Brittain's Express Car Wash in Elgin purchased by the Warren Family 2018
Starting a Business in Elgin
Congratulations! You’ve decided to become one of the most important parts of the City of Elgin—a business owner. This is a very exciting time filled with lots of hopes and dreams, but also one filled with checklists, forms and unanswered questions. That’s where we can help. The EDG is filled with resources to help you start a business. What do you need to know to start a business here in Elgin? Just contact the Elgin Development Group! Every city and state has its own rules and regulations and a good understanding of those local requirements can make or break your new business. We understand how to do business here in Elgin and can assist you. Local regulations are described throughout this guide as they apply. A listing of local resources for further help with starting your business in Elgin can be found on the final pages. Contacting the Elgin Development Group is a vital step in starting a successful business.
BUILD A TEAM
In addition to your business partners, if any, you need to consider other necessary “team members”—your Banker, Accountant, Insurance Broker, and Lawyer. It is rare that a single business owner is an expert in each of these disciplines. It is critical that these persons be in place before you start your business so that things are done correctly and legally from the start. Investing in these professional services is part of running a successful business. Connect with EDG for referrals to local "team members" who can help you build your business.
MAKE A PLAN
Feasibility Checklist A Feasibility Checklist is a tool that is used to evaluate the potential success of a new or existing business opportunity.
How to Write a Complete Business Feasibility Study: A free Online Business Course with Step-By-Step Instruction
Gail Borden Public Library Access to premium research tools, such as databases, Illinois public records. Free legal forms, checkout equipment like an LCD projector, and use a copy machine or scanner.
Business Plan A Business Plan is vital in determining the credibility of a new business opportunity. It can be used as a management tool and may be required if financing is needed. It also demonstrates to prospective investors a well-defined course of action.
Illinois Small Business Development Center (IL SBDC) at Elgin Community College offers free and/or low-cost assistance
Build Your Business Plan: SBA's Free Business Plan Tool provides you with a step-by-step guide to help you get started. Requires registration
D'Amore-McKim Northeastern University: Guide to Writing a Business Plan
SELECT AN OWNERSHIP STRUCTURE
Ownership Structure There are several ways to organize businesses in Illinois. They are Sole Proprietorships, General and Limited Partnerships, Limited Liability Partnerships (LLP), Limited Liability Companies (LLC), "S" Corporations and "C" Corporations. Before selecting a business type, consult an attorney or accountant for assistance in determining which one is best for your business.
Limited Partnership LP Forms
Limited Liability Company LLC Forms
Limited Liability Partnership LLP Forms
"C" Corporation Corporation Forms
"S" Corporation Corporation Forms
REGISTRATION, LICENSES & PERMITS
Registering a Business Name When the business name is different from the owner's full legal name, the "Assumed Name Act" requires you to register the business name with your county clerk's office, regardless to the structure
Business Tax Registration
Internal Revenue Service (IRS) information such as a checklist for a new business and selecting a business structure. Learn about operating a business with employees, deductions and credits, recordkeeping and accounting methods. Additional resources include the Small Business Tax Calendar, Tax Topics for Businesses, and Frequently Asked Questions.
IRS Forms Distribution Center, Forms Distribution Center, PO Box 8902, Bloomington, Illinois 61702-8902, 1-800-829-3676, TDD: 1-800-829-4059
Illinois Department Of Revenue (IDOR) In Illinois, most businesses are required to be registered and/or licensed by the IDOR. If you plan to hire employees, buy or sell products wholesale or retail, or manufacture goods, you must register with the IDOR. To obtain information contact: Central Registration Division, PO Box 19030, Springfield, Illinois 62794-9030, 1-800-732-8866, TDD: 1-800-544-5304
Local Tax Registration and Requirements
Some municipalities and counties impose their own taxes in addition to the state and federal taxes that most businesses are responsible for. Elgin does not require local tax registration but does require Business Licenses. New businesses should contact their local revenue department to determine if additional taxes apply to their business activities. Many communities restrict advertising, regulate pricing or require zoning permits.
Elgin Development Group Contact for restrictions on advertising, regulate pricing or require zoning permits and more.
City of Elgin Business Licenses
Elgin General Building Permit
Are you looking to build a new facility? Are you purchasing or leasing an existing space? Will renovations or updates be required in the existing space? If so, a Building Permit from the City of Elgin may be required. A few examples of what may require a permit (contact the City of Elgin http://www.cityofelgin.org for a full list) include:
- Demolition of load bearing walls
- Modifications to the building structure (floors, walls, stairs, roof, foundation,etc.)
