Starting a business is like climbing a mountain; from the base it may look daunting but focus on taking it one step at a time and you will soon reach the summit.
Some of the first steps to starting a new business may not be as complicated as you may think. We’re not talking about writing an actual business plan which includes sources for financing, developing a marketing strategy, and projecting a timeline. We are talking about setting yourself up and taking that very first step to give your idea wings.
Stop agonizing over your company name
We all want to find that perfect company name that will evoke an instant image of what it is that we are trying to do. But stop right there. If you are waiting to come up with the “right” name then you are also waiting to start making money.
Don’t get hung up on all the branding and selling opportunities that could be done if you only had the right name. This includes racking your brain over the perfect domain name or website design that will grab everyone’s attention. Just pick a reasonable name to get the process started. It doesn’t have to be perfect but it can’t be awful either. Keep in mind that your business can function under a different name than your company name. You can complete a “doing business as” form in minutes. Remember, you can always change your company name later, when inspiration strikes, but a name alone, should not be what stops you from moving forward.
Get your free Employer Identification number (EIN)
Your EIN is the federal tax number used to identify your business. You won't need one unless you plan on hiring employees or plan to form a partnership, LLC, or corporation.
But even if you don't need an EIN, you should still apply for one. It's free, takes minutes, and having this will keep your Social Security Number (SSN) private and lessens the chance of identity theft. For tax purposes, if you don't have an EIN, your SSN will be used to identify your business. To get your EIN apply online at the IRS website rather than using the online legal service you might be using to set up an LLC or corporation.
Register your business name
If you don’t plan on operating under your own name, you will probably be required to register your business name with the state authorities. So long as the name isn’t already taken or very similar to other businesses in your area, the name will most likely be approved immediately.
Apply for a business license
Your state or local municipality might ask for a business license. This form can be filled out quickly and you should use your EIN instead of your SSN to identify your business.
Find out if you need a business personal-property tax form
In some states or municipalities, businesses are taxed on personal property. If you are required to file a business personal-property tax form and you plan to work from home using computers and equipment that you already own, you won't need to list those items. If you buy personal property during your first year of business, those items should be listed when filing your business personal-property tax form the following year.
Does your town require any other permits?
Every area has different requirements, such as a “home occupation permit” to ensure that home-based businesses meet zoning requirements. Ask your township and they will let you know.
Get a seller’s permit
This is also known as a certificate of resale, which allows you to collect sales tax if you plan on selling products. There is no sales tax for services. Your state’s department of taxation website has complete details, forms, etc., if you decide to apply online. Otherwise most localities have forms you can complete while you're at their administrative offices.
Open a business bank account
One of the best ways to keep your business accounting straight and keep the IRS happy is to keep personal and business funds separate. Have a business account with your business name and EIN and use that account for all deposits, withdrawals and transactions related to your business. Find a bank or credit union that is convenient. Oftentimes local credit unions might have better deals than banks.
Work with a simple accounting spreadsheet
Don’t worry about spending hours trying to figure out accounting software like QuickBooks, and waste time on potential expense and income categories. Keep your bookkeeping simple in the beginning with Revenue and Expenses columns where you can add line items when needed. As long as you carefully record everything you do now, creating a more formal system later will be easier when you have significant data to enter.
Work with a financial advisor
Last, but not least, work with a good financial advisor who knows your personal financial situation as well as what you are trying to accomplish with your business. Your financial advisor can help guide you along the way with business planning strategies as you grow, such as employee benefits, retirement plans, business succession plans, and more! All while ensuring that you protect yourself and your family and what you’ve already built up.
So, if you believe you possess drive, discipline, and determination--and have a great product or service to provide--then these steps will set you on the right path to business success.