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Ask Jane Applegate
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September 20, 1999: 3:02 p.m. ET
Getting started with banking and insurance for a home-based business
By Jane Applegate
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NEW YORK (CNNfn) - Here are answers to your questions for CNNfn.com small-business expert Jane Applegate.
Dear Jane: I'm starting a small computer sales and service business at home. I'm having trouble setting up bank accounts and knowing what type of insurance to buy. Can you help?
Although you are working at home, it pays to set up your business the right way from the start. After you buy your office equipment and install a few phone lines, you'll need a business checking account to keep your business funds separate from your personal funds. This is required to keep you out of hot water with Uncle Sam and will help you prepare your tax returns.
You can open a business checking account after you have filed a "doing business as," or DBA, with the county clerk. A DBA allows you to operate under a fictitious name, if you choose to. You also may need to obtain a business license to open a business banking account. Check your neighborhood zoning laws to make sure you can run a business from your home before you go too much further.
Banks are aggressively pursuing small business owners, so find a bank that offers competitive fees and services. Look for the services you may need as the business grows, including a business credit line, credit card processing services, payroll services, loans and international letters of credit.
Check with your insurance agent to determine whether or not your homeowner's or renter's insurance policy will cover your home office. When The Applegate Group was home-based, we increased our liability coverage to protect against slip-and-fall accidents by visitors and delivery people.
We also bought a policy to protect our computers and office equipment against theft and fire.
Try to work with an independent insurance agent who represents many companies. They will work hard to find you the lowest rates for the coverage you need. If you use your car for business, be sure it's properly insured.
Dear Jane: I want to open an online grocery store. What do you think?
At least two big companies already have beat you to it. Peapod (PPOD ) and Streamline (SLIN ) are two companies selling groceries and other items online. It takes an enormous amount of capital to launch a business selling thousands of products. I would forget about groceries, but look for something new and different that you could offer to online shoppers.
At ApplegateWay.com's Office Corner store, we take a boutique, rather than a mass merchandise, approach. We limit the number of items we sell to about a dozen each month, emphasizing the "personal shopper" approach to online sales.
Your mission is to find a product or service that no one currently is offering on the Web and do some market research to make sure people want to buy it. Try to test market the product on someone else's site before you invest in creating your own Web presence. You also can test market a product with traditional catalog companies, which are always looking for new and different items.
Even the famous Lillian Vernon reviews hundreds of new items a year for inclusion in her catalogs. When I profiled Vernon, she took me inside her locked sample room. It was stacked floor to ceiling with hundreds of gifts, clothing, housewares and decorative items. Her buyers may select only a few a year, but they definitely look at everything that's submitted.
Visit as many online shopping sites as you can to figure out what's NOT out there in cyberspace. 
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