10 Steps to Starting a Small Business
Starting a small business is exciting—but also demanding. Here are some of the most common startup steps to ensure that your company is ready for success.
Prepare a business plan and materials
1. An important first step is preparing a business plan to define your business, products and services, and outline your goals, operating procedures and competition. If your company needs funding from a traditional loan or venture capitalists, a business plan will be required. Make sure your plan includes a marketing approach, so people are aware of what you’re selling and how to find you.
2. Create a business logo, cards and stationery. These items establish your company’s identity and help potential customers find and remember you.
Meet legal requirements
3. Of course, incorporating your business or forming an LLC with the state is important because it protects your personal assets from business debts and liabilities. Other benefits of forming a corporation include several tax advantages and greater credibility with customers, vendors and business partners.
4. Select an accountant and attorney. Many small business owners seek advice from accountants and attorneys. As you search for an accountant and attorney, get referrals from friends or family, and look for professionals who have worked with other small business owners or companies in your specific industry.
5. Get necessary tax identification numbers, licenses and permits. A federal tax identification number, or employer identification number (EIN), acts like a social security number and is required for corporations and LLCs that will have employees. Contact your state’s taxation department to learn if a state tax identification number is required in your state. Also keep in mind that most businesses need licenses and/or permits to operate—in your city, municipality, county and/or state.
6. Insure your business and investigate other requirements. Some industries have specific insurance requirements. Discuss your needs with your insurance agent to get the right type and amount of insurance. Remember to look into any other government tax and insurance requirements that might apply to your business, particularly if you have employees. For example:
Unemployment insurance Workers’ compensation OSHA requirements Federal tax
State and local tax
Payroll tax requirements (such as FICA, federal unemployment tax, and state unemployment tax) Sales and use tax
Prepare yourself financially
7. It is crucial to separate business finances from personal ones, so open a business bank account. Most banks require company details, such as formation date, business type, and owner names and addresses. If your business is not incorporated, most banks will require a DBA (doing business as or fictitious business name). Contact your bank about requirements prior to opening an account.
8. Arrange your business accounting and apply for loans. You may want to use an accountant, or handle finances yourself with a small business accounting solution. Either way, properly account for all business disbursements, payments received, invoices, accounts receivable/accounts payable, etc. And if you don’t have enough capital to start a business, this is also the time to seek funding from banks or through Small Business Administration (SBA) loan programs.
9. Establish a business line of credit. This will help reduce the number of times your company prepays for purchased products and services. It also helps establish a strong credit history, which is helpful for vendor and supplier relationships. Getting a Dun & Bradstreet (D&B) DUNS (or D-U-N-S) number for your business is advisable, as it is often used to check business creditworthiness.
10. Ready your workspace. For home-based businesses, ensure you are meeting city zoning requirements for your area. For non home-based businesses, you’ll likely need to lease an office or retail space. Don’t forget to purchase or lease furniture and office equipment to get your business up and running.
Scarms Financial Group would love to help your business grow.