First Steps to Starting a Business
You can start a business with these simple steps; it's easier than you might think. This discussion assumes you know what type of business you want to start. Begin with the general type of business you want to start - retail, wholesale, products, services. Or maybe you want to start an internet business.
After you have your business idea, you will need a business name, because everything else depends on your name. Then decide on a location - home, leased space, purchased building - and go on to the legal and financial tasks.
Most business owners start out with a business name, but before you solidify that name by putting it in a logo, on business cards, and on your website. You also want to be sure the name is not being used by someone else.
The most important thing to remember when you select a business name is to choose something that will work for you for many years. After all, who knew Amazon was going to be selling everything in the world?!
Unless you are working out of your home, you will need a location for your business.
- Start by going through this list of 12 issues to consider when selecting a business location.
- If you decide you want to lease, here are some leads for places to find commercial space to lease.
If you want to start a business in your home, there are some special issues you will need to deal with.
Depending on your business type and the location of your home, you may need to get a zoning variance to run your home business.
And it's not too soon to consider how your home business will file taxes, so you can begin collecting the records you need for your tax return.
The types of tax and legal business types range from the simple to complex.
- A sole proprietorship is the simplest form of business for one person. This business type doesn't need to be registered with your state.
Other business types you can choose will need to register with your state:
.Here is a checklist to help you decide what type of business legal entity you will start.
One of the first steps in business start-up, after you have a name and a business address and you know your legal form, is to fill out a tax identification application (sometimes called an employer ID.
This number acts as your unique business identifier on all types of registrations and documents, and most banks want you to have this number before you can set up a business checking account and apply for a loan.
Apply to Your State for a Sales Tax Permit (for Taxable Items, Services)
If you are selling any products or services that are subject to sales tax in your state, you must collect tax from customers and pay the state back that tax. To begin this process, you'll need to apply for a seller's permit from your state taxing authority.
You may also need to collect, report, and pay sales tax on sales over the internet. A recent Supreme Court decision has opened up the possibility for more states to require that online sellers collect sales taxes from buyers outside that state.
After you have applied for your tax ID number, you can use that number to set up a business checking account.
Yes, it's more expensive to have a separate business bank account, but it's a deductible expense and keeping business and personal checking accounts separate helps you avoid including personal expenses on your business tax reports (which is not allowed by the IRS).
A business checking account also makes your business look more respectable and gives you an edge when you want to apply for a business loan.
Learn about what local business licenses and permits you might need to apply for during the start-up of your business.
Create a Marketing Plan for Your Business
Before you can start selling your products or services, you will need to put together a plan detailing exactly what you are selling, who you are selling to, defining your competition, and defining exactly how you will advertise and promote your products/services during your first year of business and beyond.
Having a marketing plan in place will help a potential lender see that you are serious about selling and it will give you a plan of attack to work from as you get started.