAPTER II LEGALLY ESTABLISHING A BUSINESS IN PENNSYLVANIA Industrial Home Work Law The Pennsylvania Industrial Home Work Law prohibits industrial work in the home, with a limited number of exeptions. Individuals and establishments interested in engaging in industrial home work in Pennsylvania must obtain permits and ertifiates from the Bureau of Labor Law Compliane (BLLC). Medial Pay At The Pennsylvania Medial Pay At requires employers to pay for the medial examination fee where suh examination is a ondition of employment. Minimum Wage At The Pennsylvania Minimum Wage At establishes a minimum wage for full-time and part-time employees. It also establishes an overtime rate for employees of one and one half (1.5) times the regular rate of pay after 40 hours worked in a week. Employers may be eligible to take a redit in determining the hourly wage of employees who reeive tips. The issuane of speial lienses and ertifiates for payment of sub-minimum wages are allowed for learners, students and individuals who are impaired by physial or mental defiieny. Employers subjet to the Minimum Wage Law must maintain an aurate reord of eah employee s earnings and hours worked. Establishments are required to post the Minimum Wage At Poster and Fat Sheet. Personnel File At The Pennsylvania Personnel File At permits employees in Pennsylvania to inspet douments in their personnel files, with ertain exeptions. Prevailing Wage At The Prevailing Wage Division, Bureau of Labor Law Compliane, determines prevailing wage rates for publi onstrution industry and enfores the rates and lassifiations under heavy, highway and building onstrution projets of $25,000 or more when publi funds are involved. Presently, the Pennsylvania Department of Labor and Industry determines the prevailing minimum wage rates and employee benefits for speifi loalities and lassifiations. The Prevailing Wage Regulations allow the Seretary of Labor and Industry to onsider olletive bargaining agreements and other types of data for purposes of determining the wage rates. Seasonal Farm Labor At The Pennsylvania Seasonal Farm Labor At regulates minimum wages and provides for hours of labor of seasonal farm workers in Pennsylvania. The Pennsylvania Seasonal Farm Labor At also requires farm labor ontrators to obtain ertifiates of registration. The Pennsylvania Department of Agriulture inspets the seasonal farm labor amps. Refer to the setion on Business Requirements and Regulations for the address and telephone number of the Agriulture Regional Offie in your area. Wage Payment and Colletion Law The Pennsylvania Wage Payment and Colletion Law requires that all wages due to employees be paid on regular paydays designated in advane by the employer. Eah employee must be notified at the time of hiring of the time and plae of payment of wages, the rate of pay and any fringe benefits. Statutory liquidated damages and penalties may be assessed against employers for failure to pay wages. Workers Compensation The requirement to insure your workers ompensation liability is mandatory for any employer that employs at least one employee who ould be injured or develop a work-related disease in this state or ould be injured outside this state under a ontrat of hire made in Pennsylvania if the employment is prinipally loalized in a state whose workers ompensation laws do not apply unless all employees are exluded from the provisions of Pennsylvania s workers ompensation laws. Insuring your workers ompensation liability indemnifies you from wage loss and medial benefits inurred as a result of workrelated injuries or oupational diseases; protets you from tort liability for lawsuits arising from work-related injuries and diseases and protets you from riminal proseution, whih an result in imprisonment and substantial fines for eah day of nonompliane. 29

35 ENTREPRENEUR S GUIDE In Pennsylvania, enterprises are exluded from the requirements to insure their workers ompensation liability only if ALL workers employed by it are in one or more of the following ategories: federal workers longshoremen railroad workers asual workers who work only infrequently, at irregular intervals AND do not perform duties onneted with the regular ourse of business/prime inome-produing ativity of the business persons who work out of their own homes or other premises not under the ontrol or management of the enterprise AND make up, lean, wash, alter, ornament, finish, repair, or adapt artiles or materials given to them for sale agriulture workers earning under $1,200 per person per alendar year and no one agriultural worker works 30 days or more per alendar year domesti workers who have not eleted with the Pennsylvania Department of Labor and Industry to ome under the provisions of the Workers Compensation At sole proprietor or general partners have been granted exemption due to their religious beliefs by the Pennsylvania Department of Labor and Industry exeutive offiers who have been granted exlusion by the Pennsylvania Department of Labor and Industry General information pertaining to workers ompensation an be viewed on the Pennsylvania Department of Labor and Industry website at or by ontating the Employer s Helpline at or the Claims Information Helpline at or Oupational and Industrial Safety The Pennsylvania Department of Labor and Industry s Bureau of Oupational and Industrial Safety administers a variety of laws related to the safety of the publi and employees. These responsibilities inlude enforing the provisions of the Fire and Pani At; Universal Aessibility At; Energy Conservation At; Elevator Law; Boiler Law; Liquefied Petroleum Gas At; Bedding and Upholstery Law; Stuffed Toy Law; Employment Ageny Law; General Safety At, Asbestos Oupations Areditation and Certifiation At, Lead Certifiation At, Dry Cleaning Law, Underground Storage Law and a variety of lesser known ats. The Bureau aomplishes enforement through promulgation of regulations, field inspetions, issuane of lienses/ertifiates and responding to omplaints for possible violations. Contat: PA Department of Labor and Industry Bureau of Oupational and Industrial Safety 1613 Labor and Industry Building Harrisburg, PA Unemployment Compensation The Pennsylvania Department of Labor and Industry is responsible for administering the Pennsylvania Unemployment Compensation (UC) Law whih requires employers to pay ontributions into a pooled reserve known as the Unemployment Compensation Fund. This fund pays benefits to employees who beome unemployed through involuntary auses. The amount of ontributions an employer owes is determined by multiplying an assigned ontribution rate, determined yearly, to the wages paid to employees. If you employ one or more persons, you may be liable for the state unemployment ompensation tax and must register with the Bureau of Employer Tax Operations by ompleting a Pennsylvania Enterprise Registration Form and Instrutions (PA-100). To request this form, all (Forms Ordering Servie), or ontat any of the following Field Aounting Servie Offies listed. Field Aounting Servie Offies provide assistane to the employer ommunity regarding UC ontribution matters. 30

