Stage One - Setting Up Shop

10 Steps to Starting a Business

STAGE ONE – Setting Up Shop:

Establishing the Legal Structure of Your Business Entity

This article continues the multi-part series describing the 10 Steps to Starting a Business, beginning the first substantive discussion of the 10 Steps.  As discussed in the previous posting, the 10 Steps to Starting a Business are as follows:

1. Business Formation
2. Fictitious Name Statement
3. Apply for Business Permits and Licenses
4. Employer Identification Numbers
5. Verify Employment Eligibility (Form I-9)
6. New Hire Reporting Program
7. Withholding Requirements
8. Insurance Requirements
9. Workplace Poster Requirements
10. Pay Taxes

The 10 Steps have been further distilled into four general stages:  Setting Up Shop; Getting Licensed; Hiring Employees; and Paying Taxes.  This article addresses the first stage of starting a business:  Setting Up Shop.  As previously discussed, Stage One covers the first two steps of starting a business:  1. Business Formation, and 2. Fictitious Business Statement.  Accordingly, the remainder of this article will discuss each of these steps in more detail. 

 

    1. Business Formation.

When starting any business, the first decision you’ll have to make is deciding what form your business can take.  In general, a business will take one of four forms:

1. sole-proprietorship
2. partnership
3. limited liability company (LLC)
4. corporation

Each form of business has different legal, financial, and tax considerations (e.g. limited liability, ownership and control, etc.), and therefore, anyone wishing to open a restaurant or bar (or any business, for that matter), should carefully consider the various options in order to determine which form is best for their particular goals, objectives and desires.

Most small business owners assume they can accomplish this stage simply by using online service providers, such as LegalZoom, to set up a low-cost corporation or LLC.  However, it should be noted that this can be incredibly risky.  For example, business owners will usually choose to operate as a “single-member LLC,” one of the most popular forms of business.  Generally, the main purpose in forming an LLC (or corporation) is to acquire limited liability – i.e. the LLC provides the owner with a liability “shield,” such that if the business is sued for negligence or unpaid debts, the individual owner cannot be held personally liable.  However, what most small business owners don’t know is that this liability shield can be “pierced” if the entity is improperly structured, drafted, or operated.  That means if you are sued, you could be personally wiped out!  And in California, the single-member LLC is the most commonly pierced type of business entity.  Accordingly, it is highly advisable that you consult with an attorney before setting up your business entity.

After selecting the form your business will take, you must then actually establish it as a distinct legal entity – which consists of completing the appropriate applications, drafting the necessary paperwork, and registering your business entity with the State.  In California, after your business is formed, you must register it by filing the appropriate forms with the California Secretary of State.  (Note, if your business is a sole proprietorship, you do not need to register your business with the State.)

      2. Fictitious Name Statement

In addition to forming your business, you will also obviously have to name it.  All persons and entities planning to do business in California under a name different from their personal name must file a Fictitious Name Statement with the County Recorder Clerk's Office where the business will be conducted.

While filing your FBN may seem like an unimportant technicality, it should not be neglected, as it can result in fairly extreme consequences.  For example, Business & Professions Code 17918 essentially specifies that you cannot maintain any legal actions under the trade name unless the FBN has been properly executed, filed and published.  So make sure to complete this step before moving forward.

After completing Steps 1 and 2 – properly forming and naming your business – your business should now be established as a distinct legal entity.  But that is only the beginning.  The next stage is Getting Licensed…

Blind Barber

Blind Barber

10797 Washington Boulevard, Culver City, CA 90232 

 “The term “blind pig” (or “blind tiger”) originated in the United States during prohibition, and applied to lower-class establishments that sold alcoholic beverages illegally.  In contrast to speakeasies, which were usually considered higher-class establishments that offered food and entertainment, a blind pig was usually a dive where only beer and liquor were offered.  The namesake possibly originated from a scheme developed by bar owners to circumvent the law restricting the sale of alcohol, where they would disguise their bar on the outside to look like a forum for "exhibition shows," advertising an attraction (such as an animal), but once inside, then serve their patrons a “complimentary” alcoholic beverage (so they were actually paying for the illegal drink, and the “exhibition show” was merely a front for illicit activity).  For example, the establishment would put on an exhibit of a “blind Greenland pig” (or a “blind tiger”), charge 25 cents to see the pig, but then throw in a gin cocktail for free.”

If you’re reading this review, for my 2 cents, I’d say The Varnish pretty much sets the standard for speakeasies in LA (that speakeasy through a broom closet behind a bar inside a restaurant within the hallow of one of LA’s most historic buildings); and Sweeny Todd's sets the standard for barbershops (that old fashioned barbershop on the edge of Los Feliz where you can page through a collection of tastefully displayed vintage “gentleman” magazines while waiting to get a traditional flat razor shave).

But what if these two places were combined into one?  What if I told you they already are? ...

