There are so many different types of small business, but all have the same main aim – to become a profitable enterprise.
Of course, there are some differences in needs, aims, and even models. These differences will come from the type of product or service that they offer, the type of customers that they are looking for, and the overall plans of the company owner.
All businesses, even the global conglomerates that we all know and recognize have to start somewhere. Your business will have a better chance of a successful first year if you have everything you need in place financially, from tax forms to corporation documents – and here is a checklist of things that can help.
1. Business Plan
Even the smallest business needs a plan, even if that is only to nail down your goals and expectations (as well as how you are planning on achieving them).
If you are going to pitching for investment or applying for a business loan, you will need to have a formal business plan – although the complexity will depend entirely on the nature of the business itself. The content of your business plan will depend on what the company will be doing, but you will usually need to include the following:
- Executive Summary
- Business Description
- Market Analysis
- Description of Products/Services
- Market Analysis
- Financial Projections
2. Start-Up Costs
By estimating what your startup costs will be, you will have a better idea of when your business will become profitable. There are one-time costs that you will have to shoulder, such as lease deposits and registration fees, and then ongoing costs like overheads, worker salaries (including yours, of course), taxes and computer equipment.
You might want to start with a basic spreadsheet to help you list all these costs and calculate them; you can move this into something a bit more sophisticated later.
3. Register Business
Registering a business will vary slightly from state to state, and the type of business will also have an impact on what the process will look like for you.
One of the things that you will have to consider is the type of business structure that you are going to have. The main types are:
- Sole Proprietor or Partnership
- Limited Liability Company or a Limited Liability Partnership,
- Corporation
Once you have a business name, you will need to register with the IRS. This will include getting an Employer Identification Number (EIN), which is the company federal tax ID and will be used for all sorts of things, like paying taxes, opening a bank account, applying for business licenses, and hiring staff.
4. Open Accounts and Get Relevant Permits
Even if you are a sole proprietor, a business bank account will make managing your business and personal finances simpler, especially when it comes to taxes.
You are likely to need some sort of permit or license to operate your business. Some of these might include:
- Sales Tax Permit
- Local business license
- Liquor License
- Food License
- Tradesman License
- Occupational License
5. Set Up Systems
While it might seem like an expense to get started, having some systems in place from the beginning will reduce the administrative load on you.
One of the first systems you’ll probably want to get set up is your financial accounting. There are several different bookkeeping records that you will need to keep, so this can really help keep them all together. The best financial systems will help you manage your tax liability – don’t forget that as a business you will be expected to file quarterly and keep up with employee taxes if you have any staff.
A management system will get you ready for scaling, and might include calendars, scheduling, customer communication, and an organizational chart – and will also provide structures, workflows, and processes that will be useful now and in the future.
With this in mind, you should feel more confident in getting your business started.