Diversify your Business
Are you ready to grow your business? Before expanding, ensure your financial readiness and update your marketing plan. Furthermore, it is important to abide by all the laws, rules, and regulations of the new location.
Market Research and Plan
Begin by updating your marketing plan according to the new location. Identify your target customers, sales plan, and competitive edge. Calculate additional marketing and sales costs. Ensure your updated marketing plan is as comprehensive as your original one.
Analyze your business compared to competitors, study the local market and advertising trends.
Evaluate your business finances by projecting the estimated costs and revenue of the new location. Scrutinize your statement to verify whether you have sufficient capital. If you need more funds, consider seeking additional resources.
Legal Requirements for Expansion
Expanding your business to a new state, county, or city requires registration with the appropriate agencies and payment of taxes. Ensure compliance with licenses, permits, and land use regulations.
Regulations on land use, permits, and licenses
The procedures for obtaining licenses and permits vary by state and locality. Check with the government of the state, county, or city where you plan to expand to determine any additional licensing or permitting requirements. Visit the state’s website to start.
If you already have a permit or license from a federal agency, verify whether it permits operation in another state. For a foreign qualification, provide a Certificate of Authority and possibly a Certificate of Good Standing. The amount of fees varies with location and business structure.
If you are expanding your business to another state, it may be necessary to apply for foreign status in that state. This informs the state that your company will be operating there.
To qualify as a foreigner, present a Certificate of Authority. Some states require a Certificate of Good Standing issued by the state of formation. Check with state offices to determine the foreign qualification requirements and fees.
State and Local Taxes
As a qualified foreign company doing business in another state, you will need to pay taxes and annual reporting fees in the new state as well as your home state. Follow the same tax payment procedure as any other company that needs to pay taxes in that state.
Note that not all states and localities have sales taxes. Additionally, some items, such as food and clothing, are exempt from tax in most states. Familiarize yourself with the relevant rates if you charge sales tax.
Online Sales Tax
- If your business has a physical presence in a state, you must collect applicable state and local sales taxes from your customers in that state. If not, you are not required to collect sales tax in that state.
- It can be challenging to determine the sales tax rate. Many retailers use online sales software to automatically calculate the sales tax rate. Ensure your sales plan considers the varying state rates.
The Ins and Outs of Franchising Your Business
If you’re looking for ways to grow your business, franchising is an avenue worth considering.
There are two fundamental routes to pursue when it comes to franchising.
The first is to acquire an established franchise, which is comparable to buying an existing business. While the initial costs may be higher, the risks can be lower than starting from scratch.
The second is to develop your own franchise. Successful franchises share common traits:
- The product or service is exceptional and attractive to potential business owners.
- The concept and operations are easy to teach.
- The company can be replicated in new markets.
Keep in mind that selling franchises involves meeting requirements set by the federal government and state authorities. Hiring an attorney may be necessary. Additionally, once you have started a franchise, some states will monitor the relationship between you and your franchisees, including land rights and transfer/renewal restrictions.
Bear in mind that franchising comes with more costs than other types of businesses. You’ll likely need to pay for legal counsel, accounting, and advertising staff. Training employees and creating the necessary systems to run the franchise is also crucial.