A few weeks ago, I heard about a new speakeasy in Culver City – a bar inside of a barber shop.  The place was set to open Friday, May 18, 2012.  But I also heard the place had planned a “soft” opening prior to that date.  So naturally, I had to check it out, to verify if these rumors were true.

The place was located in Culver City – a small, but burgeoning hidden gem within LA; a place overtaken by the Munchkins in 1924; a place boasting the World’s Smallest Main Street; and a place revitalized in the 1990s with art galleries and hip shopping centers, and lauded by The New York Times as a “nascent Chelsea.”  But normally, Culver City conjures images of a claustrophobic, crowded, and boisterous downtown area, densely packed with street-side restaurants and no parking.

But this new place was different – located somewhat off the beaten-path, sufficiently west of the main downtown drag.  A place with small-town charm, not yet fully affected by the growing downtown scene, where you can still park on residential streets without needing a special permit (something I understand is virtually unheard of by Culver locals).

I parked on a dark residential street and walked along a quiet sidewalk toward the address I had been given.  Halfway down the block, I spotted a lonely barber pole, with faded red and white stripes, dimly lit and slowly spinning.  But the scene was lifeless – nobody was standing outside, nobody was walking by, no noise was heard, and all the surrounding stores were unlit and closed.  But sure enough, the barber pole led me to a barbershop window (marked only by the words, “Barber Shop,” painted above the shop’s glass doors).  However, the lights were off, the doors were closed, and nobody was inside.  (Pretty clear I had been misled about this “soft” opening.)

But still, because I’m me, I decided to express my frustration to the world by yanking on the door – as through personally disenfranchised that a bar that wasn’t officially open wasn’t open (for me).  But to my surprise…the door opened.  I jolted, almost instinctively, and looked from side to side, not wanting to be seen as inadvertently trespassing.  Still somewhat surprised, I shrugged my shoulders and decided to walk in.

As I entered, I spun around the small shop, noticing the excellent details:  the four old fashioned leather barber chairs, the faded/distressed primer walls, the penny-tiled floors, the pie-tin lamps hanging from the ceiling, the antique wooden bench seats…  Other than the almost non-existent flicker from the overhead pie tins, the shop was silent and dark, as through the last employee forgot to lock up before leaving.  As though I shouldn’t be there.

But as I walked around, I noticed a faint, almost inaudible, sound of music coming from a door in the back of the shop.

I followed the sound to the door, and decided to continue down the proverbial rabbit hole, to see where it would take me.  I turned the knob…  And again, the door opened.  And the sound of music and distant voices suddenly filled into the small room.

Again, I decided to trespass, and walked through this back door, down a dark hallway, and around a corner…

And there, I found The Blind Barber.

The concept was brilliant.  The execution, almost perfect.  The kind of place matching my description of the ideal bar:  a hidden, dimly lit establishment where the staff knows what they’re doing and does it well.

This secret room was dark, very dark, lit only by the small candles sitting atop a few couples tables tucked into the back, and the conservatively-placed wall chandeliers, providing dim light for the leather booths lining the sides of the room.  The place was full but not packed.  Intimate.  And as I walked farther into the room, I noticed a small film crew filming a movie in the back booth.  The whole scene was timeless.

The furnishings were minimal, but classy and appropriate:  black-and-white checkered floors and polished wooden walls, adorned only with lonely pictures of old-timey boxers and handlebar mustaches.

As I approached the bar, I also discovered the staff is amazing – helpful, accommodating, and unexpectedly nice.  I told the bartender I liked scotch, and he suggested I order a Sweeny Todd (ironically?).  He then introduced me to the owner, Jordan Novak.

Jordan and his crew conceived the Blind Barber in New York, and after achieving success, decided to bring the whole operation out west – including the bartenders and barbers.  He also explained the bar is nestled in the gutted remains of what was once a Wells Fargo bank, and that the location was deliberately chosen after being approached by the building’s landlord, who wanted to revitalize the entire development and bring new life to the somewhat tranquil area of town.  I also questioned Jordan about the origin of the name, “Blind Barber,” assuming the name was a subtle reference to the “blind pigs” during Prohibition (or perhaps a descriptive moniker related to stereotypical conditions of an old trade, comparable to a “Mad Hatter” – where hatters went “mad” due to the mercury used in curing felt, speakeasy patrons notoriously went “blind” from drinking too much moonshine).  Jordan assured me the name was not so contrived, and was actually developed independently by his friend, and co-owner, who originally used the name solely for the barbershop.  But I don’t know if I believe Jordan.  Which is fine.  With a quasi-illicit location like the Blind Barber, I’m sure he’s got to keep some things a little mysterious.

All in all, the Blind Barber is awesome.  One of the best bars I’ve seen in quite some time.  And while you may not be able to see a Greenland pig or an exotic tiger for a quarter, you can drink a classic cocktail while getting a haircut.  And that’s enough to bring me back.