- Major modifications to sewer/plumbing, fire protection, HVAC, and electrical systems.
A permit will likely NOT be required (again, contact the City of Elgin http://www.cityofelgin.org for a full list) for:
- New floor finishes (wood, laminate, vinyl, carpet, etc.)
- Interior or exterior painting
- Replacing doors or windows
- Replacing plumbing or electrical fixtures (without plumbing line or electrical wiring modifications)
Other questions to consider:
- How much building space will you need to run your business?
- Will you need to hire a licensed architect/engineer?
- Will you need a licensed General Contractor?
Confirm with the City of Elgin that the location of your business meets all required zoning ordinances (http://www.cityofelgin.org).
Apply for your City of Elgin Business License
In the City of Elgin, all persons who conduct, engage in, maintain, operate, carry on or manage a business, either through such person or through an agent, employee or partner, must obtain by February 1 of each year a business license for that business.
A separate license shall be required for each separate place of business. The requirement of a business license shall be in addition to any other licenses and fees required by law.
City of Elgin License Questions
State of Illinois Registration, Licenses & Permits
The State of Illinois requires special Licenses and Permits in order to protect the public’s health and safety. Visit https://www2.illinois.gov/business/registration-licenses-permits to identify specific licenses or permits required by the State of Illinois.
Will your business involve any activities that are supervised and regulated by a Federal Agency (Alcohol, Firearms, etc.)? If so, you may need to obtain certain Federal Licenses or Permits. To identify Federal licenses and permits visit https://www.sba.gov/business-guide/launch-your-business/apply-licenses-permits
Licenses and Permits Required by Law
The Illinois Department of Financial & Professional Regulation Licenses And Permits Required By Law The Illinois Department of Financial & Professional Regulation (IDFPR) is the main licensing agency for the State of Illinois for most professions. Individuals must be licensed prior to conducting business as one of the listed professions.
Just like human life, the life of a business is full of unexpected events that can have excessively large costs: earthquakes, floods, fires, theft, death of a business partner, loss of intellectual property, lawsuits, etc. Any of these kinds of events can bring about costs that cannot be covered by a business’ normal operating budget. These kinds of costs make it wise for any business to carry the proper insurance so that a company’s’ assets are properly protected.
General Liability, Product Liability, and Commercial Property Insurance are a few of the basic types of insurance necessary to protect the long term viability of any business. Here is a general description of these types of insurance:
General Liability Insurance. This is the basic insurance necessary to protect a business against lawsuits due to unexpected injuries and accidents that occur at the place of business or due to the operation(s) of a business. Bodily injuries to customers or employees, negligence, accidents, and slander are some of the things that general liability insurance covers.
Product Liability Insurance. Companies that manufacture, wholesale, distribute, and retail a product may be liable for consumer safety. Product liability insurance protects against financial loss as a result of a defective product that causes injury or bodily harm.
Commercial Property Insurance. There are several kinds of commercial property insurance. Basic commercial property insurance covers the loss, damage, or theft of any company property, as well as the tangible products and the raw materials necessary to create these products.
There are many other kinds of business insurance that a company or institution should consider based on the nature of its products/services, including Workers Compensation Insurance, Home-Based Business Insurance, Professional Liability Insurance, Flood Insurance, Automobile Insurance, Renters Insurance, etc.
Choosing a business name is required before you can register your business with the state. Entrepreneur.com offers some advice on how to name your business, including a video. entrepreneur.com/article/21774
• Come up with three name ideas.
• Consider the name based on website address (URL) availability. Check the database at networksolutions.com/whois.
• Search the Corporation/LLC Search/Certificate of Good Standing database at cyberdriveillinois.com/departments/business_services/corp.html to see if the name you would like to use has already been taken.
• Sole Proprietors and Partnerships must file a Doing Business As (DBA) name if they wish to conduct business under any other name than the owner. Existing Corporations and LLCs may also wish to file a DBA under certain circumstances.
In Kane County, the DBA is called Assumed Name. File your Assumed Name Certificate with Kane County. Read more at http://www.kanecountyclerk.org/VitalRecords/Pages/Business-Registration.aspx and fill out and print
the form. Follow the instructions for filing. Further reading: sba.gov/content/how-name-business
Determine what type of Tax Year (Calendar Year or Fiscal Year) you will utilize for your annual accounting period for keeping records and reporting income and expenses. For more information on the different types of Tax Years, visit https://www.sba.gov/business-guide/manage-your-business/pay-taxes The City of Elgin and/or Kane County may require their own taxes in addition to the State and Federal taxes for which you will be responsible. Contact the City of Elgin (cityofelgin.org) and Kane County Local Revenue Department (countyofkane.org) to determine if additional taxes will apply to your business.