36 CHAPTER II LEGALLY ESTABLISHING A BUSINESS IN PENNSYLVANIA Laws, Lienses and Regulations Loal Chek with the loal muniipality (ity, borough, township and ounty) onerning zoning and building requirements and any required loal business lienses or permits. State Professional Lienses and Regulations: For the most up-to-date information on laws, lienses and regulations ontat DCED s Small Business Champion Network or visit Building Regulations: Contat the Pennsylvania Department of Labor and Industry or your loal government to make sure your building has an oupany permit and that it omplies with the Fire and Pani Regulations and Universal Aessibility Standards. Food or Beverage: If your business will be serving food or beverages, ontat your loal health department and the Pennsylvania Department of Agriulture regarding registration or liensing proedures. Internet Sales and Servies: If your business will have an internet sales presene, ontat the Pennsylvania Department of Revenue for larifiation on the most urrent sales tax requirements. Federal Laws and Regulations Federal laws and regulations vary onsiderably in their impat on different types of businesses; these laws and regulations an also hange from year to year. As a new small business owner you will want to take time to researh and be aware of all federal laws that will or ould affet your operations. As with anything, it is advisable to ontat legal professionals and business support organizations suh as your loal Chamber of Commere, the Small Business Administration ( and your loal Pennsylvania Small Business Development Center ( The following is a general list of federal laws, regulations and agenies whih may impat your business: Amerians With Disabilities At (ADA) - Business owners should be aware of the ADA requirements to aommodate employees with disabilities and to make their failities aessible to individuals with disabilities. This at also prohibits disrimination against employment of the disabled ( Fair Labor Standards At - Federal hild labor law regulations are ontained in this at whih might affet your business ( Fair Employment Laws - There are anti-disrimination laws regarding rae, olor, religion, sex and national origin that might affet your business. In addition, the federal government regulates the Equal Pay At for women and anti-disrimination regarding age and ertain federal ontrats ( Federal Insurane Contributions At (FICA) - Soial Seurity or FICA taxes are paid by both the employee and the employer to insure inome for retired persons ( Federal Trade Commission (FTC) - FTC has speifi legal requirements regarding mail-order businesses and other advertising ativities ( Health Care - New rules for small business health are and the availability of a small business health are tax redit were signed into law reently. For more information on these new regulations and available inentives ontat the Small Business Administration (SBA) or visit Immigration Laws and regulations - The immigration laws may ontain regulations regarding hiring of employees ( Internal Revenue Servie (IRS) - Federal tax laws and regulations affet businesses in several ways. The IRS provides information and forms for small business tax filings as well as your business s responsibilities under the Federal Unemployment Tax At (FUTA). Additional information an be found on the business setion of the IRS website ( 31

37 ENTREPRENEUR S GUIDE Oupational Safety and Health Administration (OSHA) - OSHA is responsible for regulating job safety on work premises for employees. Work site health related issues are also their onern ( Wage and Hour Laws and regulations - Business owners need to be aware of federal wage and hour regulations that may affet their payment of employees ( To stay urrent with federal laws and regulations affeting small businesses, visit ageny websites or ontat the loal offies of your United States House of Representatives and United States Senators. 32

38 CHAPTER III Managing and Growing a Business 33

39 ENTREPRENEUR S GUIDE Four Keystones to Growing a Business Growing a business begins with maximizing the effetiveness and produtivity of the four key business areas shown below. The end result is an effetive growth strategy. Enterprise Audit Cheklist Evaluating where you ve been and where you want to go Management, Operations and Business Proesses How well you operate/produe/serve Marketing and Sales How well you reah and ommuniate with your target market Human Resoures How you manage, motivate and ommuniate with your talent Finanial Management How you manage your numbers Growth Strategy Strategy to grow sales through new produts and innovation and new markets 34

40 CHAPTER III MANAGING AND GROWING A BUSINESS Enterprise Audit Cheklist Before developing growth strategies, an internal audit of urrent operations and finanes should be performed. This analysis allows you to evaluate your own strengths and weaknesses before adding the stress of growth ativities. Your audit an redue the risk of operating ineffiienies or missed opportunities. Keep notes as you go through the heklist and develop a set of priorities to address those areas you want to improve. Management, Operations and Business Proesses Yes No My business plan is urrent, lays out a strategy for future growth and aurately desribes and presribes business ativities in suffiient detail for daily operation and lender requirements. My business goals are known by all onstituenies: partners, board of diretors, investors, lenders, aountant, attorney, vendors, et. My business organizational struture and business model are known and understood by all employees. This inludes understanding the roles and objetives of every department and the key fators for marketing and profitability. My management, marketing and finanial deisions are made with frequent referene to my business plan and goals. My plan guides business expenditures, and, when exeptions are required, they are justified and well-doumented. My periodi reviews of the enterprise are onduted to disover ationable and purposeful insights. My ations have been implemented to stay informed of environmental, legal and soial hanges and trends that ould affet business growth. My equipment and faility are maintained. I employ effetive reord-keeping tehniques to allow for the best management of maintenane efforts. My enterprise s use of tehnology is ontinually reviewed to ensure that my prodution methods and offie equipment are on par or better than marketplae demands and ompetitors. My inventory ontrol proedures are established and an be expanded as growth develops. My supplier relationships are established and are evaluated for prie and servie on a periodi basis. My enterprise monitors the loal and global supply of industry materials, and I have ontingeny plans in plae when shortages arise. My produt and servie quality is maintained and evaluated aording to industry best praties and benhmarking tehniques. 35

