I get excited when I get a call to meet with a business that is just starting out. Their ideas are always fun to listen to and you cannot match their enthusiasm. Usually they come wanting to open their first business account but often do not have the proper information needed to do so.
After years of research, meeting with hundreds of business owners and helping them get their business off the ground, I put together a list of top ten tasks for anyone interested in starting a business.
- Create a business plan. Creating a thorough and realistic business plan is important to not only get the business off the ground but create realistic expectations of profitability and income. Do you have a roadmap for when you expect your business to be profitable? What would your cash flow look like? Do you have a strong marketing plan? Who are the competitors in the market? What is your competitive advantage and value proposition? Do you have any management skills or experience in running a business or company? A business plan is also required when applying for a loan.
- Determine your business ownership structure. There are four choices when selecting a legal business structure – sole proprietorship, Limited Liability Partnership, Limited Liability Company, or Corporation. If you do not know the type of legal business structure that best fits your business, sit down with an accountant to discuss your options. It is important to start this discussion early because your decision will affect your startup costs, the process needed to create your business, your taxes, and personal liability for actions and debts of the business. Choosing the correct business structure from the beginning can also help you avoid costly paperwork in the future.
- Apply for an EIN. An EIN is an Employer Identification Number. You can apply for a number on the IRS Website.You will need this to open a bank account, process payroll and file your taxes, among other things.
- Register your business with your state. Each state has different requirements to be registered and have different regulations for running a business. If your business is regulated, you may need additional permits or licenses. It is important to check these requirements. Most states have excellent websites and resources to answer any questions you might have.
- Open a bank account in the name of the business. You should not mix your personal and business banking. It is important to meet with a banker early in the process to understand the difference between the two accounts in order to reduce any potential banking misunderstandings with your business account. Your banker can also help you determine and prepare the proper documentation before opening a business account.
- Know your personal credit. It is never too early to start thinking about how you intend to fund your business. Many businesses utilize credit to grow, which is largely based off your personal credit, especially when you are just starting out. The sooner you know your personal credit, the more time you will have to address your score before applying for a business loan. If you are unable to take on additional debt, it may be necessary for you to have a co-signer on the loan.
- Determine your insurance needs. You want to make sure you are protected. There are many types of business insurance that cover anything from product liability, workers compensation to company vehicle. A decent policy can cost as little as a few hundred a year and still offer extra level of protection to protect you and your assets. Speak with a trusted business insurance agent to determine the type and extent of coverage you will need for your business.
- Determine if you need an accountant or bookkeeper. Do you have a good understanding of business finances and are you great with numbers and details? If you answered yes to both questions, then you may not need to employ an accountant until your business growth dictates it.However, if you lack experience keeping records and tax time is already a burden for you, you should consider hiring a professional because incorrectly managing your accounting system will hurt your business in the long-run. While some business owners rely on an accountant for all their financial activities, others use a bookkeeper on a regular basis. If you are looking to reduce expenses, consider hiring an accountant during the startup phase of your business as well as during tax period, and switch to a bookkeeper for regular record keeping. Regardless of who you choose to manage your business finances, hiring professionals is important to maintain the fiscal health of your business.
- Create a custom website and email domain. Securing a custom web and email domain convey a sense of professionalism and legitimacy. Sending an email to fullname[at]businessname.com instills more confidence in your customers, potential investors or partners than sending emails to a personal email address. In addition to providing a better idea of your business, a custom website also shows your commitment to starting a business because of the time and effort involved in creating one.
- Network. Tell your friends and family about your business idea and ask for honest feedback. There is no better way to get your business off the ground than with the support of your social network.
Having worked with many new business owners, I understand the amount of love, sweat and tears they put into turning their business into a reality. Although there are many more things to consider when getting a business off the ground, this list is a good start to ensure you are on the right track, meet the basic requirements, and have the necessary paperwork to launch your business.