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Carl E. Person
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Tel. No. - 212-307-4444
Fax No. - 212-307-0247
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WHAT YOU SHOULD KNOW BEFORE STARTING A NEW BUSINESS IN
NYC -- A Guide to Licensing and 30+ Other Start-Up Hassles
by Attorney Carl E. Person
(July 1994 Revision)
A self-help manual for persons wanting to start a new business in New York City or acquire "business experience in NYC" as if they owned and suffered with one, including licensing and other regulatory requirements, as well as practical tips to save money and help your business survive and grow
(July 1994 Revision)
Office and Telephone Consultations Are Free
Carl E. Person, Attorney at Law
325 W. 45th Street - Suite 201
New York, NY 10036-3803
Tel: (212) 307-4444
Fax: (212) 307-0247
Table of Contents
Table of Contents
- Why Do People Start New Businesses?
- What Types of Persons Start Businesses?
- Business Entities - Take Your Pick
- Licensing Not Required, Except ....
- Creating and Reserving a Name for Your Business
- Trademarks - Creating, Reserving and Applying for
- Outlining the Main Aspects of Your Business
- Employer's Tax Identification No.
- NYS Authority to Collect Sales Taxes
- Using an Attorney; the Fees
- Using an Accountant; the Fees
- Types of Taxes You Will Encounter
- Regulatory Agencies
- Minimum Capital Requirements
- Raising Capital Is Easy
- Bankruptcy and Insolvency Laws
- Sources for Assistance and My Small Business Group
- Opening Your Bank Accounts
- Compliance with Labor Laws
- Auctions for Low-Cost Furniture & Equipment
- Avoiding NYC Occupancy Taxes
- Inspections and C of O's
- Hiring Employees
- Protection of Your Ideas
- Postal Bulk-Mailing Permit
- Postage-Meter Licensing
- Franchising - Both Sides
- Offering Securities to Raise Capital
- Environmental Inspection and Concerns
- Vehicles: Licensing and Parking
- Advertising Rules Prohibiting Fraud
- A Warning about Your Overhead
- Low-Cost Start-Up Location & Office in Your Home
- Insurance & Bond Considerations
- Useful Telephone Numbers
- A Final Word
- Appendix of Forms
A. Certificate of Assumed Name for (a "d/b/a" for a sole proprietorship)
B. Certificate of Incorporation
C. Letter to Secretary of State (accom- panying certificate of incorporation)
D. Reserving a Name for Your Business
E. List of all businesses requiring license by the NYC Dept. of Consumers Affairs
F. Occupations required to be licensed under New York Law
G. Reserving a Trademark
H. Application for Employer's Tax I.D. No.
I. Application for Sales Tax Certificate of Authority J. List of services provided by the NYS Dept. of Economic Development K. Federal rules relating to the hiring of new employees
1. Why Do People Start New Businesses?
I can answer this question. There are many reasons. Because you want to cover your personal overhead. Desperation. You want to replace income which is no longer coming in. You want to cover additional expenses you are now incurring or expect to incur. Lifelong ambition. Desire to survive. Desire to make a fortune. Financial independence. To be in charge of one's own destiny and be your own boss. Irresistible impulse. Gambling spirit. To be rewarded in direct proportion to your own effort. Conf idence that there is little risk. To prove something to someone. Some of the foregoing. None of the foregoing.
2. What Types of Persons Start Businesses?
You, me, and tens of millions other persons, including terminated executives or employees, have started new businesses over the past 10 years. The type of person is different from someone seeking safety, or who has a high-paying job and a high (or higher ) personal overhead. A person seeking to start a new business has a lot of objections to overcome, including family members who may fear that the business will not succeed and the family will be worse off than when the breadwinner had a steady job. Often the persons who start a new business have recently left their job (either by quitting or by being fired). Others go into business when they inherit some money, often an amount too small to enable the business to succeed. Sometimes friends get toge ther a continue their friendship through a business association, which often causes a permanent destruction of the friendship. After every election, there are many persons obtaining political employment from the new administration, and others who leave t he old administration and either get a new job or open up a business for themselves.
Then, there are persons who go into business to enable them to do what they really want to do, which might be to be a comic (and set up a comedy club from which to do comedy), or a chef (who sets up a restaurant), or a driver (who buys a big rig for coast -to-coast trucking), a lawyer, doctor or architect (who sets up a professional practice) or other persons who go into business doing what they enjoy doing, even though the remuneration may be less than when they did this type of work as an employee for ot hers.
But don't be afraid to tell the truth. You are going into business to make lots of money. This is what business is all about. You believe you can make more money in your own business than a businesspersons would pay you to work for him or her. This ma y or may not prove to be true.
Many businesses succeed, and the owner has a good chance in those businesses of earning more or far more than he/she could earn working for someone else's business. But many businesses fail, and the businessperson not only doesn't make any money at all f or all the work which was done, but stands to lose all of his savings, his home, and even his family through the domestic discord which often accompanies financial adversity and long hours.
What type of person succeeds in business? A person who has business skills, a high-quality product or service, motivation, sufficient capital, good employees, a good business plan, sufficient time to concentrate on the business, lack of distraction from domestic, financial, criminal or litigation troubles, freedom from disease, and so on. There are many more things which could help a person to succeed in business, including family connections, business contacts, exclusive products or services which can be sold without significant competition.
You should analyze your own strengths and weakness, and try to see if you can make a go of the small business you have in mind. Go out and talk with some small business owners, and see if you would be willing to do what they do.
Some of the most surprising things you will find are (i) that your initial advertising may not result in a single sale; (ii) your product or service is not as good as you think it is; (iii) your well-chosen name is being used by someone else who threatens suit to force you to change your name or claimed trademark; (iv) there is little or no market for what you plan to do; (v) you have failed to follow the first three rules for a storefront, retail business, which are "1. Location, 2. Location, and 3. Loca tion".
Now that I have given you fair warning about what you may be getting into, let's go on and get into the subject of starting a new business in New York City (NYC). The rules are pretty much the same for every city, since they excessively regulate business to drive them away to other cities, which try to do the same.
3. Business Entities - Take Your Pick
There are 7 main business entities which you can select from, and I'll let you know which type I think you should use. The 7 types of business (or "entities", meaning a "person" under law capable of suing and being sued) are:
1. You, as a sole proprietor of your business without any intervening business entity. In this case, you would do business in your own name or under an assumed name (by filing a certificate of assumed name). Whether or not you use an assumed name (such as "Best Gardeners"), you, as an individual human being, remain the entity, and any lawsuit against you will create personal liability for you, if you lose. A copy of a Certificate of Assumed Name for a sole proprietorship, filed in the County Clerk's Of fice of New York County, is attached as Appendix A.
2. A corporation. A copy of a certificate of incorporation as filed with the Secretary of State in Albany, New York is attached as Appendix B. A copy of the cover letter enclosing the certificate of incorporation for filing is attached as Appendix C. A n application to reserve a name for a corporation is annexed as Appendix D.
3. Limited Liability Company (or "LLC"), which is a new form of business entity sweeping the country (adopted in at least 30 states). LLC's were approved by both houses in the New York Legislature during July, 1994 and may soon be available in NYS for us e by businesses. The entity is a partnership in which all partners have limited liability, thereby creating (i) "pass-through" tax treatment of a partnership (with the individual partners taxed on the income instead of the dual taxation of a typical corp oration and its shareholders, (ii) the limited liability of a corporation for each of the partners; and (iii) with fewer restrictions than Subchapter S corporations.
4. A partnership (or general partnership) of two or more persons. Under New York law, you can have a corporation as a partner. So it is possible for you to own all the stock of a corporation which is the only general partner in a partnership and avoid p ersonal liability for yourself.
5. A limited partnership, in which some of the partners have limited liability (to the extent of their capital contribution to the partnership) and at least one partner is a general partner, which could be a corporation owned by you, thereby limiting your own liability to whatever assets are owned by your corporation.
6. A trust (or business trust), which would be somewhat unusual. But you could engage in business as a trust. 7. An estate of a decedent, which would also be unusual, because estates are usually settled, and would not be engaged in business for long, and presumably only for the purpose of liquidating the business assets of the estate. What business entity is best for you? This will surprise you, and I warn you in advance that you will be sacrificing your limited liability as a result, but I recommend, from a business (not a legal) standpoint, that a person start a new business (if it is owned and financed by the same person) as a sole proprietorship, with or without an assumed name.
I recommend this, from a business standpoint, for the following reasons: (i) your accounting and tax preparation costs will be low, because you will have only yourself to prepare and file tax returns for; (ii) you won't have to pay for the incorporation of a corporation; (iii) you won't have to pay for the maintenance of a corporation over the years, including the paperwork involved in proving you have had shareholder and director meetings, and meetings for the adoption of bank and other resolutions; (iv ) you won't have to apply for a separate tax identification number; (v) you won't have a lot of brown envelopes following you from a variety of government agencies after your business goes out of business, which might well happen; (vi) your agreements won 't be as complicated, since there will be only one "entity", which will be you; (vii) you won't have twice as many bank accounts with hundreds of dollars of extra charges each year for returned item, transaction costs, check costs, overdraft privileges an d the like; (viii) you can get started more quickly; and (ix) you can give yourself say one or two years as a sole proprietorship before deciding whether to give up the business or convert to a safer (from a personal-liability standpoint) type of business entity.