The State of Illinois will also require you to pay Business or Corporate Income Tax, depending on the structure of your business. To review specific requirements, visit www.sba.gov/content/learn-about-your-state-and-local-tax-obligations. What type of business will you be operating? The type of business will determine the taxes for which you will be responsible and how they need to be paid. General types of taxes include:
Income Tax. All business are required to pay federal income taxes and file a return.
Self-Employment Tax. Social Security and Medicare Tax for individuals who work for themselves.
Employment Tax. If you have employees, you will have to pay certain employment taxes:
- Social Security and Medicare
- Federal Income Tax Withholding
- Federal Unemployment Excise Tax. Depending on the products you sell or manufacture, the type of business you operate, equipment or facilities used, or payments you receive for certain services, Excise Taxes may pertain to you. Refer to www.irs.gov for more information.
Is your business eligible for Sales and Property Tax Exemptions?
Certain organizations may be exempt from paying sales tax in the State of Illinois. Your business may be allowed to buy items tax-free, and your property
may be exempt from property taxes. For more information about determining your business’ eligibilty, visit https://www2.illinois.gov/rev/forms/reg/Pages/stax-1.aspx
Your business could also qualify for Federal Tax Exemptions: irs.gov/Charities-&-Non-Profits/Frequently-Asked-Questions-About-Applying-for-Tax-Exemption.
Work hard to hire individuals that will help achieve the goals of your company. To that end, as new employees are considered, human resources needs to keep key
questions in mind:
- What are the key competitive trends that are happening in your industry, and how can HR adapt to make them work for your business?
- What are your strategic goals for the future?
- How does the current level of knowledge, skill sets, and attributes among your present staff match up with what will be necessary in the future?
Every business must comply with the Equal Employment Opportunity Commission, a federal agency focusing on the fairness of hiring individuals in the US. Every business must give a fair chance to hire an individual, regardless of race, gender, sexual orientation, handicapped, age etc. If company rules or state or federal laws are broken by an individual, Human Resources will work with the individual to correct and/ take punitive action to make sure the rules are followed.
Affordable Care Act
The Patient Protection and Affordable Care Act (ACA) enacted comprehensive health insurance reforms designed to ensure Americans have access to quality, affordable health insurance.
Which category does my business fall into?
- Employers with fewer than 25 employees
- Employers with up to 50 employees
- Employers with 50 or more employees
Businesses with 50 employees or fewer can offer the Small Business Health Options
Program (SHOP) plans. Apply online at the Marketplace: healthcare.gov/smallbusinesses.
Read about each category at the Small Business Administration. Free webinars in English and Spanish are also available at sba.gov/healthcare.
Credit history. Your current credit score could affect how lenders and suppliers perceive you.
Develop a Cash Flow Analysis for your business. You will need cash to start, operate, and expand your business operations.
Calculate your Breakeven Analysis to help determine when you can expect your new
business to turn a profit and be able to cover its own expenses:
Break Even Point = Fixed Cost/(Unit Selling Price - Variable Costs)
Do you anticipate needing additional funding sources outside of your personal finances to get your new business up and running? Consider
- Equity Financing vs. Debt Financing
- Will you have the ability to repay your loans?
- Make sure you have a good personal credit score.
- Most lenders will want to see equity invested into the new business.
- Retained Earnings
- Cash from Owners/Investor
- Will you be able to provide some form of collateral?
- Do you or other lead personal have any Management Experience?
- Consider taking classes or training courses that specialize in Business Management.
PATENTS AND TRADEMARKS
Patents and Trademarks
The U.S. Patent and Trademark Office keeps records of inventions submitted by the public. These records are filed to protect the rights of the inventor. If you have an invention or idea and would like to apply for a patent or trademark, you must follow certain steps.
- Read the information and instructions regarding patents and trademarks at uspto.gov/patents/resources/general_info_concerning_patents.jsp
- Following the instructions for filing at uspto.gov/web/patents/howtopat.htm
- Patent article from Cornell University Law School law.cornell.edu/wex/Patent
- Patent It Yourself by Nolo Press, 2014