41 ENTREPRENEUR S GUIDE Marketing and Sales Yes No My knowledge of how to position my enterprise ompetitively in the marketplae is based upon the onepts my ustomers view as making my ompany and produt unique. My ability to budget marketing omes from omparing industry standards with my firm s ompetitive and finanial situation. My marketing onsiders the needs of both existing and new ustomers in produt development, promotion, priing and availability of the produt, as well as in positioning, messaging and providing an overall experiene, and not just features and benefits. My doumentation allows me to evaluate the suess of marketing and advertising expenditures, speifially Return on Investment (ROI) and ustomer aquisition osts. My advertising plan effetively allows my firm to ommuniate with its intended target market. My lead system allows me to profile my ustomers and their needs and understand the soure of leads, the soure of sales and the osts of generating both. My firm s system for ustomer servie ensures that management is made aware of ustomer omplaints, speial requests and suggestions in a timely manner with doumentation of eah inident of ustomer ontat. My methods of generating repeat sales have been planned and implemented. My firm s marketing experts work losely with those developing the business and finanial plans. My system of evaluating ompetitors new produts or servies are developed and thoroughly reviewed at least twie a year. My formal and informal ommuniation methods allow all onstituenies to regularly report opportunities and onerns. My firm has formal proesses and ations to gather and review ustomer sales, demographi and lifestyle data, inluding obtaining feedbak from both ustomers and non-ustomers that ould lead to improvements or new produts. Finanial Management Yes No My professional development inludes building strong relationships with my banker(s), reditor(s) and other important finanial professionals in my ommunity and industry. My finanial analysis abilities inlude: knowing how to read and interpret finanial statements and reports; understanding the auses of low profits suh as inadequate expense ontrol, high interest and low sales volume; the ability to analyze the auses and effets of these problems and the apability of alulating key finanial ratios and determining trends affeting business growth. My pries are appropriate by industry standards, aepted by ustomers and ensure profitability. Fixed and variable osts are reviewed and updated periodially. My firm has the apaity to aurately assess finanial needs for growth, understand the impat of fast growth on eah area of orporate operation, and assess the effet of growth strategies on the ompany s debt struture and debt serviing apabilities. My firm s professional responsible for reord-keeping and finanial statements is knowledgeable about soures of finaning. Tax reords and regulations are updated and doumentation stored for onvenient retrieval. My finanial statements are prepared in a timely manner and are used to diagnose positive and negative onditions affeting operation. All information required for business valuation is retained and updated. 36

42 CHAPTER III MANAGING AND GROWING A BUSINESS My ash management tehniques allow effetive monitoring of aounts reeivable, ustomer payment and deposits, olletions, et. Cash not required for operations is invested. My redit poliies are established and enfored for all ustomers. Finanial stability is established before redit is extended. Payment poliies allow the firm to take advantage of disounts offered by vendors. Human Resoures Yes No My firm s reruitment methods inlude proedures that ensure the ompany interviews and hires employees who are qualified to play a role in the future goals of the firm. My firm s employee poliies are established, known by employees and assure legal ompliane. Job desriptions and organizational harts have been developed. The latter allows ommuniation to flow from the bottom up as well as from the top down. My firm s use of subontrators ensures that their tasks are learly defined and written doumentation of their sope of ativities is on file with all legal requirements being met. My poliies, reord-keeping and employee training allow the business to ontinue operation without interruption regardless of illness, vaation or other absene. Employee poliies, benefits, insurane and training proedures are reviewed at a minimum annually. Poliies and ations omply with loal, state and federal laws. My motivational methods, remuneration and management style is suffiiently effetive to limit turnover. Time management and produtivity analysis is used to improve operations and is inluded in all employee performane reviews. 37

43 ENTREPRENEUR S GUIDE Growth Strategy This setion disusses tatis for ontinuing to grow a business aside from improving the effiieny and produtivity in the four keystone areas. You have to deide how best to grow the business by analyzing a number of fators affeting expansion: orporate mission strengths and weaknesses of the business finanial resoures: existing and potential ustomer needs ompetitive influenes life yle of existing produts profitability of potential produts human resoures: suffiieny and apability sales and servie apability researh/development time and expense for new produts eonomi onditions, aess to raw materials, industry trends Statistial soures and researh are replete with information and ase studies that detail the high rate of small business failure in the first five years. As you begin to assess your goals for expansion, take your time and be thorough. Rapid growth is tempting and exiting, but it an also be a ostly trap that an lead to expensive problems rather than ontinued suess. Beause you have been suessful, you have established a level of quality and an overall vision for your ompany that identifies your brand and is something in whih you take pride. The opportunity for growth an be built upon the foundation you reated with your business plan. Revisit your initial planning, take stok of lessons learned and begin to renew your planning efforts with the same thoroughness, persistene and reativity that you used when starting your business. Entrepreneurs frequently define growth as an inrease in sales. Your experienes as a business owner will have undoubtedly exposed you to a variety of sales strategies. Some of these strategies may be your own reation while others may have ome from observing how your ompetition operates. As you onsider plans for growth, you an jump-start the proess by onsidering the following questions: Can growth be ahieved by selling more of your existing produts to former or existing ustomers? What would it take to onvine your ustomers that they should buy in larger quantities? Are there additional uses for your produt not yet explored by your ustomer or your ompany? Are any of your ustomers buying some items from you and some from a ompetitor? What offer would enourage the ustomer to give you all their sales? Would additional staff, promotion, longer hours, better ustomer servie or any other alteration in your business praties lead ustomers to inrease their purhases? How would an add-on, produt improvement or assortment hange help sales? Can growth be ahieved by selling new produts or servies to previous and existing ustomers? After purhasing a produt from you, are your ustomers buying supplemental or related produts from another vendor? Could these add-on produts or servies be part of your produt line? What new produts are needed by your present ustomers? Would these new produts fit into your orporate mission? 38