A corporation does give you some theoretical protection against personal liability, but it is not complete. You will still be required to guaranty various transactions, and you could be liable personally for fraud even though you are incorporated. Corpo rations cost so much money in additional fees and services of lawyers and accountants that my feeling is that you should save the $5,000 per year of added costs (just a guess), and apply this money to your business. My feeling is that the additional cost s of setting up and running a corporation are not worth it to the small, thinly-capitalized businessperson. The time and money should be spent in the business instead, to give the business a better chance for success.
4. Licensing Not Required, Except ....
The general rule in New York State and New York City is that no licensing is required to engage in business, but this general rule is riddled with numerous exceptions. For example, doctors and lawyers must be licensed. Taxicabs and taxicab drivers must be licensed in NYC. Street vendors (called "general vendors") must be licensed in NYC, but not persons selling books, pamphlets, magazines or religious articles, as to whom no licensing is required (to reflect that such vendors are exercising 1st Amendme nt constitutional rights to free speech and the exercise of religious freedom).
A list of all business which are required to be licensed by the NYC Department of Consumers Affairs is set forth in Appendix E at the end of this pamphlet. This list does not necessarily include the occupations which must be licensed under NYS law. A l ist of these fields is set forth in Appendix F.
5. Creating and Reserving a Name for Your Business
You should give a lot of thought to the name for your business. Generally, I don't like a name such as Tom's Sporting Goods, or Tom's Restaurant, or Tom Gardening. Nor do I like Tom Smith Fences or Tom Smith Computer Repairs. The reason is that all of these names are mundane and non-memorable, promising nothing out of the ordinary to the prospective customer.
Instead, I try to come up with a name which meets the following requirements: (i) descriptive of the product or service (so people will know what business you're in; (ii) catchy (so persons will remember your name and what you do; and (iii) short (to use in classified or other advertising at lowest cost, and enable you to take advantage of classified advertising 3-line minimums, for example). How to come up with a suitable name is creative and fun. Why don't you try it yourself. Let's pretend that you are starting a business of trademarking residential buildings (i.e., your business would be to own a trademark and to license building owners to paint your trademark on their building to attract tenants to rent vacant apartments in the buildings). The basic business idea (which I might add is a unique idea) is to supply a variety of services to the owner of the building and to the owner's ten ants which would attract tenants to any building which offered such services. You would have to come up with a name for the company and (the same or) another name for the trademark.
What kind of name should the company have?
First of all, your business name should suggest something about residences, buildings or trademarks. Let's try out some combinations. I usually opt for two or three words in a name. My first thought is "Residential Marks". Let me continue thinking, un til I come up with the name I like. Trademarks for Tenants. Tenant Services. Tenant Caterer. Tenant Attractions. Tenants-'R-Us.
Aha! I like this last name, and this is the one I will choose. [Note: I only spent 5 minutes thinking about the name, and I would hope that you would spend several hours thinking about the name for your new business, and write all of them down, in order of thought, on a pad, so you can keep looking at them, making tentative choices, and then changing your choice, and finally coming up with the name you are going to go with. As I said, it is part of the fun of starting a new business. Let's get on to t he trademark for your new business.
6. Trademarks - Creating, Reserving and Applying for
You don't have to have a trademark for your business. Many businesses don't have a claimed trademark. Without knowing it, however, many businesses probably have a trademark under commonlaw. But the cost of seeing a trademark attorney and paying for the filing fees to apply for and obtain a trademark probably discourages most small businesses from using a claimed trademark at the outset of business.
The way you, in your business, can use a "claimed" trademark (or "servicemark") is to just create and use one, putting "tm" or "sm" to the upper right of the claimed mark, such as Xerox (tm) or FedEx (tm) instead of Xerox (r) or FedEx(r).
The difference between a trademark and a servicemark is that trademarks apply to and are affixed on products (such as bars of soap, soft drinks, magazines) whereas servicemarks are used in the marketing or delivery of services, such as dry-cleaning servic es, tax-preparation services, and airline services, where presumably it is difficult if not impossible to affix the servicemark to the service itself which is rendered.
Once the trademark or servicemark is registered with the U.S. Patent Office, the mark is entitled to use the "r" in a circle to indicate that the mark is registered. The value of a registered mark is that the mark becomes incontestable after a few years , with some limited exceptions, leaving little or no defense to a competitor or other person who infringes the mark.
Thus, at the outset, you can use a mark, but unless you claim that the mark is a trademark or servicemark, others may not be aware and may adopt your mark as their own. Thus, when using an unregistered trademark or servicemark, you should use the letters "tm" or "sm" as indicated above, make your application for registration, and when the mark is registered, change the "tm" or "sm" to (r).
It should be noted, now, that you can apply for a trademark or servicemark without having to first use the mark in interstate commerce. You file a trademark application and check off the paragraph saying you have "a bona fide intention to use the mark in commerce". The form (see Appendix G hereto) is filed with the U.S. Patent and Trademark Office, which must be accompanied by a filing fee of $245 per class (as of 12/3/93). In interested, call the Patent and Trademark Office for a booklet entitled "Bas ic Facts about Trademarks", 703-557-4636.
You should note also that you can file for registration of a trademark or servicemark under New York law, for use in New York. Sections 360-368 of the New York General Business Law. The filing fee is $50, for 1st 10 years, renewable 6 months before end of 10 years. Sections 362(d), 364. Now, let's create a servicemark for our Tenants-'R-Us business. We should remember that we are trying to use the trademark to induce tenants to go to the building owners (our hypothetical customers) and rent apartments from them. Thus, the name of our b usiness (which we selected to be useful in marketing our services to the owners) is not necessarily suitable as a trademark or servicemark to encourage tenants to purchase (i.e., lease apartments) from building owners. In the instant case, however, it mi ght well be appropriate, and I think I'll adopt Tenants-'R-Us as a trademark or servicemark for licensing to owners. My reasoning is that from the tenants' perspective, they might well be attracted to a building owned or managed by a person who seems to be saying that Tenants Are King or Tenants Are Tops. Hey! Maybe I should use "Tenants 'R King" or "Tenants Are Tops" as the trademark instead of "Tenants-'R-Us. Now, can you see what you can go through in coming up with a trademark/servicemark for your self.
The whole process is pretty creative. Also, it makes you focus on what your business is about, and what you are telling your business is to others.
7. Outlining the Main Aspects of Your Business
Now that you are thinking about your business, why not start outlining exactly what you plan to be offering as products and services, and then, separately, how you plan to market these products and services.
You will find that in many instances the products and services are not very novel, and that your main creativity is in the way you plan to offer your goods and/or services. There is nothing wrong in this, I want to be quick to point out. If you have a b etter way of selling hamburgers, you could possibly start a business which will push McDonald's aside in 10 or 20 years. This is so even though your hamburgers are not a new or different product. Through creative marketing, you can get the public to per ceive that your hamburgers are different when in fact they may not be more than slightly different.
Your marketing angle might be, for example, to have microwave-heated coin-operated hamburger and cheeseburger dispensers installed on light poles (to provide the required electrical power) throughout the nation, leasing the space and purchasing the electr icity from the appropriate governmental agencies and public utilities. Otherwise, you might just invent, manufacture and sell such equipment to others, as your business, so that your business would be the manufacturing, marketing and servicing (presumabl y) of a patented product.
Well, enough about marketing, except to say that marketing is everything. Advertising and publicity are merely subdivisions of marketing. The way customer claims and servicing are handled are also subsumed under marketing. The location of your offices , your choice of salespersons, and many other decisions will have elements of marketing connected to them. Thus, you see that marketing is an all-pervasive concept, which must be taken into account in every aspect of your business.
8. Employer's Tax Identification No.
The federal government requires that each business entity (such as a corporation, trust, partnership) apply for and obtain an Employer's Identification Number (or "E.I.N."). You can obtain an "E.I.N." number in an emergency by telephone request by calling the I.R.S. at telephone number 516-447-4955 (but only between the limited hours of 8:30 a.m. to 10:00 a.m.). A form (SS-4) for making this application (which must be filled out and signed before making the call, and then mailed to the IRS immediately th ereafter) is annexed as Appendix H. Otherwise, it will take you several weeks or longer to obtain the number. The banks won't generally require that a corporation have an E.I.N. as a condition to opening up a bank account, but it is nice to have one, to avoid little hassles here and there. But now that I have told you about E.I.N.'s, I will tell you that you already have your number, at least if you intend to do what I suggest (which, by the way, is not legal advice to you), which is to do business as a sole proprietorship at least to get s tarted. The reason is that your social security number is all that you need. After all, you are going to be reporting your income and expenses for the business as part of your overall activities as an individual (or married) human being on your annual t ax forms.
In New York State, as in most other states, I presume, your tax filings under State law will use the same E.I.N. as you use for federal purposes.
9. NYS Authority to Collect Sales Taxes
New York State is a state which has a sales tax, and various cities within the state (such as New York City) have added to the tax to bring the combined sales tax up to a level of 8.25% for many items. It is the duty in NYS/NYC for the merchant making th e sale to collect the tax and pay it over to the NYS Department of Taxation and Finance every 3 months. This state agency then turns the appropriate part of the tax over to NYC.
You must have the "authority" from NYS to collect this tax, however, which means that you would be violating the law if you made sales without such authority, because you would either be making sales without adding the required sales tax or you would be c ollecting the sales tax without authority to do so from the intended recipient of the tax.
