If you are considering starting a small business, you might be intimidated by what you think the startup procedure entails. A business is a big deal, so it seems like it should involve tons of paperwork and fees to start one. In reality, the process is very simple and streamlined.
A small business is relatively straightforward to start, and it should only take a few hours to get the preliminary groundwork done. It is still vital to go through the proper channels and fill out the right forms, but all of that is simple, especially once you know what these steps are.
Follow this short guide and you will be well on your way to owning your own business.
Before you do anything, register your trade name if you can. You will save yourself a lot of time going forward. It is common to put this off until you can come up with the perfect company name, but avoid this. You can always operate under a different name than you registered, or even change your name down the line, but you will want to start operations immediately. Additionally, you might want to file for an EIN. An Employer Identification Number (EIN) is a 9-digit number issued by the IRS to identify a business entity. It is required in order to file federal tax forms with the IRS as well as apply for other permits and authorities.
If your company is small enough, it may not be necessary, but if you have any plans to expand, it will be required eventually anyway. Regardless, an EIN is a good way to show clients and the entire business world that your company is serious. Plus, it is free and easy to get.
Permits, forms, and licenses.
This is where the bulk of the work is. It may seem complicated, especially because the required paperwork varies depending on where your business is, but it really is quite simple. To start, ask your locality what is required of you. You will definitely need a business license, and, if you are selling products rather than services, a seller’s permit. Besides those, the required forms will be unique to your location. A very common form is a business personal-property tax form. You will likely need one eventually, but sometimes it is not necessary in the first year of operation.
Set up your accounting.
In small businesses, a common pitfall is combining personal finances with business finances. This can cause problems, especially come tax season. You should set up a business bank account to keep everything organized. Also consider using a local credit union instead. While a dedicated bank account is necessary, do not make your accounting too complicated. A simple spreadsheet that keeps track of income and expenses is more than enough when starting a small business. As with all aspects of running a business, there will be a time to upgrade your accounting once the ball gets rolling.
The business plan.
Every business needs an action plan. Most people waste too much time putting together a working document. A simple plan can get you started but don’t waste all your time on a business plan when you should be in business. It’s vital if you need to raise funds now or in the near future. It’s important but not required.
A business plan is a work in progress. Lots of things will change once you are business. If you are keen on maintaining a solid business plan , you should regularly review and update it. A simple executive plan that serves as a guide always work. Focus on getting the business started instead of spending too much time planning.