44 CHAPTER III MANAGING AND GROWING A BUSINESS Can growth be ahieved by finding new markets for your present produts? What additional resoures would be needed to expand geographially to sell to new ustomers? Whih foreign markets are most appropriate for your produt? Are there ustomers of a different age, inome level, industry or other harateristi who are not presently purhasing from you but have a need for your produt? Can your produt be used to serve more than one need? Can it be sold to a different group of buyers based on a need you have not yet promoted? Is a ompetitor with a sizable market share hanging produts or business praties? Will the hange allow you to sell to a ompetitor s previous ustomers? Would a hange in brand name, pakaging, hannel of distribution or other marketing variable allow you to sell your present produt to new groups of ustomers? Can growth be ahieved by developing new produts or servies for new groups of ustomers? Are there unmet needs in the marketplae that are emerging as a result of hanges in tehnology, lifestyle, the eonomy or other onditions? What additional produts are sold by others in your industry, but are not presently part of your offerings? Are you presently purhasing servies from a vendor that ould be supplied by an expansion of your own firm? If you deide that the method of sales growth is to inrease sales to previous and urrent ustomers, your strategies must inlude: the prodution of quality produts that meet the expetation of the ustomer the delivery of exellent ustomer servie priing that assures the buyer of value Repeat sales rarely happen simply out of habit or onveniene, but beause a ustomer was satisfied with the initial purhase experiene. It is less expensive to sell to a present ustomer than to find new ones, yet many firms develop the majority of their strategies with their sights on the new ustomer. Always start any searh for inreased sales with a thorough knowledge of present ustomers and their needs. Even if you find you annot sell more to them, you an still use the knowledge gained by applying it to strategies you will use to win new ustomers. If your business expansion ours as the result of selling new produts to your present ustomers, your experiene should allow you to understand their needs and buying habits. If your reord-keeping has been thorough, you will have mailing lists and other data allowing the introdution of new produts in a ost-effiient way. Business expansion through the addition of new produts or servies should be well planned even when existing ustomers are the prospetive buyer. 39

45 ENTREPRENEUR S GUIDE Reord-keeping The foundation for sustained business growth is the maintenane of aurate information on whih to base deisions and ations. Beause reord-keeping often seems less important than produing or selling a produt, many entrepreneurs plae these tasks last on their to-do lists and the importane of good reord-keeping gets lost in the shuffle of other exiting business startup tasks. Year two of the business annot be built on year one experiene without thoroughly doumenting and analyzing everything you learned in year one. By years three and four, when the firm needs to seure finaning for growth into other markets, buy additional equipment or add personnel, the neessary reords for attrating lenders and investors are nonexistent. Tehnology has revolutionized the way reords are kept and has moved soiety away from solely relying on the ardboard box methods of years past. It is the small business owner who is responsible not only for deiding whih reords will be kept and how they will keep reords, but also for developing organized and effiient primary and bakup methods of reords retention. A way to begin this proess is to answer these questions: What reords are mandatory? (Those required by state or federal law, insurers, investors and lenders) What reords are needed to ontinue operations in my absene? (Day-to-day tools and regularly aessed files) What reords are neessary for effetive finanial management? What reords protet the business and its employees? What reords are required to maintain and improve sales opportunities? After answering these questions, make a list of those who have an interest in any of your reords suh as shareholders, lenders, ustomers and suppliers. Determine what information they require. With these items added to your list, you should have a thorough ompendium of the information you must maintain. Your next step is to deide whih reords are partiularly sensitive and must be proteted. You an then develop the reord-keeping system that is easiest for you to aess as you make growth deisions. Cheklist for Reord Retention Contrats, deeds and leases Patents, trademarks and opyrights Tax bills and returns Business plan and organizational objetives Guaranties Insurane poliies Finanial reports Aounting data Human Resoures files, benefits, poliies and performane appraisals Goods ordered and sold Suppliers and redit terms from eah Customer lists and sales data Soures of sales leads Promotional literature Competitors promotional literature 40

46 CHAPTER III MANAGING AND GROWING A BUSINESS Human Resoures Hiring and Managing Employees The entrepreneur hooses the type of business to start, develops a business plan and seures finaning. The business owner may serve as manager, marketer and manufaturer. If the initial efforts to grow the business are suessful, hiring employees beomes a neessity regardless of how motivated the entrepreneur may be. A single person has 168 hours a week, some of whih must be spent on sleeping, eating, personal responsibilities and family demands. If the entrepreneur dediates 50 hours a week to the business, the maximum sales volume of the firm has a eiling of 50 times the number of dollars per hour harged (servie business) or 50 times the number of produts produed in an hour multiplied by the prie of the produt. After deduting business expenses, most entrepreneurs realize they need help to grow the business, but they are apprehensive about adding employees beause of the additional expense and required reord-keeping. The first step in reruiting help is often one of the following: A temporary employee is hired through a loal personnel ageny. A family member or friend is asked to volunteer to answer telephones, perform data entry or invoiing. A similar ompany is ontrated to produe some of the produt or deliver some of the servies. A management task is delegated to an outside firm, i.e., aounting, sales or advertising. Hiring Employees You are enouraged to onsult with an aountant or an attorney who an inform you about employer requirements on reordkeeping and labor law. Refer to Chapter II, Legally Establishing a Business in Pennsylvania and Chapter IV, Important Small Business Resoures for additional information on employment requirements. Following is a heklist for gathering information: All state and federal regulations for tax withholding, payment and reord-keeping, as well as workers ompensation Required employment postings and where they will be displayed Minimum wage requirements Regulations for employment of minors Provisions of the Fair Labor Standards At as they relate to equal pay for men and women; overtime payment (over 40 hours per week, 1.5 normal rate) Laws governing disrimination Family and medial leave Employment Eligibility Requirements. U.S. Department of Homeland Seurity, Bureau of Citizenship and Immigration Servies Form I-9 must be ompleted by every employee and employer PA New Hire Reporting Program Safety and health standards Environmental protetion laws 41