This authority is obtained through application to NYS, in Albany only, and takes up to 2 months from the date of application, unless you are turned down for some reason, in which case you won't get the required certificate of authority at all. NYS asks a lot of questions on its application, and it does a check to determine if it is going to issue the requested authority to you, so that NYS could in fact decline to permit you to go into business by denying your application for authority to collect sales t axes. If you doubt what I'm saying or having any questions, please call the NYS Dept. of Taxation & Finance (sales tax applications), in Albany, 800-225-5829 (menu "3"). You can obtain a copy of Form DTF-17 1/92, "Application for Registration as a Sales Tax Vendor"), by calling the NYC, 212-383-1352 or 1353 (located at 27 Cedar Street near 80 Maiden Lane, New York, NY, and difficult to find; call and they will mail).
I believe there is something wrong with this, and it should be challenged in court as unconstitutional, both the fact that you can be denied permission to collect sales taxes which by law you are required to tax (thereby preventing you from going into bus iness) and from the standpoint that you regularly have to wait for up to 2 months to receive permission to go into business, in effect.
People wonder why some states do better than others in creating jobs, and here is a clear example of how governmental excess in NYS deprives persons of the right to earn a living and destroys jobs in the process.
A copy of the application for authority to collect sales taxes in NYS is annexed as Appendix I. Read it and weep.
10. Using an Attorney; the Fees
I am an attorney and do most of my corporate and business work of a legal nature myself. But I suggest to you that you would be better off doing such work through an attorney, especially since you have an idea of what needs to be done.
Your time is too valuable to waste in learning how to be the effect of a competent lawyer in the non-recurrent areas of filing various forms, applications and certificates. Yes, you could learn, but you might make so bad mistakes, which could hurt you la ter, and then there is your time to consider. Why take the time to learn the law when you can hire competent legal services to do the work for you. What you save in money you will probably lose in time and quality if you try to do the work yourself.
Another thing about using an attorney to do the work is that the attorney has the forms available for the various items which are required to be created, such as by-laws for a corporation˙if you choose to set up a corporation.
Also, you should want to have a lawyer who is familiar with your business from inception to the present who you can bounce ideas off from time to time, and get minor legal problems handled when they arise.
Accordingly, I suggest that you start off using a lawyer and talking with him/her about your objectives, and even talk over whether you should incorporate or not. I have told you that from a business standpoint it often makes sense not to incorporate, at least to get going, but let a lawyer give you his/her advice, which may well be that from a legal standpoint there is no reason to subject yourself to personal liability when your business goes under and you are sued for breach of contract (which if you were incorporated would not be a liability for you unless you guaranteed the contract in some fashion).
You will have to pay an attorney fees or something else to obtain his/her services. There are various ways in which this is done. One of them is to pay for what you get, on a fee for services-rendered basis, usually where the small business is billed ea ch month for the number of hours (or minutes) which the attorney devotes to the client, multiplied by the hourly rate of the attorney, which might range between $150 and $250 per hour, more or less. Another way is for the attorney to charge a monthly ret ainer (of, say $500 to $1,000 per month, more or less), and not charge additionally for any of the services rendered (except, usually, for extraordinary services such as litigation). Finally, some attorneys will take a percentage of the stock in the new business and charge a lower legal fee, or even none at all. There are pros and cons to each of these methods of purchasing legal fees, both from the lawyer's and the client's standpoint. A medium ground seems to be a low monthly retainer, which is adjus ted from time to time as the amount of use of legal time for month is being determined. Of course, this arrangement is designed to encourage the client's use (because there is no immediate charge for the services), but it leads to escalating monthly reta iners, if the client doesn't use the attorney conservatively). The attorney should make sure the client is told when the attorney's time is being wasted. The client may not know.
11. Using an Accountant; the Fees
The reason you should use an accountant is to avoid getting into the trap which new businesses often fall into. This trap is that when things go bad, the businessperson often deliberately fails to file tax returns of all or various types, hoping that thi s end of the business can be picked up later, when things hopefully get better. All too often the business doesn't get better in time to avoid financial disaster, and the tax forms and tax payments are not made, and the businessperson becomes liable indi vidually (for everything when the entity is a sole proprietorship or general partnership or for part of the tax when he/she is an officer of the entity which fails to report or pay taxes).
For an entrepreneur trying to conquer the world with new products, services and marketing ideas, there is a certain comedown when it comes to adding up the cash receipts each month for the numerous highway-toll payments, taxicab rides, telephone calls fro m pay telephones, newspaper purchases on the way to a visit to a customer in Philadelphia, the lunches, coffee and snacks throughout the month for yourself and employees, and so on, especially when these purchases did not succeed in making your business f inancially successful.
Thus, I urge you to get and use an accountant from the outset of your business, to keep your taxes and tax payments in order, including your sales taxes, occupancy and special occupancy taxes (which you can avoid completely, lawfully), disability insuranc e, federal unemployment tax (FUTA, meaning Federal Unemployment Tax Act), social security ("FICA" taxes), other federal, state and city withholding taxes on payroll, federal, city and state income taxes, including periodic payment (estimated tax payments) of them in advance throughout the tax year.
Leave these dreary but important matters to your accountant, who has made it his/her business to do these things quickly and efficiently, which will free your time and emotions to do the things in your business which caused you to go into the business in the first place. Try to insulate yourself from these depressing tax matters as much as you can by using an accountant from the outset.
Of course, the accountant is going to charge money, and you are going to have to have the money available each visit (usually once per month) to pay the accountant on the spot. He or she will be aware whether you are paying your bills on time, and will b e in a position to collect his money at the time he renders the services to you.
Accountants usually want to be paid a retainer per month for the work they do, probably because they put in fewer hours than the client realizes (with much of the work being done by lower-cost paraprofessionals). Of course, the accountant still has to re main competitive, because there may be other accountants seeking your business offering a significantly lower rate. My advice is not to change professionals merely to take advantage of a slight (or possibly even a significant) dollar saving. Your profes sionals have a knowledge of your business which a new person might not acquire right away.
12. Types of Taxes You Will Encounter
I have already mentioned various types of taxes you will encounter in NYS/NYC. But let me list them in a more functional order (and add a few which I didn't list above).
1. Federal unemployment tax (FUT or FUTA).
2. Social security taxes (FICA), which are partly withholding (meaning taken from the employee) and partly the employer's contribution (an amount equal to what was withheld from the employee).
3. Federal withholding taxes on gross payroll (very minimal if your salaries to employees are low).
4. Federal income taxes (on individuals, corporations, partnerships, and other entities).
5. Federal estimated income-tax payments. A note is in order here. You have to consider whether you want to pay a salary to yourself. If you do, you also have to pay social security taxes and FUTA, which will amount to a lot of money especially if your business is not making any money and in effect all of your salary payments are only coming out of your savings or capital. Thus, I ordinarily recommend not to pay a salary to yourself for this reason. On the other hand, the years will go by and you will lose social security credit, which could well result in lower or no social security payments in your retirement years. Y ou have to think through this problem, and discuss it with your lawyer and accountant. It should be noted that the NYC unincorporated tax law requires you to pay an income tax to NYC as a businesspersons at the same you are required to pay an income tax to NYC as an individual (an egregious case of double dipping by NYC into small businesspersons' pockets and adding to the overall tax burden of small business). Nothing is easy in this area, and you will have to decide this important question of whether you should pay yourself a salary. If you are making a lot of money in your business, you should probably pay yourself a salary. But if you are making little or no money, it will cost you money, and immediate money, to pay yourself (and your spouse) a sa lary, money which you will never get back during the next 10 or 20 years or maybe at any time. Also, it adds to an increased inability to meet payroll each pay period, and when you don't cash your payroll check because of insufficient cash on hand, your computerized tax forms prepared by a payroll services firm such as PayChex (which I highly recommend) or ADP (which I recommend to a lesser extent for a business with few than 5 employees) will be inaccurate and make it appear that you owe more money in t axes than you do, which can bring upon you all sorts of government demands, interest payments, penalties and hassles for years which it will take money (which you may not have) to resolve.
- Disability insurance (compulsory under the New York
- Disability Benefits Law, section 204-4), which can be recouped by the employer through payroll deductions).
- NYS withholding taxes on payroll.
- NYS income tax (on individuals, corporations, partnerships, and other entities).
- NYS estimated income-tax payments.
- NYS sales tax.
- NYC withholding taxes on payroll.
- NYC income tax (on individuals, corporations, partnerships, and other entities).
- NYC estimated income-tax payments.
- NYC unincorporated business tax (a double tax for the sole proprietor, since he/she is paying a tax on the profits of the business, and this "unincorporated business tax" taxes the same entity as a "business" before taxing the person as a "human"; the tax creates much paperwork, causes a loss of substantial time and money for small unincorporated businesses, and produces very little income for NYC).
- NYC sales tax.
13. Regulatory Agencies
When you are in business, there are various regulatory agencies which may be looking over your shoulder and cause you some difficulties, especially if you are trying to start a unique business.
These regulatory agencies (including a private association) are, in the order of their importance as I see them:
1. The NYC Department of Consumer Affairs, which has a series of licensing laws to administer, and solicits, receives, investigates and acts upon consumer complaints;
2. The Federal Trade Commission ("FTC") which could get into the act if your business is operating on an interstate basis, such as selling franchises throughout the United States or offering immigration or other types of lottery interests throughout the U .S.
3. NYS Attorney General's Office, Department of Consumer Frauds or something like that (the divisional name changes from time to time). Often there is competition between the NYS Attorney General and the NYC Department of Consumer Affairs in going after an errant business.
4. NYC District Attorney's Office. When these people are involved, you may be in some serious (criminal) trouble. But more often than not the District Attorney's office declines to prosecute because the complaint was made merely to try to get the busine ss to pay an obligation, and the District Attorney's office is not in the debt collection business.
