Starting a business can be challenging and a lot of work. Along with creating a marketing and business plan, you need to find financing, decide how to organize the business, get necessary licenses and permits, and comply with local and state regulations. The following steps will help you turn an idea into your own business.
Assess Your Business Acumen
Before you start making serious plans for your business, it is always a good idea to determine if you have what it takes to be a business owner. You need to do an objective appraisal of your personal skills, talents, and overall weaknesses and strengths. Common traits among successful business owners include self-motivation, willingness to take risks, good decision-making skills, a can-do attitude, and ability to get along well with others.
Writing out a business plan is one of the most crucial steps when you want to start a business. It is a written guide that outlines how you will get started, where new business will come from, and how you will continue to run the business successfully. Most plans project three to five years ahead.
Finance the Business
This is another crucial step in the process. Most businesses don’t make a profit for months, so it is important to have enough money to cover your costs. Investing your own finances is common, but it often isn’t enough. There are many sources for small business loans, such as bank loans, lines of credit, or loans through the Small Business Association (SBA).
Decide on Legal Structure of the Business
Businesses can be formed as sole proprietorships, partnerships, limited liability companies (LLC), or corporations. Each one has its advantages and disadvantages, and it is best to consult with legal and accounting experts to help determine which business organization would be best for you.
Register Business Name
If the name of your business differs from your personal name, then it will need to be registered with the state. Terms for this include fictitious name, trade name, doing business as (DBA) name, or assumed name. Not all states require that you register your business name, and registration can be done with your state government or your county clerk’s office.
Register for Local and State Taxes
As a business owner you will be responsible for a variety of different taxes. Almost every state charges corporate or business income tax. If you have employees, you will be required to pay unemployment insurance and workers’ compensation insurance taxes. Check with your state to find out about disability insurance requirements and business tax registration in your area.
Business Permits and Licenses
Depending on your industry and state, there may be certain state and federal licenses and permits that will be required in order for your business to run legally. Each state has its own requirements for specific businesses, and certain ones, like those that sell firearms or alcohol, require a federal permit or license.
Understand Responsibilities as an Employer
If you plan on hiring employees, you will need to obtain an employer identification number (EIN) from the IRS. It is also known as an employer tax ID. Once you have hired an employee you must complete Form I-9, which verifies employment eligibility. You will also need to set up records for tax withholding. You will need to keep track of a federal wage and tax statement (W-2), federal income tax withholding (W-4), and state income taxes.
Within 20 days of hire, you need to report newly hired employees to a state directory. Also, make sure that you have certain posters on display in the workplace. These inform employees of your responsibilities and their rights under labor laws.
Starting a new business is exciting and challenging. With the right tools and advice, the process can go quite smoothly.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.