47 ENTREPRENEUR S GUIDE Independent Contrators If your ompany grows to the point where help is needed, it is important to understand whih workers are lassified as independent ontrators and whih are employees. In making these determinations for federal tax purposes, the IRS and the ourts typially look at three main ategories: behavioral ontrol, finanial ontrol and the relationship between parties. Fators suh as instrutions, training, method of payment, employee benefits and the worker s opportunity for profit and loss are all onsidered. For more information, go to the IRS website at and download Publiation 1779 (Independent Contrator or Employee). The Pennsylvania Department of Labor and Industry (DLI) presumes a worker to be an employee unless it an be shown that the individual is free from the diretion and ontrol of the employer and as to the servie performed, the individual is ustomarily established in an independent business, profession trade or oupation. For more information, ontat the Employer Aount Servies of the Pennsylvania Department of Labor and Industry ( In workers ompensation, the key fators to onsider in determining whether a worker is an independent ontrator or an employee inlude the right of the alleged employer to hire and fire the worker, diret the manner of the worker s performane, or ontrol the work to be ompleted. Key Doumentation The proess of researhing employment regulations, writing job desriptions, interviewing andidates and hiring employees begins the transformation from entrepreneur to employer. Tools for managing employees are important to limiting employee turmoil and turnover. The most basi tools are an organizational hart, job desriptions and an employee handbook. Organizational Chart The organizational hart is a diagram that shows reporting responsibility and supervision. As the business grows, it allows both employees and managers to identify the orret flow of information. Position Desriptions Formal, written position desriptions save time in helping urrent and suessive employees and managers understand the requirements and expetations of their position and of others. A position desription template is inluded in this guide. Position desriptions allow both the employees and management to understand expetations. In an entrepreneurial firm with no employees, one major deision must be made prior to writing the position desription: should the new employee possess the same skills as the owner, or omplementary skills? The position desription should then be written with speifi tasks assigned to the position and the skills needed by the new employee to satisfatorily omplete those tasks. Employee Handbook or Poliy Manual There are two basi reasons for developing an employee handbook or poliy manual: A handbook helps new employees to understand their new employer and helps existing employees by reduing misunderstandings. All employees are assured that poliies are applied equally to everyone in the firm. Very small firms often operate informally in the management of human resoures. The existene of the handbook tells employees that the ompany takes this management task seriously. There are numerous regulations governing employers responsibilities toward employees. (Some laws apply to all employers; others apply after the number of employees reahes a ertain level.) Developing a handbook enourages the entrepreneur to learn basi human resoure skills. 42

48 CHAPTER III MANAGING AND GROWING A BUSINESS Your handbook might inlude some or all of the following information as appropriate for your partiular ompany: history and mission of the ompany management philosophy on quality standards, employee performane, innovation and internal ommuniation a brief desription of produts and servies, ustomers, stokholders and strategi partners employee benefits: vaation sik leave holidays jury duty/military leave medial plan training programs professional development profit-sharing program savings plans group life insurane employee information: work hours/reporting work loations absene poliy/reporting pay periods inentive/overtime programs use of telephones, omputers and other equipment grievane proedures safety trade serets/intelletual property sexual harassment equal opportunity provisions orporate ommuniation: postings internal/external publiations employee reporting methods meeting attendane ustomer servie Software pakages are available for the development of an employee handbook. The most thorough method of preparation would inlude meeting with your attorney, aountant and human resoure onsultant. 43

49 ENTREPRENEUR S GUIDE Template: Position Desription Please note: The below is merely a suggested basi outline for a position desription. As eah business is unique, eah entrepreneur will need to tailor position desriptions to fit individual business needs. POSITION DESCRIPTION Position Title: Reports to: Job Summary: Tasks and Responsibilities: Knowledge Requirements: Minimum Qualifiations: Aountability/Evaluation: 44

50 CHAPTER III MANAGING AND GROWING A BUSINESS How to Seure Contrats with Government Agenies Identifying new markets is an important part of business growth. Some entrepreneurs identify government marketplaes as one of their targets for market expansion, and with good reason. Eah year, government agenies and institutions purhase billions of dollars worth of supplies and servies. Thousands of ompanies ompete for these ontrats. The ommonwealth enourages Pennsylvania firms to beome suppliers of the state s needs, espeially small businesses and those owned by veterans, minorities and women. Pennsylvania Department of General Servies To assist you in doing business with the state, the Pennsylvania Department of General Servies (DGS) has set up the PA emarketplae. The emarketplae is designed to be a one-stop loation for ompanies to get a wide variety of information on opportunities for doing business with the state. Visit the emarketplae website ( to register to do business with the ommonwealth, sign-up for prourement ealerts and learn more about the ommonwealth s prourement poliies and proedures. Pennsylvania Treasury Department The Pennsylvania Treasury Department s Business Outlet provides aess to state ontrat data and other servies. The PA Treasury Department is, by law, the entral repository for state ontrats over $5,000. A Business Outlet representative an supply desriptions of suessful bids on state ontrats and will diret you to the appropriate person or state ageny looking for your produt or servie. Servies are free exept for the ost of photoopying ontrats. Learn more at Pennsylvania Prourement Tehnial Assistane Centers (PTACs) You will learn that promoting and selling your produts to a government market requires different proedures than business-tobusiness or business-to-onsumer marketing. By ontating one of the servie providers in the State Prourement Tehnial Assistane Center (PTAC) Network you an get assistane in takling the ompetitive world of government prourement. The network onsists of various organizations loated aross the state whih help ompanies do business with federal, state and loal governments. Speialists at these enters an assist you in getting started or solving a problem regarding government prourement. Many of the PTACs subsribe to the Pennsylvania Bulletin ( The PTACs also have speialized servies that an math a ompany s apabilities and interests eletronially to loal, state and federal bid opportunities. Copies of the math information are sent diretly to the firm, with opportunities to bid on government ontrats. The PTACs also provide military speifiations, tehnial data, and other servies related to ompeting for government ontrats and subontrats. For more information ontat the DCED Small Business Champion Network at or 45

51 ENTREPRENEUR S GUIDE How to Develop International Markets The global eonomy is fueled by new trade agreements, new markets and new tehnologies that have profoundly restrutured the ways in whih ompanies view business expansion. Any deision to export your produt must follow an intense period of study and planning. Fortunately, there are many resoures that an assist entrepreneurs in assessing whether international markets are the right hoie for the produts and servies of their partiular ompany. A first step in exploring foreign markets is usually an internal examination of your firm s produt quality, prodution and marketing apaity, and servie performane. Analyze your ompany s objetives for exporting and determine whether management and staff possess the experiene and risk apaity for foreign trade. The next step is to evaluate your firm s external ativities in distribution, marketing and ompetitive positioning. Firms that are well-managed and profitable in the domesti market usually perform well in the international market. The deision to venture into international markets should be based on: The opportunities of exporting: larger market for your goods and servies longer produt life for some produts ability to redue seasonal flutuation in demand dereased dependene on domesti markets fresh insight from overseas markets, whih an enhane your position domestially larger prodution runs, whih may redue fixed osts per item and enable ompanies to purhase materials at lower unit osts The hallenges of exporting: possible long lead times from marketing efforts to atual sales high osts of entering export markets, inluding travel, trade shows and samples possible requirement of foreign language labeling and point of sale materials risk of non-payment by the foreign buyer requirements to meet overseas standards, ertifiations and inspetions possible need to reformulate produt or pakaging for overseas buyer long lead times for shipping and delivery diffiulty ompeting against loal suppliers due to additional osts from shipping, finaning, tariff and non-tariff barriers loal ulture, ustoms and negotiations are different from dealing with U.S. ustomers 46