5. U.S. Securities and Exchange Commission (the "SEC"), which regulates the offering of securities and the stock markets in the United States.
6. Better Business Bureau. The BBB is financed by the local daily newspapers and the business members. When a consumer complains to the BBB, the BBB sends a letter to the business asking for its side of the matter. If the business fails to respond, the BBB takes the position that the business has done something wrong; if, however, the business reports that it did nothing wrong (even if it did), the BBB generally takes the position that the business has done nothing wrong in such instance, and will usua lly give the business a clean bill of health (unless the volume of complaints against the business becomes truly excessive).
7. National Association of Securities Dealers, Inc. ("NASD"), a private trade association which regulates the compensation payable to its broker-dealer members (who wish to sell your company stock in a public offering, and because of the ceiling on the am ount you can pay thereby makes it difficult for its members to raise money for small businesses. This regulation is paragraph 2151.02 of the CCH NASD Manual (April, 1992), for those of you who are interested in reading about this little-known restraint.
I'm not critical of this. I'm only trying to say what happens. There are two sides to the issue of "consumerism": One is that consumers need protection since they can do little individually to protect themselves, but on the other hand politicians have seen consumerism as a way of obtaining votes by excessive regulation (and resulting destruction) of business, which has caused untold millions of jobs to be lost, without the public understanding that what the government gave on one hand (stronger consume r laws) the government took away on the other (jobs).
The public has not been able to put two and two together and demand a rational policy toward business, at least in NYS and NYC, which accounts for NYS and NYC being the worst places in the country for small business (and perhaps big business as well).
14. Minimum Capital Requirements
You may be interested to find out what is the minimum amount of capital you should have as a matter of law. The answer is that there is no specific dollar amount which is required for most businesses.
I'll take a moment to digress. There are some types of businesses which do have capital requirements, including banks (federal and state laws), stock brokerage firms (NASD and SEC requirements), proprietary schools (NYS Education Law and NYS Dept. of Edu cation, Bureau of Proprietary School requirements), and insurance companies (e.g., $750,000, required of title insurance companies, paragraph 6402, New York Insurance Law; and at least $6,000,000 for a life insurance company, paragraph 4202, New York Insu rance Law). This list of capital requirements in NYS is far from complete.
Even though most businesses don't have any explicit minimum capital requirements under law, there are the two doctrines that may cause a loss of the advantages of a corporation if it fails to have sufficient capital. One doctrine relates to corporations which are too thinly capitalized (i.e., inadequately capitalized) for the business in which they are engaged. If this doctrine is applied against the corporation by the courts, a person suing the corporation can pierce the corporate veil and go after the shareholders and obtain a judgment against them personally for the debts of the corporation. Walkovszky v. Carlton, 18 N.Y.2d 414 (1966), a New York Court of Appeals decision reaffirming the ancient doctrine, but see Gartner v. Snyder, 607 F.2d 582 (2nd Cir. 1979) which did not hold the shareholders liable when the only factor was that the corporation was inadequately capitalized. Piercing the corporate veil and holding shareholders personally liable does happen from time to time, and it is always some thing which a creditor could raise as an issue in court, if suing to collect money which is owed, making the lawsuit more expensive to defend, and more risky to defend from the defendant shareholder's standpoint.
The other application of the thinly-capitalized problem is for tax purposes, whether the corporation is or is not a sham, used merely for tax avoidance, since it is too thinly capitalized to engage in the type of business it is in. If this is so, the I.R .S. could argue that the corporation loses its surtax exemption, which effectively treats related corporation as a single corporation, with a higher effective overall tax rate, or that the shareholder is to be taxed at his/her own higher personal rate.
In spite of all this, I recognize that most persons starting out in business don't have enough capital to get going, and the whole argument of "thinly-capitalized corporation" is too academic to worry about. What is more important is whether you have eno ugh capital as you plan to run the business. Have you given yourself enough time to develop sales and income (such as a 1 or 2 year period), or do you assume that you will be breaking even in 1-2 months, which is most unlikely. What is more likely is th at you will start to receive gross income (and gross profits, which is your selling price less your direct costs for the product or service) within 1-2 months after you get started, but that you will not be paying all of your expenses out of this income ( or gross profit), and that you will continue to eat up your savings or capital for at least 1 year, perhaps 2, and longer (meaning that you will have to go out of business if your capital is insufficient to cover the deficiency for any extended period.
Thus, when you start a new business you will be running a race to try to get the business to a break-even status as fast as possible (including the amount of draw or salary you are taking), which stops the drain on your savings. You should be very caref ul in calculating your overhead and break-even figures, and determining how long it will take to reach break-even, and whether you have the capital to hold on. If not, you either need more capital, have to reduce your expenses, are tempted not to pay with holding or other taxes, reduce your draw or salary, or put off creditors by extending your time for payment of accounts payable from 30 days to 60 or more.
15. Raising Capital Is Easy
Generally, with one notable exception, it is impossible for small businesses to raise capital, unless the owner has sufficient assets to sell to raise the money (or mortgage as collateral to obtain a secured loan from a bank).
The one major exception to the rule that you can't borrow money to finance a new business is credit cards (and your bank overdraft privilege). You can borrow up to about $70,000 to $100,000 on your credit cards, if you have had the forethought of making out credit card applications at a time when you were gainfully employed by General Motors, NYC or some other solid company which pays you more than you deserve. With a good salary and a history of steady employment, you can obtain 10 or 20 credit cards, and have an aggregate borrowing power sometimes exceeding $100,000 as a result, which may be more than you'll need to start up your business.
Credit cards and ATM's have revolutionized the financing of small business in the United States (Note: France, in contrast, only allows one Visa card per person), and little is said about it. You should be aware of this, however, because it may well be y our only possible source for small-business, start-up financing.
You should also be aware that interest rates will vary from card to card and even within a single card. Rates can be from about 12% to 22%, and it would be wise to plan your credit card borrowings to borrow first from the cards offering the lowest intere st rate.
16. Bankruptcy and Insolvency Laws
If you get into financial trouble, you might have to file for bankruptcy. If you need a breather from eviction or a lawsuit which is nearing judgment (or even after a judgment is entered), you can file a voluntary Chapter 11 proceeding as a corporation o r a similar filing as an individual under Chapter 13, which will stop all litigation and eviction proceedings, and give you a chance to reorganize your corporate or individual business activities.
Also, you could try to reorganize your financial affairs under the New York State insolvency laws, which permit creditors to get together and compromise their claims with the debtor to receive less than the full amount of the obligation, often on a payout basis, which enables the debtor to remain in business by scaling down his/her debt. See the New York Debtor and Creditor Law, paragraph 15(14), composition with creditors, and paragraph 3, general assignment of assets for the benefit of creditors.
17. Sources for Assistance and My Small Business Group
It is tough getting good business advice for many reasons. Let me try to list the main reasons.
1. Competitors have no interest or time to give you good advice;
2. Competitors in fact might mislead you and even use their awareness of your financial problems to take away your customers through bad-mouthing you;
3. Persons who volunteer their advice may not have the skills you need;
4. It is not clear who is available to give you good advice;
5. You may not want to tell your accountant the gory details, especially if you owe the accountant money; it may cause him/her to cease having your business as an account;
6. Books don't provide the answer to specific problems you may have and may not be up to date;
7. Various other reasons too numerous to mention. On the other hand, for whatever it is worth, since 1964 the U.S. Small Business Administration ("SBA") throughout the U.S. has maintained a volunteer organization known as the Service Corps of Retired Executives (or "SCORE") which offers free consultation to small businesses, and a retired executive might be able to help you to some extent. Counseling is provided at the SBA offices, 26 Federal Plaza in Manhattan, 31st Floor (Room 3100) or on the premises of the businessperson being helped. Counseling la sts as long as it is needed or wanted. The telephone numbers of SCORE are 212-264-4507 (direct) and 212-264-4354 (through the SBA switchboard). This office has a volume of 400-500 calls or consultations per month.
Also, there are courses for small business owners, which presumably cannot focus in any great detail on your own business problems.
NYS has the NYS Department of Economic Development, Division for Small Business, at 1515 Broadway, 51st Floor, New York, NY, telephone number 800-782-8369 for hotline assistance. This agency will take information from a small-business caller and refer th e person to the nearest NYS Small Business Development Center for counseling or perhaps give the caller the telephone number for the local SBA/SCORE office. I suspect that this agency does far more referring that it does counseling. It has a volume of m any thousands of callers per year. A list of its services are in Appendix J hereto.
NYC also has an agency for economic development, NYC's Department of Business Services, with its only office at 110 William Street, New York, NY, 3rd floor, telephone number 212-513-6300. This agency helps persons who want to start up a business, and eve n tries to help them obtain the bond often necessary for doing business with NYC. The agency appears to have a variety of programs to help small businesspersons. This counseling, as with the other government agency programs, is free.
I doubt if you as a developing small businessperson could obtain any meaningful assistance from it. I say this because the agency as far as I can remember hasn't been able to come up with any good ideas. It seems to be just another governmental agency w hich issues salaries to the persons lucky enough to be able to claim they are required to report there every day. You might try calling the agency, however, to find out for yourself.
The real problem, as I see it, is that as a small business person you are on your own, with little more than biased or uninformed advice from friends, employees, associates and well-wishers who volunteer to try to help you solve business problems which th ey can't articulate.
Some persons will tell you that you are working too hard (and undoubtedly that observation is true); others will suggest that you give up, and stop beating a dead horse (which is hardly a solution to your business problem unless your problem cannot be sol ved); others will deter you because they don't want you to succeed (for fear that they will lose you as a friend, which they well might); and others will give you totally wrong advice because they want to help but really don't understand the problem (part of which may be their own relationship with you in giving you wrong advice).
The net effect is that it is difficult to obtain good advice, especially by a person who is versatile and experienced, and can understand and deal with your overall problem.
I have often thought it would be an interesting experience to have a group of businesspersons (which I will call the Small Business Group) meet regularly to talk over their problems and see if some answers can be obtained from the group. If anyone is int erested in trying this out (by participating without charge in the Small Business Group), please give me a call. My name and telephone number are on page 1 of this pamphlet.
18. Opening Your Bank Accounts
To be able to write checks in your business name, you will need to open another bank account, or at least order different checks which have the new name of your business. The bank will probably require that you give them a certified copy (or a copy of a certified copy) of an assumed name certificate (or partnership certificate, or certificate of incorporation), before it is willing to issue you new checks on an existing account, or open up a new account for a newly-created corporation or partnership.
Also, the bank will ask you for an Employer's Identification Number ("E.I.N."), which previously I told you how to get.
19. Compliance with Labor Laws
Especially because of the country's growing job and immigration crises, there is pressure on employers not to hire persons who are not permitted to be hired under law. A copy of the rules relating to the hiring of employees is set forth in Appendix K her eto. Basically, it is your obligation as employer to ensure that you have copies of documents from the employee proving that the employee can be lawfully hired. Thus, you should obtain a copy of the person's social security card and a copy of his/her gr een card, or a copy of proof of citizenship.
In addition, you will have to ensure that you are maintaining a safe workplace, and comply with laws designed to make the workplace a safe place for employees to work. Finally, you should know that you are obliged to pay employees on time, even if you don't have the money. New York Labor Law, section 191. Thus, it is a violation of law not to pay employees when their wages are due, and there is no excuse that you don' t have the money. I think these laws are overly tough, and are often violated, when employees do not receive their paychecks for several weeks, and hang in there to try to save the business for the employer. The employee is not allowed to waive this req uirement of payment on time, even to save the employer's business. Seidenberg v. Duboff & Davies, Inc., 143 Misc. 167, 256 N.Y.S. 17 (City Ct., Kings Co. 1932).
20. Auctions for Low-Cost Furniture & Equipment
Anyone starting out in business should know that he/she can buy virtually brand new furniture and equipment for 5% to 10% of the original price, and even less than that. This is done at auctions of companies which have gone into bankruptcy. These auctio ns are listed in the Classified Advertising section of The New York Times each Sunday, in the last several pages of such section, and you can see from the advertisements what items are going to be auctioned off. You can buy a perfectly good computer (IBM "XT" or "286" or clone, with monitor and software, for $25 to $250), fabulous desks, tables, chairs and other furniture for $5 to $25 each or more, a photocopier for $50 to $250 (much higher for the better, newer and faster models, of course), $500 for a telephone system (which will have a higher cost to install), and so on.
Auctions are worthwhile to follow and attend, if you can wait to make your purchases, and if you have the time to spend. You might delegate this function to your spouse or to an employee, and let such person get back to you to inspect the item before any bid is made. You must have at least 10% of the bid in cash or certified check at the time of the bid, and usually have to pick up the items you have won by the end of the day, paying the remaining amount in cash or certified check, including a sales tax of 8.25% in NYC.
Be careful that the auctioneer doesn't have you bid against yourself by pretending there are higher bids elsewhere in the room. There isn't much you can do about it, because either the auctioneer will apologize for his mistake, or one of the aides standi ng in the room will indicate that he made the bid for someone not there at the auction.
The best thing you can do is go in with a bid amount which you will stick with (i.e., not exceed), and follow your plan.
You will be bidding against professionals who have to resell the items for substantially more than their winning bid, so that you can beat any dealer because you are not buying the item for resale. The real problem is that there may be non-dealer persons like yourself at the auction who don't know the value of an item, and may bid too much, causing you to bid too much to win the bid. So be careful. Go to a few auctions and get the feel for auction prices and procedures.
21. Avoiding NYC Occupancy Taxes
NYC has an outrageous business occupancy tax (i.e., commercial rent tax) by which a person in business who rents space from a building owner has to pay a percentage of his rent each month as a tax to NYC. What makes this tax so outrageous is that a busin essperson who owns the real estate in which he does his/her business does not have to pay the tax.
Real estate taxes have nothing to do with the problem. Whatever property is involved, if it is occupied by the owner, the owner pays the real estate taxes; if the property is occupied by you or some other business tenant, then you or the business tenant will pay the real estate taxes, either directly (as part of your lease agreement) or indirectly, with the landlord building such amount into your monthly rent.
No, the occupancy tax in fact is paid only by the tenant, and over and above the real estate taxes which he/she also pays with respect to such rented space.
The way to avoid paying this is either to own your own space, such as by purchasing a cooperative or condominium unit, or by renting space for business for which the rent (including electricity and maintenance charges) are less than $916.67 per month (1/1 2th of $11,000). Any combined rent for less than this amount is exempt from the NYC occupancy occupancy tax. You should try to have the real-estate tax obligation separately stated, which might pull down the stated monthly rent to an amount below the ma gic figure of $916.67, and in any event would reduce your occupancy taxes if the monthlly rent is more than $916.67 anyway, because you would not be paying the occupancy tax on the real-estate tax if it is separately stated in your lease.
These odious taxes hopefully are going to be repealed, but they are one of the main complaints by businesspersons in NYC.
Many small businesses in NYC are on the verge of failure, particularly because the commercial rents are so high, and the requirement to pay a 7%-10% surcharge on commercial rent is an outrage, and destructive of small business. The amount may not seem li ke much, but it is 7%-10% more than a competitor pays who owns the real estate in which it has its office. This disparity is most unfortunate and hits the smallest businessperson only, the one who has insufficient funds to own his/her own real estate. I f you have any questions, call the NYC Department of Taxation - Taxpayer Assistance Service, 25 Elawmall Street, Brooklyn, NY telephone number 718-935-6000.
One final note, if your commercial rent is less than $916.67 per month ($11,000 per year), you still have to file the occupancy tax form, or be subject to an annual penalty of $100 for non-filing.
22. Inspections and C of O's
Some types of businesses are required to have inspections by the Fire Department and the NYC Board of Health. These inspections are required before a proprietary school is licensed.
Also, the Fire Department goes around to inspect refrigeration equipment, and collect a fee in the process. Then, there are the fire extinguishers, which must be inspected and recharged periodically, for a fee. If the tag does not have a recent inspection date, the Fire Department will issue you a "summons" or "violation" requiring you to appear in court and w aste a day of your time (worth perhaps $1,000 to you) so that you can pay NYC a $20 fine. Then, there is the requirement that your building have a Certificate of Occupancy (or temporary certificate of occupancy) issued by the Buildings Department in NYC before you are permitted to occupy the premises. The premises have to be inspected by diff erent types of Buildings Department inspectors, and when they finally get together and give their approval, the Certificate of Occupancy will issue. This procedure has to be done through if you are going to make any changes in the premises. You will hav e to have plans prepared and filed by the architect, showing exactly what changes you propose to make to the real estate; then the approval is hopefully received for such proposed changes; and then the contractor does the work; then the Buildings Departme nt inspectors come in and verify that the work complies with the original plan as filed. After the work passes the inspection(s), the Temporary Amended Certificate of Occupancy is issued, and years later, maybe, a Final Amended Certificate of Occupancy w ill issue changing the type of use for such floor of the building.
All of this amounts to money and delay. One way to reduce the delay is to pay money to a person called an "expediter", who through his/her knowledge of the NYC Buildings Department and its personnel and procedures, can push or "expedite" your papers thro ugh the Buildings Department and obtain approvals faster than you could obtain otherwise. I see some possible sources of trouble in any system in which you can obtain faster government action by making special payments, but this is how the system works. Also, I might add, that many inspectors from the NYC Buildings Department have been arrest ed in the past for accepting bribes for doing the work they are required by law to do.
23. Hiring Employees
Let's set aside the issue of whether you are permitted under law to hire a specific applicant, and assume that we are talking now only about qualified applicants.
Do you want to hire any employees at all?
My answer may surprise you.
I would opt for no employees at the outset, if you can possibly avoid having employees.
The reasons are: (i) it takes time and money to find employees; (ii) small-business employees know very little and have to be trained, which is costly and time-consuming, and often leave before the employer gets any decent payback; (iii) payroll taxes are not only a time-consuming nuisance, but they progressively add up to a serious liability for the employer when not paid on a timely basis; (iv) employees often steal; (v) employees are often not reliable; (vi) employees take 2-20 times the time it would take for me to do most of the jobs they do except deliver envelopes; (vi) employees have to be paid more than they are worth to me because I cannot use all of their time effectively (it takes time for me to create work for someone else, and especially for an untrained employee, and this often results in numerous hours per day and sometimes days per week in which an employee has nothing to do except personal things, which then causes the employee to develop bad habits; (vii) low-end employees are not relia ble and cannot be counted on to come to work, or to come to work at the right time (and they rapidly learn to come to work at a time when they can expect you to be gone, so that they have no one to direct them); (viii) employees seem to have a tough time in maintaining a list of what I want them to do, so that the employee does nothing until told to do something and watched over until the work is done; (x) employees cause enormous paperwork for the employer which is far out of line with the value of the e mployee to the employer. I can think of various other reasons not to hire any employees, such as that employees want benefits (which most small new businesses don't have even for the owner), which causes them to always be looking for a "better" employer.
