Accounting Tips

I've got a great idea for a business. How do I get started? Part 1

There has never been a greater time in history to start and own a small business. Advancements in technology have made it easier and easier for entrepreneurs to get started with very little startup cost. 

So, you have an idea and want to start your own business. First things first, you need to design a business plan. I know that sounds like a huge task, and in some respects, it is. But, you have to know what you want to achieve with your business and it’s best to sort that out at the beginning. We’ve all heard the adages, ‘If you fail to plan, you plan to fail.’ or ‘If you aim at nothing, you’ll hit it every time.’ Those are all true! There are 3 D’s in owning a business…

Desire, Discipline, and Determination. You’ve already got the desire, but if you can’t take the time to formulate a business plan, you probably don’t have the discipline or determination necessary to make your business a success. 

A business plan helps answer questions like, ‘What is my product or service?’ ‘What are my goals?’ ‘Who will I market my product/services to?’ ‘Who is my competition?’ ‘Do I need to incorporate, or can I operate as an LLC, or sole proprietor?’ ‘What skills and experience do I bring to this new venture?’ ‘How much will I charge for my product/services?’ There are many more, but you get the general idea. There are some great templates available on the internet to help you get started, but this is the wisest first step.

Once you’ve got your business plan, and you’ve made the decision about which corporate structure you’d like to implement, it’s time to choose and register your business name. This is the legal name of your business and is required on all government forms and applications, including your application for employer tax IDs, licenses and permits. Corporations, Non-profits, LLCs, and LLPs are required to register with the state government. Look up the Secretary of State for the state in which you plan to do business and follow their prompts to complete the appropriate forms to register. Sole proprietors are not required to register their business with the state. However, it is best to register a DBA with the state, if you prefer to establish your business as a sole proprietorship. Some states require that you use your own name for the business name unless you formally file another name. You can also start your business as a sole proprietorship, and convert once your business grows and your risk of personal liability increases. At that time, you will need to file follow the IRS instructions for Changes in Ownership or Organization, and you will need to file new documents with your state government to obtain new business licenses. This is also the time to register your business with the IRS and acquire an Employer’s Tax ID number (EIN), also known as a Federal Tax ID number. You may apply for an EIN in various ways, including online. Click here for a list.

Determine your business location and equipment. Don’t assume that being a home-based business exempts you from zoning laws. Zoning laws can restrict the types of changes that can be made to your home to accommodate your business, as well as the number of visitors to your home-based business. These types of issues will most likely come to light when applying for a business license within your city, but it is best to be prepared for restrictions that might be raised by the city.

Some businesses will require licenses and permits. Businesses like ones that sell alcohol or firearms require a federal license or permit. Businesses that serve alcohol or food require a liquor license or certification from the local/state health department. Your business plan should have helped you identify any such licenses and permits that you will require. 

I’m out of time for this week. In our next installment, we’ll cover business financial records, financing your business, taxes, and hiring employees. Don’t worry; I won’t make you wait a month it, but I do have work to do myself. If you’re wanting to get started, but not sure what to do next, give us a call we’ll be happy to help you navigate the process.

Until next time – Life is an adventure, and it’s better with friends like you.

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