Download How to Start and Operate Your Own Design Firm, : A Guide for Interior Designers and Architects PDF

TitleHow to Start and Operate Your Own Design Firm, : A Guide for Interior Designers and Architects
PublisherAllworth Press
ISBN 139781581156331
Author
LanguageEnglish
File Size1.5 MB
Total Pages257
Table of Contents
                            Title Page
Copyright Page
Table of Contents
Preface
Acknowledgments
PART 1: Making the Decision
	1 SO YOU WANT TO START YOUR OWN DESIGN FIRM?
	2 FACING THE HARD QUESTIONS
PART 2: The Reality of a Start
	3 INVESTING IN YOURSELF
	4 VISION AND GOAL SETTING
	5 FINANCIAL CONSIDERATIONS
	6 BANKING CONSIDERATIONS
	7 MARKETING CONSIDERATIONS
	8 LEGAL CONSIDERATIONS
	9 INSURANCE CONSIDERATIONS
	10 OFFICE AND EQUIPMENT CONSIDERATIONS
PART 3: Getting Down to Business
	11 DEVELOPING PRELIMINARY BUSINESS AND MARKETING PLANS
	12 FEAR, RISK, AND GUILT
	13 SUCCESS
	14 THE FUTURE
Recommended Readings
Appendix A: Sample Design Proposal
Appendix B: Glossary of Accounting Terms
Appendix C: Glossary of Legal Terms
Appendix D: Glossary of Banking Terms
Appendix E: Glossary of Insurance Terms
About the Author
Index
                        
Document Text Contents
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LEGAL CONSIDERATIONS �


115

Sole Proprietorship
A sole proprietorship is the simplest form of business. The company is you
and you are the company. In many cases, the only legality of this form of busi-
ness is filing the appropriate tax returns. You must pay a quarterly estimate
of your income tax and social security (self-employment tax), and you must
retain all records of the business’s transactions.

The following are advantages of starting as a sole proprietorship:

Ease of formation
Low cost of registration and legal expense
Lack of complexity
Simple decision-making process
Sole ownership of profits
Ease of termination or sale of the firm
Flexibility

The following are disadvantages:

Unlimited personal liability
Less financing capacity with lenders (banks)
Unstable duration of the business owing to owner’s illness or death
Sole decision-making
Taxation on profits at certain levels
Limited business deductions

Unlimited liability is no doubt the biggest disadvantage. Many sole proprietors
transfer title of their personal assets to their spouses to protect themselves from
business liabilities! Another major disadvantage is that banks doubt the stability
of sole proprietorships, since their success rests on one key individual. Finally,
unlike corporations, sole proprietors may have tax challenges in taking the
costs of automobiles, health insurance, and charitable contributions as business
deductions. You need to verify all aspects of the business law in your state about
this form of business before you commit to it.

Partnership
A partnership is a written or oral agreement between two or more parties to
carry on a business. In a partnership, each partner contributes capital, services,
and assets to share in the business’s profit or loss.

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� HOW TO START AND OPERATE YOUR OWN DESIGN FIRM


116

An important issue in a partnership is that each partner is subject to
unlimited personal liability for the debts of the partnership.Also, each partner
is liable for the negligence of another partner and of the partnership’s employ-
ees! Therefore, before you enter into a partnership, there are two concerns you
should address:

1. If I go into partnership with _____, is this a responsible, account-
able person for whom I am going to be liable?

2. Can I get enough insurance to adequately insure and protect the
partnership, as well as my personal assets and my partner’s?

As you can see, a partnership is significantly more complex than a sole
proprietorship, although most states do not require any formalities of docu-
mentation. If your partnership does not have a formal “partnership agree-
ment,” your state law will determine the terms. State laws in general are
based on fundamental characteristics of the partnership as it has existed
throughout time. Here are the most important of the legally presumed
characteristics:

� No one can enter into a partnership without the consent and
approval of all partners.

� All partners have an equal vote in the operations of the partnership.

� A simple majority vote is required for ordinary business decisions,
and a unanimous vote is required to change the fundamental char-
acteristics of the partnership.

� All partners share equally in the profits and losses of the partnership.

� A partner can withdraw from the business at any time, causing the
partnership to dissolve.

These are just a few basics. Each state will have different presumed char-
acteristics. Therefore, since each partnership is different simply because the
individuals involved are different, it is highly recommended that you employ
legal counsel to help you draft a formal partnership agreement that recognizes
your special requirements for a new design firm.

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INDEX �

payroll taxes, state, 66
peer review

areas for, 209
procedures for, 210
purpose of, 209–211

phone system, 146–148
profit

banking and, 53
calculation of, 50–51, 53
defined, 52, 53
goals for, 50–51, 52
investment of, 47

proposal writing, 99–102, 107
See also design proposal, sample

risk
business and, viii, 174–175
defined, 173
insurance management of, 135
management of, 176–179

routine
goals and, 32
refinement of daily, 179–182
success and, 177–179
suggestions for, 177–179

self employment taxes, 63
selling

marketing and, 106–109, 110
presentation strategy in, 107–109

social security payroll taxes (FICA), 65
sole proprietorship

advantages of, 115
disadvantages of, 115

starting firm, 23
challenges of, vii
decision of, vii, 10
excuses for not, 21
failure of, 11
fear of, vii, 26–27, 169–170
forms of business and, 114–121
as journey, ix, 27, 28
personal requirements for, 5
reasons for, 10, 12
startup cost analysis for, 37, 38–41
See also first year

startup capital, 37, 38, 41

subchapter s (sub-s) corporation
advantages of, 119–120
lawyer and, 120

success
attitude and, 189
business relationships and, 189–191
defined, 188
by design, 167–168
essential ingredients for, 191–192
as journey, ix, 192–193
key for, 6
leadership commitment to, 6
money management and, 36
odds of, 6
partners relationship and, 20
routine and, 177–179
rules of thumb for, 213–214

support groups, 211–212

taxes
by accountant, 60–61
accounting period for, 62
basic knowledge of, 60
business deductions allowable in,

67–68
estimated income, 64
failure to file, 68–70
filing requirements for, 62–63
income, 63, 65
IRS web site, 61
payroll taxes, 64–66
self employment, 63

time management
balance and, 183–184
business expansion and, 27
delegation need for, 25–26
devices for, 182–184
time investment and, 26, 27

vision
business application of, 30
defined, 29
hope provided by, 30
imagination as, 29, 31

vital signs, management of, 207–209

writing. See proposal writing


243

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Page 257

Books
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