You should try to structure your business so that persons are paid for what they do, and this is difficult, but in the area of sales it is common. For matters other than sales, you might want to have accountants do accounting work for a fee; lawyers do l egal work for a fee; secretarial services do secretarial work for a fee (but be careful not to step over the line and call an actual employee an independent contractor when the person is not, because of the tax liabilities involved for not collecting and turning over to the tax authorities any withholding taxes on your payments to the secretary.
There are services which provide temporary workers and become the employers of record, but I find that the persons are not very versatile, and that the charges are way out of line for the benefit I receive; and there is always the problem that the tempora ry worker doesn't know your business and will be answering your telephone and not know what to say. It would be better to have your telephone answered by a telephone answering machine.
Anyway, I hope I have given you something to think about. Government has made it too difficult for small business to hire employees. I am trying to cure this by proposing that the federal government enact a law which would adopt the meaning of my slogan "The 1st Three Are Free!", which means that there should b e no laws at all relating to the hiring of the first 3 employees by any business, and to require the employee himself/herself to go down to the U.S. Post Office and do any reporting and payment which may be required. Thus, the small business would be put on a pay-as-you-go basis with respect to withholding taxes (when you pay the full salary to the 3 employees each week), and be removed from the requirement of reporting and paying taxes as to the first three employees.
If this were adopted, there would be a major expansion of employment because it would then be possible for small business to use employees profitably. As it is right now, there is very little reason for a small business to want to hire any employees unle ss they really have to have them.
24. Protection of Your Ideas
Your new business will be based on your ideas. You might be wondering how you can protect your ideas. Without attempting to be complete, you should consider the following ways (many of which will require you to use an attorney):
1. Patent protection;
2. Design patent protection;
3. Copyright protection (including the use of "work-for-hire" copyright protection);
4. Federal trademark and servicemark protection;
5. State commonlaw and statutory protection of trademarks and servicemarks;
6. The federal and state laws prohibiting unfair competition;
7. Federal Lanham Act, which prevents a competitor from falsely designating the origin of a product or service;
8. By contract, a provision (secrecy agreement or agreement to hold in confidence) requiring the employee to hold certain business information in confidence or in secret and not to divulge or use it for himself/herself or any third person;
9. By contract, a provision prohibiting the employee from competing for a period of, say, 3 years from the date of termination of the contract, within a range of 10 miles from the employer's place of business;
10. By contract, a provision requiring that any know-how, inventions or improvements of the employer's business belong to the employer;
25. Postal Bulk-Mailing Permit
If you plan to use any bulk mailing, which is direct mail at a reduced postage rate, you will have to obtain a bulk mailing permit from the United State Post Office. Each borough has one office at which you would apply for such a permit, and you only nee d one permit, to be renewed each year. You go to the Mailing Requirements Section of the main post office in any borough, and fill out the forms to apply for the bulk mail permit, and you will receive the permit and a bulk mailer's number. The bulk-mail fee is $75 per year. You can cut your postal costs by about 10 cents or more per letter using a bulk mail permit, but you may not have enough volume of direct mail to warrant the added time and delay which the use of bulk mailings entails. The telephon e number of the Mailing Requirements Section of the main Post Office in New York, New York is 212-967-8585 (select menu for business mail, other).
26. Postage-Meter Licensing
One of the things which I can suggest to you to save money is not to use a postage meter, at least when your business is small. The reason is that there appear to be only three manufacturers of postage meter machines, each of them having an agreement wit h the United States Post Office (as any additional postage-meter manufacturer would have to have as well) requiring that the user of a postage-meter machine license the operative meter itself, which is an integral part of the overall postage-meter machine , from the manufacturer, which charges a hefty quarterly fee (ranging up to several hundred dollars or more, depending on usage. This fee of several hundred dollars (or more) each quarter is a royal pain in the butt, particularly when the usage is minimu m, which substantially adds to your postage costs. But there is more hassle to come.
One such hassle comes when you fall behind in these payments, as small businesses are apt to do, which causes someone to come in to take the meter away (even though you thought you bought the meter at a cost of several hundred dollars or more), to ensure that you pay the money owed to the postage-meter company. Also, you will be getting periodic visits from the postage-meter company (mandated, I guess, by its contract with the U.S. Postal Service) to actually inspect the meter of the machine for the amou nt of postage which has used by you during the period dating from the last such inspection, with appropriate records being taken by the postage-meter company, which results possibly in an increase in the amount you will owe the company if for some reason your prior voluntary disclosure of the amount of postage used turned out to be inaccurate. Then, there are the additional billing items by the postage-meter company for late fees and possibly interest, all of which makes up one useless package of trouble (consisting of unnecessary time, expenses, and hassle) for the dubious privilege of using a postage-meter impression or postage-meter stamp instead of the good old U.S. sick-em-on postage stamp which I have now used for the past 20 years, after going thr ough all of the above hassles for years. I had paid $5,000 for my postage-meter machine, and always resented this obsolescence which it underwent because of these hassles and my (excellent) decision to throw the bums out.
So far, I've said nothing about the involvement of the U.S. Postal Service. It plays an additional role in the overall hassle, which is that every time you want to buy more postage, you either have to go down to the Post Office with the meter in hand (ac tually, you have to remove the meter and place it in a carrying case, which also contains the records for use of the meter and take the whole case with you to the Post Office) and then wait in a special line for a technician of the U.S. Postal Service to snip the wired seal and dial in the amount of your postage purchase, and then fill out the records to show how much you have used by this date, how much you have left, and how much you have just purchased. Then, the technician seals the machine back up a gain, takes your money, issues you several receipts, including one which is tucked into your meter book, and you then are on your way back to your business, wondering how much business you have lost during the past 3 hours. The Postal Service will also make an appointment to reset the meter, or come on regular schedule, both of which plans are difficult for the small-business owner (especially if he/she has no employees), because you either choose to lose 2-3 hours going to the Post Office yourself, or more than that waiting in your business, when you want to be somewhere else, for the Postal Service meter man to arrive.
The solution is easy. Just don't use any postage meters, and buy stamps instead. If you have employees, you should set up some system for inventorying the stamps otherwise you might lose some of them. Or you might try hiding all but a limited number of stamps, and replace the inventory when necessary from your hidden supply. By limiting the number of stamps available at any one time, it will become more obvious when stamps are stolen. You'll be replacing inventory more quickly then your actual use of postage warrants. Also, don't forget to obtain 2 types of postal scales to save on postage: a small scale (up to 1-2 pounds) and a large one (1-10 pounds or more).
Just for the record, in case I haven't convinced you, the 3 companies which manufacture and lease or sell postage-meter machines (and are required to lease the meter itself to you under the terms and conditions described above) are: (i) Pitney Bowes, 1 Pe nnsylvania Plaza, New York, New York, telephone number 1-800-322-8000 for information; (ii) Friden Neopost, 1250 Broadway, New York, New York, telephone number 212-971-0011 for information; and (iii) Hasler postage meters (sold in NYC by various dealers i ncluding Atlantic Business Products, 134 W. 26th Street, New York, NY 212-741-6400. Some or these meters can be licensed to use for UPS shipping charges, as well.
27. Franchising - Both Sides
You might be interested in franchising from one of two perspectives, both of which are regulated by the same laws. You might be interested in purchasing a franchise. New York General Business La w, paragraphs 660-695, and federal law, 15 U.S.C. sections 41, et seq. (the Fede ral Trade Commission Act), and 16 C.F.R. paragraphs 436.1, et seq. (the FTC's Fr anchise Disclosure Rule), regulate the offering and sale of franchises, and you should have your lawyer review any proposed franchise you may be thinking of purchasing. Purchasing a franchise is purchasing a ready-made business (hopefully), but many of t he franchised business opportunities are not as ready as you might think, and the franchise agreement can leave you with few remedies for any breach of contract, particularly if you are required to resort to arbitration. My experience with franchise arbi tration requires that I warn you that the rights supposedly spelled out in your franchise agreement may not be enforceable, because of incompetence of the arbitrator(s), a predisposition by them to hold for the party which is bringing in the arbitration b usiness to the money-charging tribunal (i.e., the franchisor who puts the arbitration clause in thousands of franchise agreements), and the fact that the franchisee can easily be in default by non-payment or attempted late payment of royalty fees which is grounds for termination of the franchise agreement, which destroys your business. You have no such hold over the franchisor to take some act under the agreement to destroy its business, which puts you at a major disadvantage. You could, theoretically, bring a class action, but the courts would probably throw it out because of (i) the arbitration provision itself, requiring you to arbitrate rather than sue, and (ii) the fact that fraud is often or sometimes held to be not a proper matter for class actio n treatment because the fraud may affect each franchisee in different ways. Then there is the one-sided ability of the franchisee to go into court, after terminating your franchise agreement for whatever reason, to obtain an order prohibiting you from an y further use of the franchisor's name and trademark, which may effectively put you out of business, even though you cannot bring a countersuit against the franchisor in the same (or any) court, due to the arbitration clause in the franchise agreement.
So, in light of these and many other problems, let a lawyer look over any franchise (meaning the franchise agreement and related papers) you are thinking of buying, so you can have the gory details spelled out to you.
Also, remember that some franchisors are selling franchised businesses which have little history and often little hope for any success by you, the franchisee. You are stuck out there alone (when the franchisor stops giving you its franchise services), bu t you will be asked to continue paying about 7% of your gross sales to the franchisor. That 7% is a lot of money for nothing, and may well be the only profit which can be made out of the franchise, which you are being asked by franchise agreement, to tur n over to the franchisor.
