The most exciting parts of setting up your own business are the first stages, where you decide what you want to do, where you want to do it and formulate a business plan. Your concept and enthusiasm for the project will fuel your progress through these initial steps, and you’ll be eager to get your premises ready and start welcoming customers. Before you can begin though, there are some important things you need to do to set you off on the right foot.
Structure and registration
There are a number of different business structures, but small businesses will normally be sole proprietorships, partnerships or limited liability companies. The choice of structure will determine how much you pay in taxes and the returns you must file, among other things. There are different benefits and liabilities associated with each structure, and it’s important that your business is registered in the most appropriate category. Professional advice will ensure you select the best structure for your situation. For most small businesses you will then just need to register the name of your business with state and local governments. You won’t need to register with the federal government unless you want to trademark your business or products. What you will need to do is apply for federal and state tax IDs if your business comes under their criteria.
Accounting
If you haven’t done so already, get your business bank account set up. There are several options for running your accounts, from doing it yourself to using accounting software designed for small businesses, or employing a CPA. For a sole proprietor, accounts don’t need to be too onerous, and you simply need to keep records of income and expenditure. If you have employees, you’ll also be responsible for payroll, and this involves administering tax deductions. Be realistic about your abilities in this area; it’s too important a role to not be completed accurately and on time, so outsourcing or employing a professional will be a worthwhile investment. There are plenty of apps and services to assist with accounting tasks, such as the Pay stub generator for preparing employee check stubs, or automated invoicing software that links to your accounts and banking services.
Licenses and permits
You will need to check if there are any federal or state licenses or permits you need, which will depend on the nature and location of your business. If you undertook the right research when you were planning your business, you would probably have already found out what licenses you need. It’s worth double checking to make sure you are covered, or you could face some hefty fines.
For small businesses, the paperwork should be reasonably straightforward and simple to take care of. If your business grows and you change your structure, then a whole new wave of legislation will apply to you. Before you need to worry about that, make sure you’ve got all your documentation and systems in place, so you can concentrate on running your business and making it a success.