I'm thinking about going into business with a friend. Are we both sole proprietors?
According to the Uniform Partnership Act (UPA), which is a body of law that establishes basic guidelines for partnerships,[1] the a partnership is "an association of two or more persons to carry on as co-owners of a business." If you and your friend work together in the business you would be considered partners whether you formally agree to be partners or not. That means you would each be bound by all the rights and responsibilities and liabilities of a formal partnership arrangements, too. Thus it would be advisable to have a formal partnership agreement with your friend.

Why do we need a partnership agreement?
While you and your partner may be the best of friends now, it is very easy for misunderstandings to develop in a partnership, just like it is easy for misunderstanding to develop in any agreement that isn't written down. Several people who were psychologists and good friends learned this lesson the hard way. They agreed to open a jointly run practice. Although they were advised to have a formal partnership agreement, since they were all "experts" in dealing with human relationships, they decided it wouldn't be necessary to have a formal agreement written up. Less than a year later their joint effort ended, leaving them engaged in bitter and expensive legal disputes over ownership of partnership property and responsibility for various debts.  

What should go into a business plan if I'm not looking for a loan or investors?
If you will be investing any significant amount of money or time in you venture, you should create a business plan that at minimum puts the following information down on paper:

What business am I in? 
The answer to this question should dictate the focus for all your operation.  For instance, are you in the business of selling dried floral arrangements or decorative home accessories? Do you have a word processing business, a resume service or a secretarial service? If you offer several different products or services, how do they fit together? What do they have in common? You should be able to summarize the nature of your business in a sentence or two. If you can't do that, your business isn't likely to have the focus it needs for growth and success.

Who are my customers and what do they want to buy?
Even though you aren't looking for a loan or investors, you still need to gather facts about your market so you can make realistic sales forecasts.

How will I sell my products or services?
Many home-based entrepreneurs get so engrossed in developing their ideas that they forget to determine how they are going to sell their products or services and what it will cost them to make those sales. Typical is the person who pulls thousands of dollars out of savings to buy the equipment necessary to run a business, then discovers that newspaper ads cost more than he thought and that he doesn't have enough money left to run ads long enough to have them do any good.  The time to make such discoveries is before you sink thousands of dollars into setting up you operation, not afterwards.

What will all of my expenses be? 
One of the biggest mistakes made by people who start homebased and other very small business is not calculating all of their costs. Production and advertising expenses are only part of the costs you will incur.  Even if you work from home you will still have to buy supplies, (for instance, just printing out or photocopying a single page of text can cost you anywhere from about 2 to 5 cents depending on the cost of ink and the type of paper you are using). You will also pay for business cards, letterhead and envelopes, equipment, repairs, gas if you travel to your customers, professional fees, taxes, insurance, etc.

At what point will I make a profit?
The point of being in business is to make a profit. You need to know the how many sales you need to make at what price to make the kind of profit you want or need from the business. You also need to determine how long it might take you to reach that level of profit so you can determine if you have enough money to live on and support the business until it does become profitable.  

What is non-billable time?
Non-billable time is the time you spend doing work you can't charge your customers for. Typically such work involves writing proposals, making business contacts, answering customer questions,  doing your own filing, typing and bookkeeping,  learning to use new computer programs, etc.

Why do you consider non-billable time an expense?
In a service business, earnings are tied to the number of hours devoted to income-producing work. In some small service businesses one-third or more of the total working hours each week may be spent doing work that can't be billed to any client.. In fact, it's not unusual for the owner of a one-person business to work from early in the morning until late at night without directly producing a cent of income.

Under such circumstances, time is a commodity with a significant value. For instance, assume you work a total of 40 hours a week in your service business and on an average you make about $25 an hour on time spent on client work. If you spend 10 hours a week doing non-billable jobs, you have only 30 hours a week left for paid client work. Thus you are losing $250 a week in sales (the 10 non-billable hours times $25 an hour.)  If you normally charge $50 an hour for your time, those 10 hours of non-billable time will cost you a whopping $500 each week.

How do you factor the cost of non-billable time into your fees?
Calculate what your expenses will be for a month. This figure should include a salary for yourself, plus all expenses including loan payments if any for the business, allowances for equipment upgrades and repairs, etc.  Add in an amount for profit. (Your own salary is not profit. Profit is what the business makes over and above your salary and all other expenses.)

Multiply this figure by 12 to determine what the gross yearly income  of the business should be (what you need to make each year). Then divide the gross yearly income by 48 weeks to determine the amount of money the business will need to make in per week. The reason for using 48 weeks instead of 52 is to allow for vacation time, holidays, sick days, etc. (Even self-employed people get sick, need a vacation, celebrate holidays, etc.!)

Once you determine the amount of money you need to earn per week, divide that amount by your billable hours. For instance if you plan to work 40 hours a week, but will spend 10 of them on your own accounting chores or other nonbillable work, divide the weekly gross income needs by 30 to get the hourly fee you should charge.

For example, if you determine you need to bring in $5,000 per month to cover your salary and other business expenses, here's how you would calculate hourly fees:

$5,000 (monthly income) x 12 (months)  = $60,000.00 (gross yearly income)

$60,000 (gross yearly income) / 48 weeks   $1250.00 (per week)

$1250 (per week) / 30 (hours)          =    $ 41.66 (per hour)  

Do I need to check domain names before I choose a name for my business?
From a practical point of view, yes. Having a web site is becoming as common has having a business card. Even if you don't plan to put your new business on the web immediately, you may want to do so in the future "Before you invest money and time in developing the goodwill in a company name you should check the availability of both your company name and your domain name so you don’t have to make changes after you've begun to use the name.," advises Thomas O'Rourke, a partner in the law firm of Wyatt, Gerber, Meller & O’Rourke. The firm is located in New York City.

I've been doing business under my name for several years and wanted to register it as a domain name, but someone else already took it! What can I do?
The answer goes back to the issue of how well-established your name is, how widely established it is, and how much money you have to fight for the use of your name. If you have only operated locally, and the company using your name as a domain name is located in a different state, and you have a limited budget, from a practical standpoint, there isn't going to be much you can do if they are actually operating the site. If they have registered the domain name, but haven't set it up, contact them and ask that they turn it over to you. But be prepared for a price tag with the name. As the Internet was first becoming popular, many people bought up domain names they thought might be in demand. They now try to sell those back to people who want them.

 On the other hand, if the use of the domain name "would be likely to cause confusion, mistake or deception leading the public to believe that the owner of the domain name is sponsored, endorsed or otherwise approved of by you, you could have a cause of action for trademark infringement," says O'Rourke. "Your chances of success depend on how strong your trademark has become."

How much does it cost to file a law suit to force someone to stop using my trademark as a domain name?
Filing the law suit is only a small part of the total cost, and that alone can cost you $2,000 to $5,000. To actually bring a suit to court can easily cost $20,000 or more.

I'm planning on quitting my job to start my own business. Can I convert my company health insurance policy to a personal one?
If your present employer has 20 or more employees and you become ineligible for insurance under the company group plan due to a "qualifying event," you may be entitled to continue the plan for up to 18 months under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).If termination of employment is due to disability, the continuation period is extended to 29 months.). You will have to pay the premiums out of your own pocket, however. At the end of the continuation period you would have the option of converting it to an individual policy under the health care policy's regular conversion options.

Does the cobra law apply to all companies that have twenty or more employees?

No. Some government, church and self-insured plans are exempt from the COBRA law, so be sure to check before assuming you can continue coverage.

What are "qualifying events?"
The following five events are considered qualifying events under COBRA:

1) You cease to be an employee for any reason other than gross   misconduct.

2) You change from full-time to part-time employment and no longer qualify for the company's healthcare plan due to the reduction in hours you work.

3) You are the spouse of the insured and lose coverage due to divorce, legal separation or the death of the insured.

4) You are a child who ceases to be eligible for group plan benefits.

5) You become entitled to Medicare benefits.

About the author
Janet Attard is the founder of the award-winning  Business Know-How small business web site and information resource. Janet is also the author of The Home Office And Small Business Answer Book and of Business Know-How: An Operational Guide For Home-Based and Micro-Sized Businesses with Limited Budgets.  Follow Janet on Twitter at http://www.twitter.com/JanetAttard.