The thought of starting a new business can be overwhelming, but the financial and personal rewards can make all of the hard work worth it. In order to make the process more manageable and less daunting, it helps to break things down into smaller steps.
- Determine capability: This is the time to be brutally honest about if and how you are going to make a profit. Run realistic numbers to make sure you can make a profit after covering costs.
- Design business plan: Creating a plan helps you think through details such as marketing and financial projections.
- Secure financing: It usually takes longer to start making a profit than one thinks. Plan for at least a year of living expenses from your savings, a spouse’s income, a part-time job, etc. If you need help with start up costs, start looking into small business loans.
- Choose and register a name: Brainstorm a business name and make sure it is not already being used. Once you have chosen one, register it with the state or county. Also, register for a domain name, and file for state and/or federal trademark protection, if applicable.
- Decide on your legal structure: Your decision will be based on numerous factors such as personal risk, the number of owners, tax structure, and if you will be selling stock. It is best to consult with an accountant or attorney for advice.Your options include the following:
- Sole proprietorship
- Limited liability company (LLC)
- Apply for a business permit or license: Investigate whether you need a license for your new business. Some businesses require applying for numerous licenses, depending on where you are located and your industry. These are mostly available at the local or state level, although some require federal permits.
- Apply for an EIN: If you will be having employees, are opening a business bank account, or are incorporating, you will need an employer identification number (EIN). This is available through the IRS.
- Find a location: If you plan on having a brick-and-mortar business, you will need to start this process early on. Determine the space that you will need, research neighborhoods that will fit your business, and determine what you can afford. You may want to hire legal help to negotiate the terms of your lease.
- Purchase insurance: The types of insurance you need will vary greatly depending on your particular business. You may just need property and liability insurance, or you may need commercial auto if your business uses vehicles. If you will be hiring employees, you will need to look into workers’ compensation and health insurance, and even disability or life insurance for them.
- Open a business bank account: Even if you have a small, home-based business, it is important to open up a bank account that is separate from your personal one. This makes things less confusing and easier when it comes to tax time.
- Choose an accounting system: Choose accounting software for your business and decide whether you will use the accrual or cash method. If you feel that it will be a complicated process, consider hiring someone to help with the bookkeeping.
- Hire employees: Depending on the type of business, you may be able to go awhile before having to hire anyone. You may also be able to outsource to independent contractors or third-party vendors for a little while to help save money.
- Start marketing: Purchase business cards, design your website, and start networking with everyone you know. The sooner money starts coming in, the sooner you will start making a profit.
Having a checklist to follow will help you maneuver through the business start-up process. Get legal help and other professional advice when you need it.
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.