52 CHAPTER III MANAGING AND GROWING A BUSINESS Export Assistane Servies The Center for Trade Development (CTD) direts Pennsylvania s Export Assistane Program. By partnering with the Regional Export Network (REN) and managing a global network of Authorized Trade Representatives, CTD provides unrivaled servies and expertise to Pennsylvania ompanies. Servies inlude: market researh market entry strategy development foreign ompany bakground heks ustomized searhes for qualified buyers, agents, distributors and partners eduation programs and tehnial support grants and finaning programs trade missions and low-ost exhibitions at prominent international trade shows Contats Your first point of ontat for export assistane is Pennsylvania s Regional Export Network (REN). Whether you are a new or experiened exporter, your loal REN partner an onnet you with the partners, programs and servies best suited to meet your ompany s needs. Visit for a partner near you. Learn more! For more information on Pennsylvania s Export Assistane Program, visit 47

53 ENTREPRENEUR S GUIDE 48

54 CHAPTER IV Important Small Business Resoures 49

55 ENTREPRENEUR S GUIDE Advoay Small Business Advoate The Offie of Small Business Advoate within the PA Department of Community and Eonomi Development (DCED) represents the interests of small business onsumers of utility servies before the Pennsylvania Publi Utility Commission (PUC), in the ourts and before omparable federal agenies. For purposes of the At, a small business onsumer is defined as, "A person, sole proprietorship, partnership, orporation, assoiation or other business entity whih employs fewer than 250 employees and whih reeives publi utility servie under a small ommerial, small industrial or small business rate lassifiation." Contat: Pennsylvania Department of Community and Eonomi Development Offie of Small Business Advoate 300 North Seond Street, Suite 1102 Harrisburg, PA Phone: Fax: Small Business Champion Network (SBCN) The Small Business Champion Network (SBCN) offers free, pratial advie and assistane to individuals interested in starting a business, while helping existing ompanies grow and prosper. Questions related to ritial business issues suh as starting, registering, expanding, finaning and managing a small business an be direted to the SBCN. These staff members also have diret aess to loal and regional experts aross the ommonwealth that an meet with urrent and potential entrepreneurs and provide further business assistane. Finaning Area Loan Organizations (ALOs) The purpose of the ALO is to work with DCED and other government agenies in assisting a business in preparing loan appliations. ALOs work with federal, state and loal loan organizations. The organization also reviews and evaluates the loan appliation and determines whether to approve the loan. Contat the ALO loated in the ounty designated for your proposed projet. Contat: For the most urrent listing, visit Industrial Development Authorities (IDAs) An Industrial Development Authority is a publi authority reated by a ounty or muniipality to assist Pennsylvania businesses in aessing low-interest private apital. The IDA issues private ativity bonds, sells these bonds to investors in the bond markets and loans the proeeds to eligible businesses. In general, the bonds are guaranteed by the individual business s bank. An IDA is also authorized to sponsor projets to the Pennsylvania Eonomi Development Finaning Authority (PEDFA), whih is a state-wide issuer of private ativity bonds. All IDA and PEDFA projets are reviewed by the DCED Center for Private Finaning. Contat: For information on the loation of the IDA in your area, ontat the Pennsylvania Department of Community and Eonomi Development, Center for Private Finaning at The SBCN is the first stop for many individuals who have ideas for new business opportunities or simply need to learn about the vast toolbox of servies and resoures available within Pennsylvania. Committed to making it as easy as possible to get help quikly and effetively, the SBCN is the key that unloks the door to suessful business startups, growth and expansion. Contat: Pennsylvania Department of Community and Eonomi Development Small Business Champion Network Commonwealth Keystone Building 400 North Street, 4th Floor Harrisburg, PA Phone: or RA-DCEDSBCN@pa.gov 50

56 CHAPTER IV IMPORTANT SMALL BUSINESS RESOURCES Tehnial Assistane Partnerships for Regional Eonomi Performane (PREP) PREP is a statewide network of partners (Partnerships for Regional Eonomi Performane) designed to work in onert to deliver vital business assistane servies aross 10 regions of the ommonwealth. Our loal and regional PREP partners have the experiene and know-how to assist individuals who have an idea and need help with the basis of starting a new venture. PREP also meets the demands of existing ompanies that seek assistane in all aspets of suessful business development and growth. The PREP network onsists of hundreds of trained and experiened experts who an offer assistane and resoures. PREP s one-on-one ounseling, speialized workshops, online training and finanial inentives make it one of the most oordinated and respeted networks in the nation designed speifially to meet the needs of our job reators the men and women who start and grow our businesses. PREP makes it easier to learn what publi and private setor resoures an be quikly harnessed to meet individual and ompany needs. Our oordinated network an quikly analyze needs, formulate a plan and assemble a team to put that plan into ation. PREP helps to answer the following questions and more: How do I start a new business? How do I write a business plan? Where an I get neessary finaning? Where is the best plae to loate my business? How an I expand into new markets? Who an help me re-organize my shop floor? Should I invest in new equipment? Can I get training for my employees? Contat: Contat your respetive PREP Region by visiting newpa.om/prep, or ontat the State s Small Business Champion network at or all to speak with a trained representative who an help you navigate diretly to the resoures you need to start or grow your business. Governor s Ation Team (GAT) GAT s experiened eonomi development professionals work with ompanies on projets involving apital investment and job reation. GAT an provide the information needed by ompanies to make a loation deision, oordinate the involvement of other state agenies and reommend finanial inentives when appropriate. Contat: Pennsylvania Department of Community and Eonomi Development Governor s Ation Team Commonwealth Keystone Building 400 North Street, Plaza Level Harrisburg, PA Phone: Industrial Resoure Centers (IRCs) The Industrial Resoure Centers assist manufaturers in solving problems through the deployment of tehnologies. They do this by using the tehnial expertise of their own staff or by mathing ompanies with appropriate onsultants. The IRCs also assist ompanies in seuring training programs, maintaining a tehnially skilled workfore and supporting the introdution of tehnology to ompanies. The IRCs are a unified network and are strategially loated throughout Pennsylvania to best serve manufaturers in all 67 ounties. Contat: IRC Network One College Avenue, DIF 32 Williamsport, PA Phone: Loal Development Distrits (LDDs) The Loal Development Distrits provide business development servies within the 52 designated Appalahian ounties. Typial servies inlude finaning, government prourement and export assistane. Contat: 51

