If you’ve ever dreamed of being your own boss, you may have considered starting your own business. When you thought about your company, did you consider all of the steps necessary to get your business up and running? A lot of planning is required in order to start a successful, profitable business. This guide explains the many facets to starting your own business.
Create a business plan. This will lay the groundwork for your company, and allow you to keep track of company progress. Start a business plan by outlining the major goals you wish to accomplish. Establish what good or service your company will provide, and create a mission statement. This will allow you to form core company values, business policies, and eventually, a brand. Your business plan should also define:
- The market your business will cater to
- Prices of your products/services
- Competitors in your industry
- Risks or problems you could run into and how you are going to face those problems
- The roles of each owner/employee
- The processes you will use to conduct business
- The legal structure of your business
- The finances of your business
Your finances should break down all of the supplies your business requires to run each month, and how much your business needs to bring in to cover those costs and turn a profit.
Set a legal structure. A major element of your business plan will contain the legal structure of your business. The form of business you choose will determine what income tax form you’ll need to fill out. This will ensure your business is legal, as well as help protect the profits of the business and your livelihood.
The most common types of businesses are sole proprietorships, partnerships, LLCs, and corporations.
- Sole proprietorship: A business that is owned and operated by a single person.
- Partnership: One business that is owned by two or more people.
- LLC: A Limited Liability Company combines the pass-through taxation of a sole proprietorship/partnership but with the limited liability of a corporation. These types of businesses are common for non-profits, as LLCs do not need to be organized for profit.
- Corporation: An independent legal entity that is owned by shareholders. Any actions or debts incurred are on the corporation, not the shareholders.
Funding and financing your business. Once you’ve established a business plan and pooled enough money to get your business off the ground, consider all of the supplies your businesses is going to need to run efficiently. Determine how much money is needed to get your business started with the essentials, like desks, printers, computers, and an office space. If your business requires equipment to produce your product or provide your service, you’ll need to finance this machinery. Financing companies like Liberty Financial Group provide leasing on expensive equipment, allowing you to start your business sooner and at a lesser cost.
Choose a location. You should ask yourself a few questions to determine the location of your business:
- Can your business be handled anywhere, or do you need a central office location that allows you to cater your customers?
- Does the location need to say something about your company as a whole?
- Are you going to be surrounded by your competition?
- If you’re selling a product, is there going to be enough foot traffic in front of your location?
- Does the space leave enough room for potential growth?
- Is the space clean and safe to operate in?
- Are their hidden costs associated with the lease of the space?
Taking these questions into consideration will help to ensure you choose a space that will be functional and beneficial to your business in the long run.
Name your business. Choosing a name for your business will help you to build your brand. Ultimately, your business name should say what your company does and evoke a sense of your brand. The name you choose should appeal to you and the type of clientele you wish to attract. Avoid choosing a name that is long, confusing, or misleading to customers.
Obtain licenses, permits, and tax identification. Businesses must file certain taxes with the federal government, but they also have to pay state and local taxes. First, file for your Federal Tax Identification Number, or the EIN mentioned previously. Each state has their own tax laws for businesses, so check your states tax obligations to ensure you file the right forms, such as income tax, employment tax, and state and territory tax.
Hire employees. Prior to hiring people to work for your company, there are several forms you’ll need to fill out and file. First, you’ll need to obtain an employment identification number (EIN). This will be used to report tax information to the IRS. When you file, be sure to keep records of the taxes you are withholding, including Federal Income Tax, Federal Wage Tax, and State Tax. The next step in hiring an employee is to prove their eligibility to work in your state. Then, establish workers’ compensation insurance for your employees, and make your new hire aware of company policies and their rights and responsibilities under labor laws. Once you’ve offered a position to a new employee, register them with your state’s new hire reporting program, and file your new tax forms. Businesses that pay wages need to file the Employer’s Quarterly Federal Tax Return.
Market your business. Once you have established your business in the eyes of the government and hired employees, you’ll need to get the word out about your business. Advertisements on the internet, in newspapers and local publications, and word of mouth are great ways to attract customers to your business. Use mediums and strategies that will appeal to the customer base you want your business to attract.
Starting a business is quite an undertaking, but with the right action steps in place, you can be your own boss and create a successful company you can call your own.