Now, the other side of franchising is whether you have a business (sometime after it is developed) which is worthy of franchising as a turnkey business to persons here in NYC or elsewhere in the United States or beyond.
If you have a business which can be franchised, you have the ability to raise money for yourself immediately by selling franchises, and you obtain the self-interest of the franchisee to watch over "your" business interest and make it prosper, without havi ng to have such person or his/her employees on your payroll. If everything works out, you can have a royalty of perhaps 7% on all monthly sales of each franchise coming in to you each month. If a typical franchise has $360,000 in annual sales (or $30,00 0 per month) after any returns (and I'm just taking these numbers out of thin air), you could expect a check of $2,100 each month from each franchisee, which could add up to a hell of a lot of money if you had hundreds or thousands of franchisees. Some o f this money, of course, has got to be put back into the business through appropriate national or regional advertising to give support to your franchisees, and into product and service development, to ensure that your franchisees remain competitive.
The things which I look for in a franchise is (i) a strong trademark, to attract business to each franchise; (ii) an advertising, publicity and other marketing program which can be expected to result in business for the location under consideration; (iii) favorable statements from franchisees selected at random by me and not the several franchisees who have been named voluntarily in the original sales materials given to me (or my client) to initiate the franchise offering process (because these franchisee s are successful and happy doesn't mean that there are not hundreds or thousands of others who are disappointed, miserable and failing in their franchise businesses); (iv) I am not rushed into considering the franchise offering without the aid of a lawyer (some franchise sales companies try to discourage the use of a lawyer because they tend to be deal killers, often for good reason, and sometimes without good reason, I am sure; (v) there is a need for the underlying product and service; (vi) the underlyi ng product and service is of high quality (which of course in the case of services, is going to be what the franchisee is going to have to maintain, but his/her ability to do so might depend on the level of information and support which is received or ava ilable from the franchisor; (viii) there is sufficient territorial protection given to the franchisee so that he is not killed by the competition of another of your franchisees; (viii) the price and terms are right; and (ix) a most vital concern, that the location is suitable (remember the first 3 rules of business, which is Location, Location and Location).
Your lawyer can help you with this. But you must take the time to ensure that your business can be sold to others for use in other locations. Look at my factors i-ix in the preceding paragraph and see if this is the case. There are other factors, of co urse, and you should try to analyze what they are, and how they apply to your idea.
Look around to see what types of businesses are being franchised successfully. You may be surprised. Century 21 real estate is a franchise, made up of otherwise unrelated licensed real estate businesses throughout the United States and possibly beyond. Allied Van Lines is also a franchise, made up of otherwise unrelated long-distance moving companies, which use the power of nationwide advertising by the franchisor (coming out of the franchisees' royalties) to produce business for all. Each C-Town Supe r Market in NYC is a franchised store.
What ideas are there left for franchising? A lot of ideas I would suspect. Let's think of some. For one, remember what I said above about licensing buildings to use a trademark. You could make this into a franchise deal. You could take shoe-repair bu sinesses (as I believe someone has done already) and turn them into franchisees, to take advantage of a strong trademark such as "Drago Shoe Repair" (which I think but am not sure is a franchised or licensed trademark as to some locations at least). How about coffee shops, which are the newest rage in NYC. You could create a strong trademark out of one very successful coffee shop, and then license others to use your name. Consider Hard Rock Cafe, Planet Hollywood and Harley Davidson Cafe (all located w ithin several blocks of each other in the area surrounded by 56th and 57th Streets and Sixth and 8th Avenues in New York, New York). If they are not being franchised in other cities, they easily could be. What about combining all three into a single fra nchise, and let the customer take his pick as to which of the 3 different rooms or areas he would like to go? This would enable a franchise to be sold in smaller cities which might not be able to support the 3 competing franchises.
28. Offering Securities to Raise Capital
If you plan to raise capital for your business by the offering of shares of stock, bonds, preferred stock or other interests in the business (all of which are called "securities"), you cannot do so lawfully without compliance with various federal and stat e statutes, rules and regulations governing the offering of securities (securities and blue sky laws). The federal laws generally are the Securities Act of 1933, and the rules and regulations thereunder; and the New York State law, sections 352-359 of th e New York General Business Law.
I'm not going to take the time to develop this complicated subject in this pamphlet, but I am warning you in advance, not to make any offers to anyone at all to raise money for your business without first consulting a lawyer who known about the federal an d state securities and blue sky laws.
If you fail to heed this advice, you may have to give back all the money, with interest, and defend yourself in one or more suits civil or criminal actions, and wind up with an injunction against you, among other horrible possibilities. There are "exemptions" which you can take advantage of, which will permit you to try to raise capital for your business, without the necessity of any formal registration statement, offering circular or substantial filings with any government agency (such as the Securities and Exchange Commission and the New York State Bureau of Investor Protection and Securities, which is part of the New York State Attorney General's Law Department). An experienced securities attorney can tell you what to do.
You can get information from the Securities and Exchange Commission in NYC by telephoning 212-748-8000 (Public Reference Room); and the New York State Attorney General's office in NYC, Department of Law, Bureau of Investor Protection and Securities, 212-4 16-8185 or 212-416-8222. You are better off reading this material before talking with a lawyer, to save a lot of the attorney's time and costs to you.
29. Environmental Inspection and Concerns
When purchasing a business, you should be aware that there is a developing area of law which holds the owner of real estate civilly and/or criminally responsible (even if he/she didn't do anything) for the costly relating to the cleanup of toxic waste sit es on the property. You should ensure by an environment inspection and certificate that you are not buying into such a disaster. Old gas station sites and old chemical plant sites are two of the main types of disaster-potential properties which you shou ld avoid buying, at least without carefully checking into their environmental status. Banks won't even foreclose on some properties (such as gas station sites) for fear that they will be held responsible for the costs of cleaning up any gasoline or oil which may have been absorbed into the ground, either through storage tank leakage, or du e to employees dumping motor oil into the back of the gas station as part of daily "clean up" activities.
The costs of defending these civil and criminal suits for clean up costs can amount to hundreds of thousands of dollars, and the cost of clean up itself can range into the millions of dollars (even tens or hundreds of millions of dollars). So remember th is. If the phrase "environmental problem" or "possible environmental difficulty" or the like appears, run as fast as you can away from the deal.
30. Vehicles: Licensing, Parking
Any vehicles you use in your business should obviously be licensed, and you should place in your calendar all dates by which your own driver's license is to be renewed (which will be on or before your birthday every 2 years; the date by which your vehicle must be inspected, and the date by which the vehicle must be re-registered. If you have changed addresses, you may not get any notice from the NYS Department of Motor Vehicles (because of a policy not to forward mail), and you will fail to get the notic e for each of these 3 types of renewals, and only find out too late from a policeperson that you are driving with an expired license in an uninspected and unregistered motor vehicle, which might be enough points to cause you to lose your license, and you will certainly spend several days or more trying to contain the problem, including the reinstatement of your insurance which will be automatically cancelled by your insurance company upon learning that your registration has been cancelled or not renewed.
So, take my advice, and immediately determine these (i) dates for renewal of the driver's licenses of you, your spouse and any driving employees; (ii) dates for renewal of the registration of each of your vehicles; and (iii) dates by which each vehicle is to be re-inspected.
The NYS Dept. of Motor Vehicles maintains various offices throughout NYC and NYS, and most of them can get you through in about one hour or less, which is a change from several years ago, when you could expect to spend at least 4-5 hours waiting in variou s lines. The telephone number of the Motor Vehicle Dept. at 40 Worth Street, New York, New York for information is 212-645-5550 (7:30 am - 5:30 pm, Mon-Fri). As to parking, all commercial vehicles are to be parked off the road by 6:00 p.m. each day, to enable owners of cars to park their cars overnight along the roadside curbs. To increase the misery of commercial vehicle owners, NYC has a 14% sales tax appli cable solely to parking-lot charges in NYC.
NYC offers a rebate of part of the 14% (14% less the regular sales tax rate of 8.25%) to motorists who certify to NYC that they use their vehicle solely for non-commercial use. If I were you, I would not attempt to get the refund, because some or most of your motor-vehicle use will relate to business, and at income-tax time you will be deducting a variety of car expenses which will show that you defrauded NYC when applying for and obtaining a refund as to part of the NYC parking sales tax. NYC cross che cks these two tax forms to find inconsistencies, and bring in more money to NYC as a result. Don't be fooled by NYC's offer to refund part of the parking sales tax.
31. Advertising Rules Prohibiting Fraud
Throughout your business career, you should be mindful of the rules which prohibit false and misleading advertising. You don't have to read any rules to know that you should not employ false or misleading advertising. There are various laws prohibiting false and misleading advertising, including the NY General Business Law, the Federal Trade Commission Act, the federal Lanham Act, various other statutes, and the common law.
You may not think something is false or misleading, and you should have someone (such as a lawyer) look over your proposed advertising to be a devil's advocate. Is it fraudulent for a major daily newspaper to say "All the News that's Fit to Print". The answer is apparently "No". This is obvious "puffing" which the reader knows is not true. What about a landlord offering apartments in his building advertising that "All violations have been removed", when in fact there are violations which have not yet b een removed? Or what about the situation where the violations have been corrected by the owner but the NYC agency in charge of violations has not yet removed the violations from the database? I hope you can see that "fraud" is sometimes difficult to det ermine, and you should be careful in your advertising, for fear of making statements which some persons might consider to be fraudulent.
