So you’ve decided to take the leap into entrepreneurship. Now what? Here are a few things to consider as you’re setting up your business.
1) Business Plan
First, you’ll want to take your idea and plan for execution and turn it into a business model. Writing out a business plan is a good blueprint for where you plan to take your business and helps you identify opportunities and risk areas through a better understanding of your market. A business plan should at a minimum include: executive summary, mission, background, organization, go-to-market plan, market analysis, market potential, and strategies (e.g. financial forecasts).
2) Create your legal entity
Create a corporation, Limited Liability Company, Partnership or Sole Proprietorship. If sole proprietor or partnership and you choose to use a business name other than your personal legal name, you must file a Fictitious Business Name Certificate (DBA) with your local County Clerk’s Office to identify the owner(s). Corporations and Limited Liability Companies (LLC) must file Articles of Incorporation or Articles of Organization within a state and maintain all records, minutes, etc., as required by law. Many companies choose to do this in Delaware because its business law is one of the most flexible in the country. You also don’t have to pay taxes on your business in Delaware if you are not operating there.
As a sole proprietor or partnership, you’ll want to file a doing business as (DBA) or fictitious business name (FBN) with the county you are operating your business in. You can look up the County Clerk’s website and find out how to file the DBA/FBN.
3) Licenses, Permits (specific to your line of business)
If you are selling goods within a state, you’ll need to file for a state business license. If you are selling specific goods, like alcohol or firearms, you’ll need to obtain specific licenses. Depending on the state you are operating in, you may be required to obtain a business license within each county/city in which you are performing work. Check with your County Clerk. Look into special permits for your industry, e.g. construction or food and beverage.
4) Taxes and banking
You’ll want to be set up with the IRS, so be sure to look into forms needed. You can always call the IRS to be sure.
As a business you are required to have an Employer Identification Number (EIN) to use as a federal taxpayer identification number. You will need this number to open a business banking account, pay employees and for tax purposes.
5) Business address operations
You might be thinking you don’t need to worry about this because you are planning to work out of your home for the foreseeable future. However, there are zoning laws even in your neighborhood. Common zoning restrictions include: no deliveries, no inventory storage, sign restrictions and no customer parking to name a few. Please check with the jurisdiction in which you plan to operate a home based business for permit requirements and fees along with additional information.
6) Hiring employees
Consider what work your employees will be performing and get workers compensation if necessary. There are also incentive programs for hiring new employees in certain states. You can find out more about this through local resources (see below).
7) More resources
Finally, if you are looking to network or get free advice on the basics of starting out, you are in luck. Most places have local resources to encourage your business to grow and flourish. Leverage these! Some of them include the Small Business Development Center (SMDC), Small Business Administration (SBA), and Chamber of Commerce. They will also likely to provide you more resources from there. Also start to think of adjacent industries that you could benefit from working together, e.g. you’re start a landscaping business so perhaps you can reach out to your local Chamber of Commerce for contractors or interior designers to connect with.
This is an exciting time, so use the resources you have to help you get going!