10 Steps to Starting a Business
Starting a business involves making key financial decisions and completing a series of legal activities. These 10 steps provide the information to help you plan, prepare, and manage your business.
Step 1: Research and Plan Your Business
Are you ready to start a business? Do you have the resources you need? Have you done enough planning? This assessment tool from the Small Business Administration is designed to help you better understand your readiness for starting a small business.
To increase your chance for success, take the time up front to explore and evaluate your business and personal goals.
Next, use this information to build a comprehensive and well thought out business plan that will help you reach these goals. The process of developing a business plan will help you think through some important issues that you may not have considered yet. Your plan will become a valuable tool as you set out to raise money for your business. It should also provide milestones to gauge your success.
Step 2: Get Business Assistance and Training
Several counseling and training programs are available to help you get started and expand your small business. These services cover all aspects of starting and running a business, from getting a loan to developing business plans and marketing strategies.
A good place to start is the Small Business Administration. they offer several free online courses on a number of timely business topics, including starting a business, writing a business plan, and more.
For more direct assistance that is tailored to meet you personal and professional goals, contact Advantage Consulting Services. We can work with you to get your small business up and running with a successful start!
Step 3: Choose a Business Location
It is often said that the three most important elements of a successful business are location, location and location. But it depends on the type of small business you are starting. Can you run your small business from your home? Or do you need a store front or just office space? Will your clients and customers need to meet with you in person?
If you need a physical location for your business, you will need to be familiar with the zoning laws in your state and your community. The Small Business Administration provides information about basic zoning laws.
Step 4: Finance Your Business
Federal, state and local governments offer a wide range of financing programs to help small businesses start and grow their operations. These programs include low-interest loans, venture capital. You might also qualify for some grants.
Step 5: Determine the Legal Structure of Your Business
When beginning a business, you must decide what form of business entity to establish. Your form of business determines the amount of regulatory paperwork you have to file, your personal liability regarding investments into your business, and the taxes you have to pay.
The Small Business Administration has detailed information on the most common business structures:
- Sole Proprietorship - A business owned and managed by one individual who is personally liable for all business debts and obligations.
- Partnership - A single business owned by two or more people.
- Corporation - A legal entity owned by shareholders.
- S Corporation - A special type of corporation created through a tax election. An eligible domestic corporation can avoid double taxation (once to the shareholders and again to the corporation) by electing to be treated as an S corporation.
- Limited Liability Company (LLC) - A hybrid legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. (Advantage Consulting Services is an LLC)
- Non Profit - An organization engaged in activities of public or private interest where making a profit is not a primary mission. Some Non Profits are exempt from paying federal taxes.
- Cooperative - A business or organization owned by and operated for the benefit of those using its services. Cooperatives are not a legal structure.
Step 6: Register a Business Name ("Doing Business As")
The legal name of a business is the name of the person or entity that owns a business. If you are the sole owner of your business, its legal name is your full name. If your business is a partnership, the legal name is the name given in your partnership agreement or the last names of the partners. For limited liability corporations (LLCs) and corporations, the business' legal name is the one that was registered with the state government.
A fictitious name (or assumed name, trade name, or DBA name, short for "doing business as") is a business name that is different than your personal name, the names of your partners or the officially registered name of your LLC or corporation.
The Small Business Administration provides a listing of business naming requirements by state.
Step 7: Get a Tax Identification Number
All businesses are required to pay federal, state, and in some cases, local taxes. Most businesses will need to register with the IRS and state and local revenue agencies, and receive a tax ID number or permit.
The U.S. Internal Revenue Service offers a "Guide to the Employer Identification Number" and provides a link to apply for an EIN online.
Step 8: Register for State and Local Taxes
In addition to business taxes required by the federal government, you will have to pay some state and local taxes. Each state and locality has its own tax laws. The Small Business Administration provides information about the most common types of taxes requirements for small business as well as listing of tax information and required forms by state.
Step 9: Obtain Business Licenses and Permits
Every business needs one or more federal, state or local licenses or permits to operate. Licenses can range from a basic operating license to very specific permits. Regulations vary by industry, state and locality, so it's very important to understand the licensing rules where your business is located. Not complying with licensing and permitting regulations can lead to expensive fines and put your business at serious risk.
The Small Business Administration provides find licenses and permits search tool as well as list of licenses and permits by state.
Step 10: Employer Responsibilities
Learn the legal steps you need to take to hire employees.