57 ENTREPRENEUR S GUIDE Small Business Development Centers (SBDCs) The Small Business Development Center network provides management assistane and expert ounseling to urrent and prospetive small business owners. SBDCs offer assistane to small businesses, providing a wide variety of information and guidane in entral and easily aessible loations. Their staff an help with issues suh as aounting, reord-keeping, business planning, market researh, finanial analysis and environmental ompliane. The SBDC Environmental Management Assistane Program (EMAP) is a no-ost onfidential resoure to help businesses minimize waste and prevent pollution, plus improve energy effiieny and redue expenses. Assistane from an SBDC is available to anyone interested in going into business or improving/expanding an existing small business. Although most of these servies are free, there are minimal fees for some ourses, workshops or other servies. Contat the Small Business Development Center nearest you or visit Many have loal outreah offies. Offie of Voational Rehabilitation (OVR) The Offie of Voational Rehabilitation has 21 distrit offies and the Hiram G. Andrews Center in Johnstown, Pa. From these offies and the Center, rehabilitation ounselors help people with disabilities prepare for, obtain or maintain employment. Assistane may inlude servies to help lients overome or lessen a disability and/or prepare for a areer through voational evaluation, ounseling, training and job plaement servies. OVR staff an provide employers with work site task analysis, job modifiation and assisted tehnology suggestions. OVR has job-ready appliants for referral to employers. Tehnial assistane and training about the Amerians with Disabilities At are available. Contat: PA Department of Labor and Industry Offie of Voational Rehabilitation 1521 North Sixth Street Harrisburg, PA Phone: Pennsylvania State Data Center (PaSDC) The Pennsylvania State Data Center is Pennsylvania s offiial soure of population and eonomi statistis and servies. Designed to improve aess to statistial resoures onerning the ommonwealth, PaSDC provides assistane on a wide variety of business initiatives. 52 The PaSDC website ontains demographi and eonomi information on Pennsylvania ounties and muniipalities, metropolitan areas and politial jurisditions. Diretories of other eonomi development and business assistane resoures and organizations, reently released researh briefs, marketing opportunities and maps depiting reent trends around the state are also available. Contat: PA State Data Center Institute of State and Regional Affairs Pennsylvania State University at Harrisburg 777 West Harrisburg Pike Middletown, PA Phone: Pennsylvania State University Cooperative Extension Program The Cooperative Extension Program offers publiations, tehnial assistane, workshops and seminars in business, eonomi and ommunity development, plus management and marketing assistane for agriulturally-related firms. There is little or no ost for this servie. Contat your ounty extension offie listed under County Government or Agriulture Extension offie in your telephone diretory. Contat: Center for Eonomi and Community Development Pennsylvania State University 103 Armsby Building University Park, PA Phone: ed.aers.psu.edu Pennsylvania Tehnial Assistane Program (PENNTAP) PENNTAP is a federal-state-university partnership for eonomi development. Serving Pennsylvania business and industry statewide sine 1965, PENNTAP is one of the nation s first tehnial assistane programs and remains a redible and valuable resoure for helping Pennsylvania businesses ompete and grow. PENNTAP helps Pennsylvania businesses improve their ompetitiveness by providing free tehnial assistane and information to help resolve speifi tehnial questions or needs that an be addressed within a limited amount of time. The program fouses on helping small businesses that normally do not have the in-house expertise or time to resolve speifi tehnial questions or needs. PENNTAP tehnial speialists assist small businesses by providing tehnial advie, tehnial information and referrals to other experts, resoures or programs.

58 CHAPTER IV IMPORTANT SMALL BUSINESS RESOURCES PENNTAP s information tehnology and e-business experts assist ommonwealth firms with the implementation and improvement of their websites. Assistane with evaluation of software, network options and web page upgrading an be obtained from PENNTAP. PENNTAP servies the entire state of Pennsylvania through a network of tehnial speialists who have speifi areas of tehnial expertise and are loated throughout the state. The servie of PENNTAP staff is onfidential and provided at no ost to lients. Contat: PENNTAP Pennsylvania State University 200 Innovation Boulevard, 156 Tehnology Center University Park, PA Phone: DEP Small Business Ombudsman The Department of Environmental Protetion s (DEP) Small Business Ombudsman provides free, onfidential environmental assistane to businesses with 100 or fewer full-time employees. By law, the Ombudsman annot reveal the identity of any small business that ontats the Offie without their permission. All ontats are kept stritly onfidential. The following are some of the servies that the Ombudsman provides: serves as the primary advoate for small business within the DEP assists small businesses in realizing potential ost savings of pollution prevention versus pollution ontrol serves as the DEP spokesperson to the small business ommunity reviews pending regulations and ensures that the impat on small businesses is onsidered. investigates omplaints from small businesses about DEP provides onfidential assistane to small businesses within the ommonwealth needing help with environmental issues Contat: Department of Environmental Protetion Offie of External Affairs Small Business Ombudsman Phone: Fax: depombudsman@pa.gov Tehnology Ben Franklin Tehnology Development Authority (BFTDA) The Ben Franklin Tehnology Development Authority (BFTDA) is one of the largest and most reognized tehnology-based eonomi development programs in the nation. The mission of the BFTDA is to strategially support programs and investments whih reate a ontinuum of finanial and tehnial servies to advane the reation, growth, suess and global ompetitiveness of Pennsylvania s early-stage tehnology ompanies and its universities. Through targeted programs suh as the Ben Franklin Tehnology Partners, the Keystone Innovation Network and the University Researh Commerialization Grant program, new tehnology ompanies are reated, ideas are moved from onept to ommerialization and high-paying, familysustaining jobs are made available to Pennsylvania itizens. Contat: Workfore Development CareerLink CareerLink (PA CareerLink) mathes jobseekers with businesses looking to fill jobs within the state. It is a free, internet-based system of reruitment and training servies supported by a network of professionally staffed enters aross Pennsylvania. The fat that PA CareerLink is both online and in-person is what makes it different from other areer servies. PA CareerLink an reruit, sreen, evaluate and refer job appliants aording to employers' speifi instrutions. Contat: 53

