Start Up Guide
How to Open Your Own Small Business
Let’s say you have an idea for a unique product or service. You want to open your own small business. You’re darned sure it will work and you have no doubt that you want to be your own boss. You are ready for action. It’s time to do something. Great! Hang on. Here you go!
- Claim your fictitious business name with an FBN (DBA).
- Further protect your business with Copyright, Trademark and/or Service Mark.
- You will need a Federal Employer Identification Number (FEIN) from the IRS to open a bank account or process payroll
Open a business banking account so you can separate business and personal finances
- Do this as soon as you secure your business name and know your business ownership type.
- Pay your start up costs with this account, not with your personal account because you will likely want to deduct these expenses on your taxes.
- Separating personal and business finances makes the taxman happy.
- While requirements for opening an account vary from bank to bank, most require copies of partnership and corporation paperwork and completion of an FBN/DBA certificate.
- This will have a big impact on your taxes, start up expenses, as well as daily business operations.
- as a guide to you now and in the future
- to impress backers, bankers and SBA to help obtain loans and financing
- to include sections on product, customer, competitors, etc., will help you write a marketing plan
- Start with a logo and use to identity your business on all marketing materials.
- Build your website, blog and social networking sites.
- Join networking organizations such as your local Chamber or Womens’ Network.
- To stretch your budget consider low cost/free marketing such as word of mouth, press releases, guest speaking, networking, and finding places to post announcements of your new venture and events (supermarket bulletin boards, Craig’s List, penny shoppers)
- Use every technology available, including the internet, to gain a competitive advantage. When customers do research, make sure your company is there with the information they seek.
- Use the Internet to augment your research.
Build a working knowledge of federal and state laws affecting businesses
- Know which licenses and permits you need to operate your business.
- Find a competent legal adviser to help you with legal papers.
- Understand Occupational Safety and Health requirements, and hazardous material regulations.
- Be familiar with local ordinances for signage, parking, zoning issues.
Before you hire employees
- Obtain an employer ID from the IRS plus employee forms. Apply for this tax id number even if you don’t plan to hire employees.
- Contact your local INS office to get Employment Eligibility Verification forms (Form I-9) to prove your employees have the right to work in the United States.
- Consider using independent contractors, but know the difference!
- You may be able to cut expenses by hiring family members. Check IRS first.
- Laws, tax code and good business practices require records
- If necessary, find a professional to do this for you.
- Maintain complete records of sales income and expenses, accounts payable and receivables.
- Decide how to handle payroll records tax reports and payments.
- Set up and schedule financial reports.
Obtain necessary Workmen’s Compensation Insurance
Obtain insurance for fire, theft, robbery, vandalism and liability
Find a Business Location
- Buy, rent, lease or work from home
- Work on line
Arrange Initial Financing
- Take time to find the best source for you–a bank, venture capitalist, angel investors, SBA grants (government).
- Be cautious when using your own savings.
- It can be a few years before you make enough profit to replace savings
- Do not touch your existing 401K or IRA to back your business. Taxes and penalities can grab around 40% of the money you take out of a 401K or IRA.
- You need personal emergency savings of 10-12 months of expenses–especially now that your income is risky.
- Learn which Small Business Credit Card is right for your small business by taking a quick quiz.
Get ready to sell merchandise
- Get a Resale Permit.
- Draw up a merchandise plan using sales estimates to determine how much inventory you will need so you can control your expenditures.
- Find reliable suppliers willing to help you in the start-up phase of your business.
- Always compare the prices, quality and credit terms of suppliers. These can vary greatly.
- Use information gathered in your business plan to price your product or service.
- Set up an accounts receivable to handle billing.
- Make it easy for your customers to pay you with credit cards.
Have the full, enthusiastic agreement of your life partner, business partner or spouse (unless you’re on your own). Without it, you’ll have no one to hang on to during the rough and rocky ride ahead of you.
If you plan to accept credit cards, you need a merchant account–a contract between you and a bank that extends a line of credit so a merchant can accept payment card transactions. These accounts are brand specific (Visa or MasterCard, etc.) Without an account, you can’t take credit card payments.
Many businesses never know if they are making money or failing because they do not keep good records or have a solid business plan.
Find a mentor to offer ideas, suggestions, resources and help keep your business on track.
It is usually easier and less expensive to start up an online business than an offline business.