So, have a lawyer or someone else with appropriate knowledge review your advertising copy before you use it. You might save yourself a lot of time, cost and embarrassment if you do.
32. A Warning about Your Overhead
I have said at different places in this pamphlet that you should keep your overhead low. The reason, I'll state again, is to give you more capital to reach the point at which you have enough income (and gross profit) to cover your overhead, which is the "breakeven" point for your business. If you spend too much of your small amount of available savings or capital needlessly, you will run out of money before you reach this critical breakeven point, and be forced out of business even though your business is "successful" in other respects. Capital shortage would be the cause of your bankruptcy, and not because your business was no good. Most businesses are under-capitalized, and you can do something to reduce this problem by not spending any money at all which is not necessary to spend, especially when the expense is on a recurrent basis (such as with postage meters, high rent, occupancy taxes, unnecessary employees, unnecessary supplies purchased by thoughtless employees who want to decorate "their" des ks with useless gadgets while waiting for something to do).
33. Low-Cost Start-Up Location & Office in Your Home
You should choose a good location for your business, depending on whether or not you need walk-in business, as you would in you were a store front retail operation. If, on the other hand, you are providing some type of service (such as guards), you could easily be tucked away in the top floor of an old tall building in NYC and probably lose no customers, since none of them would see your premises anyway.
If I were you, I would give a lot of thought to the place from which you plan to conduct your business, especially at the outset, and try to avoid committing yourself to an expensive long-term lease unless you really have to, and even then I would say you probably shouldn't sign the lease.
You should try to keep your overhead (including occupancy taxes) as low as possible during the time you are trying to get your business started, and I would rather see cash in the bank which gives you power in business, than cash in the landlord's bank ac count, with you unable to do the things necessary to get your business to the breakeven point. I urge you not to go for "show" if you can avoid it, but go for the conservation of cash, by keeping your rent as low as possible (and especially below the amo unt at which you would have to start paying occupancy taxes to NYC).
Also, I urge you to consider using your own home or apartment as your office as long as possible, to pay no rent during the time that you are trying to start up your business. It is possible; more and more people are working from their homes; even the bi g companies are eliminating office space (such as IBM, which now has thousands of employees when they do choose to come in to the IBM office in Armonk NY, I believe, being assigned for the day whatever office may be available that day). However, don't ta ke the value of the home or apartment space which you allocate to your business as a deduction for any type of tax purposes, because this immediately sets off an I.R.S. warning system which will have it checking into the rest of your tax returns for other suspicious items. Therefore, forego the tax deduction even though it is totally legitimate.
You can successfully use your home or apartment to get started in many types of businesses in which your contacts are by mail, fax, federal express or telephone, and only an occasional meeting in your home "office", and most meetings are held by you in th e field, outside of your home office. The next step above a home office is an inexpensive office which may be cramped and far less attractive than an office rented by General Motors, but the price is often right, and you can obtain low-rent offices of this type for somewhere between $500 and $1,000 per month in Manhattan, which might be an important borough in which to have your office address.
Of course, there are companies which will allow you to rent tiny office space from them in nice-looking offices, who will have a receptionist, telephone operator and secretarial and fax services for you as well, for a price. But you will probably wind up paying more than the $500 to $1,000 per month, and still have an obvious which is obviously not yours, defeating your purpose at the outset.
So, think very carefully, and keep your rent down to a minimum or nothing, until you are ready to move into better offices, once your business is taking off (with significant sales of fully developed products and services) and you really need additional s pace to conduct your business (such as for space to permit you to hire needed employees). At that time you should consider Location, Location, Location.
34. Insurance & Bond Considerations
When starting a business, you should consider the types of insurance you should have, especially if you are going to use a sole proprietorship (with its personal liability of you, the owner):
1. Motor vehicles used in the business by the owner or any employees;
2. Workmen's compensation and disability income insurance;
3. Liability insurance to protect you from any personal injury claims (such as customers falling down and hurting themselves on your premises), including the costs of defending yourself;
4. Product liability insurance, to protect yourself from claims for personal injury resulting from any claimed defects in the products made or sold by you, including the costs of defending yourself.
5. Fidelity insurance to cover any of your employees who have an opportunity of stealing from you.
If you plan to enter into contracts with government agencies directly, or indirectly by subcontracting, you will have to post bonds which guaranty the performance of your work. These bonds can be costly and prohibitive, and probably should be substituted with some other means for qualifying persons to contract with government or with main government contractors (such as by having the government pay for an overall bond).
35. Useful Telephone Numbers
You might find useful the following telephone numbers:
NYC Department of Business Services, with its only office at 110 William Street, New York, NY, 3rd floor, telephone number 212-513-6300.
NYC Economic Development Agency, 212-826-6100 or 800-782-8369 (for hotline assistance).
NYS Small Business Development Center, at Pace University, Pace Plaza, (on Nassau Street, near the Brooklyn Bridge), New York, NY 10038, 212-346-1899.
NYS Economic Development Agency, at 1515 Broadway, New York, NY, telephone number 800-782-8369.
US SBA Service Corps of Retired Executives (SCORE), 26 Federal Plaza in Manhattan, 31st Floor (Room 3100), 212-264-4507 (direct) and 212-264-4354 (through the SBA switchboard).
Business, Name and Idea Protection Related:
Trademark searches, CompuMark U.S., 800-421-7881 or 301-907-9600 (in Bethesda, MD).
Trademark and copyright searches, Government Liaison Services, Inc., 800-642-6564 or 703-524-8200 (in Arlington, VA).
US Copyright Office, general information, 202-707-3000, or write to Copyright Office, Library of Congress, Washington, DC 20059.
US Patent Office, 24-hour trademark and patent information line, 703-557-4636 (with live operator from 8:30 am to 5:00 p.m., Mon-Fri). or for help dial 703-557-7800.
Incorporation and Regulation Related:
NYC Dept. of Consumer Affairs, 42 Broadway, NY NY (very difficult to reach by telephone), 212-487-4444 (information, menu-driven, with little expectation of talking with any human being).
NYS Department of State, Division of Corporations (for corporate filings), in Albany, 518-473-2492 County Clerk's Office, NY County (business certificate filings)
Post Office Numbers:
Bulk Mailing Permits, Mailing Requirements Section, main post office in New York, NY, 212-967-8585 (Menu for Business Mail).
Customer Assistance, 212-967-8585. Postage rates, Postal Answerline, 212-330-4000 (a menu-driven service).
Zip Code Information, 212-967-8585
Friden Neopost, 1250 Broadway, New York, New York, telephone number 212-971-0011 for information.
Hasler postage meters (sold in NYC by various dealers including Atlantic Business Products, 134 W. 26th Street, New York, NY 212-741-6400.
Pitney Bowes, 1 Pennsylvania Plaza, New York, New York, telephone number 1-800-322-8000 for information.
NYS Attorney General, Department of Law, Bureau of Investor Protection and Securities, in NYC, 212-416-8185 or 212-416-8222.
US Securities and Exchange Commission, New York, NY, 212-748-8000 (Public Reference Room).
IRS tax forms of all types, 1-800-424-3676, including SS-4 (Application for Employer Identification Number). IRS (Long Island, NY office) to obtain immediate issuance by telephone (on an emergency basis) of a new Employer's Identification Number, telephone number 516-447-4955 (but only between the limited hours of 8:30 a.m. to 10:00 a.m.)
NYC Department of Taxation - Taxpayer Assistance Division, 25 Elawmall Street, Brooklyn, NYC general corporation tax, NYC unincorporated business tax, NYC occupancy (commercial rent) tax, NYC commercial motor vehicle tax, telephone number 718-935-6000.
NYS Dept. of Taxation & Finance (sales tax applications), in Albany, 800-225-5829 (menu "3").
NYS Dept. of Taxation & Finance (sales tax application forms only, Form DTF-17 1/92, "Application for Registration as a Sales Tax Vendor"), in NYC, 212-383-1352 or 1353 (located at 27 Cedar Street near 80 Maiden Lane, and difficult to find; call and they will mail).
NYS Motor Vehicle Dept., 40 Worth Street, New York, NY, for information, 212-645-5550 (7:30 am-5:30 pm, Mon-Fri).
36. A Final Word
There are a lot of things for you to consider, and many things for you to avoid, when you start a small business in NYC or elsewhere in the nation, for that matter. Deal with these things thoughtfully and carefully, on a businesslike basis, and you will increase your probability of business success. Good luck!
Appendix of Forms
A. Certificate of Assumed Name for (a "d/b/a" for a sole proprietorship)
B. Certificate of Incorporation
C. Letter to Secretary of State (accompanying certificate of incorporation)
D. Reserving a name for your business
E. List of all businesses required to be licensed by the NYC Department of Consumers Affairs
F. Occupations required to be licensed under New York Law
G. Reserving a trademark
H. Application for Employer's Tax I.D. No.
I. Application for Sales Tax Certificate of Authority
J. List of services provided by the NYS Dept. of Economic Development
K. Federal rules relating to the hiring of new employees
Carl E. Person, attorney
325 W. 45th Street - Suite 201
New York NY 10036-3803
Tel: (212) 307-4444
Fax: (212) 307-0247
For the c.v. (resume) of Attorney Carl E. Person, click on Carl Person C.V.
Copyright © 1994 by Carl E. Person - Permission is given for non-commercial users to send a copy of the data processing file for this work by electronic means to a specific individual for his or her own use, and then only if the entire file is sent, including this copyright notice, but no permission is given for anyone to copy or transmit this file for or to any person for public viewing or downloading. It is intended by the author of this work that the work shall be made available in electronic form only through LawMall.