59 ENTREPRENEUR S GUIDE Guaranteed Free Training (GFT) Program Pennsylvania offers qualified employers the opportunity to train new and existing employees through the Guaranteed Free Training (GFT) Program, managed and administered by the Workfore and Eonomi Development Network of Pennsylvania (WEDnetPA) a ollaborative partnership among 28 Pennsylvania eduation organizations. Any of the 28 WEDnetPA partners an serve as the point of ontat for businesses wishing to aess GFT funding. Contat: WEDnetPA 4807 Jonestown Road Suite 246 Harrisburg, PA Phone: Workfore Investment Boards (WIBs) Workfore Investment Boards are regional entities reated to implement the Workfore Investment At of 1988, whih provides the framework for the use of federal job training funds for adults, disloated workers and youth. Contat: PA Workfore Investment Board Phone: Federal Resoures U.S. Small Business Administration (SBA) The U.S. Small Business Administration is an independent federal ageny reated to assist individuals starting a small business and to help existing businesses grow. Assistane is provided through a variety of programs and servies. SBA guarantees loans through ommerial lenders. Finaning is available through miro loans, loan guarantees and long-term, fixed-rate finaning of fixed assets through hundreds of programs and venture apital. For more information about the SBA, its programs and servies, ontat the offie nearest you or visit Philadelphia SBA Distrit Offie Parkview Tower 1150 First Avenue, Suite 1001 King of Prussia, PA Phone: Pittsburgh SBA Distrit Offie 411 7th Avenue, Suite 1450 Pittsburgh, PA Phone: Harrisburg 1 Penn Center 2601 N 3rd St Suite 503 Harrisburg, PA Phone: Pennsylvania Innovation Marketplae The Pennsylvania Innovation Marketplae is a omplimentary online servie that onnets manufaturers to tehnology and business opportunities that an result in aessing new markets and new produts neessary for suess in the global marketplae. The portal allows registrants to find innovation solutions, post/sell inventions, sell manufaturing expertise/apaity and loate resoures or hire experts to help with business growth strategies and opportunities. The site is partnered with the Industrial Resoure Centers, one of the statewide eonomi development PREP partners. Contat: 54

60 CHAPTER V Diretory of State and Federal Agenies 55

61 ENTREPRENEUR S GUIDE Important State and Federal Telephone Numbers This page inludes many of the ommonly used phone numbers needed by new and existing businesses. Contat the Small Business Champion Network for additional ontats at many state agenies that an help you suessfully start or grow your business by alling or DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT Small Business Champion Network PENNSYLVANIA DEPARTMENT OF LABOR AND INDUSTRY Building Oupany Permit Unemployment Compensation Tax or Unemployment Compensation Claims Workers Compensation or PENNSYLVANIA DEPARTMENT OF REVENUE Sales Tax Questions (Taxability of an Item) Sales Tax Questions (On a Sales Tax Aount) Sales Tax Liensing Loal Sales and Use Tax (Philadelphia and Allegheny Counties) Employer Withholding Tax (Questions) Employer Registration Corporation Taxes (Rate & Base Changes) Cigarette Tax Malt Beverage Tax Small Games of Chane Use Tax (Airraft, Waterraft, Motor Vehile, Misellaneous) Publi Transportation Assistane Fund & Tax & Fees or Personal Inome Tax Speifi Legal Questions on Tax Changes PENNSYLVANIA DEPARTMENT OF STATE Business Entity Filings Charitable Organization Registration Fititious Name Searh Offie Bureau of Professional and Oupational Affairs Liensing Boards (General Information) BUREAU OF CITIZENSHIP AND IMMIGRATION SERVICES National Customer Servie Center INTERNAL REVENUE SERVICE (IRS) Employer Identifiation Number Information SMALL BUSINESS ADMINISTRATION (SBA) Philadelphia Pittsburgh Harrisburg

62 CHAPTER V DIRECTORY OF STATE AND FEDERAL AGENCIES Diretory of Pennsylvania State Agenies PENNSYLVANIA DEPARTMENT OF AGING Website: General Information PENNSYLVANIA DEPARTMENT OF AGRICULTURE Website: General Information PENNSYLVANIA DEPARTMENT OF BANKING AND SECURITIES Website: General Information PENNSYLVANIA DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT Website: General Information PENNSYLVANIA DEPARTMENT OF CONSERVATION AND NATURAL RESOURCES Website: General Information PENNSYLVANIA DEPARTMENT OF EDUCATION Website: General Information PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION Website: General Information PENNSYLVANIA FISH AND BOAT COMMISSION Website: General Information PENNSYLVANIA GAME COMMISSION Website: General Information PENNSYLVANIA DEPARTMENT OF HEALTH Website: General Information PENNSYLVANIA DEPARTMENT OF HUMAN SERVICES Website: General Information PENNSYLVANIA INSURANCE DEPARTMENT Website: General Information PENNSYLVANIA DEPARTMENT OF LABOR AND INDUSTRY Website: General Information

63 ENTREPRENEUR S GUIDE PENNSYLVANIA LIQUOR CONTROL BOARD Website: General Information PENNSYLVANIA MILK MARKETING BOARD Website: General Information PENNSYLVANIA PUBLIC UTILITY COMMISSION Website: General Information or PENNSYLVANIA DEPARTMENT OF REVENUE Website: General Information PENNSYLVANIA SECURITIES COMMISSION Website: General Information PENNSYLVANIA DEPARTMENT OF STATE Website: General Information PENNSYLVANIA DEPARTMENT OF TRANSPORTATION Website: General Information

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