Starting your own business can be a daunting task. From legal decisions to financial choices, there are a lot of things to take into account. But despite the complicated nature of some of the issues, there is also a lot of additional help available, especially for groups that are disadvantaged and many reforms are in place to aid start-ups of new and micro scale business units. The following is a step by step guide to starting your own business:
1. Business Plan
A business plan details what your business stands for, what it has to offer to the market, and also, what kind of market you are aiming for. Your business plan enables you to identify and build your niche in the market. Every business has a certain uniqueness, which sets it apart from other similar businesses. And if you are dealing with a product or service that is pretty common, you have to find a way of setting yourself apart from others. For example, there are many good restaurants, but there are always one or two good dishes that a restaurant is remembered by. This is what you have to do with your business and creating a solid business plan at the start is a great first step so you have a roadmap for where you want to go.
2. Assistance and Training
Because someone starting a business needs to have a basic understanding about financing, financial management, and business strategizing, as well as various business utilities and technologies getting help from experts and professionals is a valuable way to build a solid foundation for your business. There are many free counseling services available that you can make use of. These services walk you through everything you need to know about starting a business.
3. Business Location
Choosing the right business location is crucial and requires a lot of research and planning. You need to look into state laws, analyze your competition, look into demographics, assess the supply chain management, and do all these while staying on a budget. You can’t use all of your start-up capital choosing and securing a location. The best location is the one that gives great exposure to existing and new customers. It should be safe, aid in future growth and development, and should preferably be close to your suppliers.
In the likely event that you aren’t completely funded when you want to start your business, there are many loans offered by the SBA, and they are all for specific purposes. For example, the Microloan program helps NPO and small scale units by loaning up to $50,000 for startup and expansion. On an average, a microloan can be obtained for $13,000. Collaterals have to be provided and personal effects of the owner are also a security for the loan. This loan can be used for furniture and fixtures, machinery, inventory, and for financing working capital requirements. The repayment term is 6 years (maximum) and the terms vary depending on the amount, use, and needs of the owner. Other loans by SBA are general loans for small business, disaster loans, and CDC/504 loans, to name a few.
5. Tax Implications and Legal Requirements
The form of business has to be decided. You have to decide whether you want to start a partnership, sole proprietor, a LLC, among others. This would, in turn, affect the kind of taxes and returns you need to file. Every state has its own corporate or business tax. The legal structure of your business would determine the state taxes that are applicable to you. In Federal tax, you have to pay income tax, excise, employer tax, and tax for self-employment.
6. Business Name
Your brand image depends on the name you choose for your business. So, the business name is a representation of the business and its product or service. The business name has to be registered if it is different from your personal name, which would be your business’ default name. This registration is done with the county clerk of the state office of whichever state your business is located in. The registered business name would be used in all future communications of the business with others, tax filings and returns, permits, licenses, and government forms.
7. Tax ID
A Tax Identification Number is the same as an Employer Identification Number (EIN), and it is used for identifying your business unit. You can apply for an EIN online, and your state laws would determine whether you need a charter or a state number.
8. State Taxes
Income and Employment Tax are the two most common state taxes you have to pay apart from your Federal taxes. The tax structure differs from state to state. The Income tax is the same for everyone but Employment taxes include taxes for workers’ compensation and unemployment insurance. Some states also require insurance for temporary disability. You should get a thorough knowledge of your state’s tax structure and requirements.
9. Licenses and Permits
For legal running of a business, there are certain state and federal licenses and permits that every business must have. There are many activities that are regulated and supervised by the federal agency like agriculture, aviation, alcoholic beverages, fishing and wildlife, firearms and explosives, mining/drilling, nuclear, transportation, and television/radio broadcasting. There are different license and permit requirements for every state, and you need to look into that to determine which ones you need to obtain.
10. Employer Responsibilities
There are many state and federal laws and regulations that need to be followed once you start hiring people for your business. The hiring can only start once you have your EIN. For 4 years, you have to keep all records related to employment taxes. This involves receipts, expenses, and the financial statements of your business. Form I-9 has to be submitted for employee verification and eligibility.
More information about starting a business can be found here: