Here's How to Start a Business in 15 Steps
Starting a business takes research, smarts, confidence, and a decent amount of guts. You have probably kicked around the idea in the past, but never knew how to get started: How can I start a business with no money? What types of insurance do I need? Am I getting the best advice?
There are many sources of information available for you to seek out online…. lists of small business ideas, how to draft a business plan, accounting software options. Here are the essential steps to getting your business off the ground.
Step 1: Find the right opportunity
What business should you start? It depends on your area of expertise; plus, the amount of time and money you have available to invest in your new adventure. Some small business ideas can be launched from home, while others would require a separate landing area.
Step 2: Write a business plan
A strong business plan can assist in the preparation of every aspect of your business. This document should include details of the products and services you expect to offer, how you plan to profit, who you need to include on your team, and more.
You will need a business plan to present to potential investors and lenders. But more importantly, the process of writing it will help you lay out the framework for your business.
Step 3: Choose a business structure
The legal structure of your business can affect everything from your taxes to what you are liable for. Speaking with a tax professional can help you choose the right structure for you. You can also change your structure as you grow.
Step 4: Get a federal tax ID
Getting an EIN (employer identification number) is essential for most businesses to file taxes, open bank accounts, and perform other required tasks. The good news is that once you have the previous three steps planned out, the online application for the EIN only takes a few minutes.
Step 5: Apply for licenses and permits
There are industry specific credentials you may need to obtain as well as permits for the location you choose. Your city may require you to apply for a business license regardless of what field you are in. If you plan on renovating a space, you may need permission for a zoning change.
Set aside time early on to find out what licenses and permits you need before you can open the doors. Industry and local business associations like your Chamber of Commerce should be available to offer advice.
Step 6: Open a business bank account
Keeping your personal finances separate from your business is key to managing your new endeavor. A business account will help you and they are easy to obtain. This will make things flow more easily when it comes to tax time and if you eventually outsource to an accountant or bookkeeper.
Step 7: Understand your financing options as a startup
Most new businesses need a little capital to get started. Generally, business loans are not an option for companies that have been operating for less than six months, and most online lenders prefer at least a year. Many business owners rely on their own savings to get started. You can also look into personal loans, business grants, crowdfunding, and more.
Step 8: Get a business credit card
A business credit card can come in handy when purchasing needed supplies and paying your bills while your cash flow is still sporadic. It will also help to keep your finances separate from your personal dealings. Usually, you can qualify for a business credit card based on your personal credit score, so these can be good tools when starting from scratch.
Step 9: Choose the right accounting software
It is imperative that you keep records to show how much revenue you are bringing in and how much you’re spending. Accounting software can streamline this process and make the progression easier. As your business grows, you may want to seek out a bookkeeper. This person will help ensure that your records are complete and accurate. Being thorough with your financial records will make it easier to apply for financing and of course, file your taxes.
Step 10: Prepare to pay your taxes
You will have new tax responsibilities as a business owner and some new breaks as well. You may need to pay taxes throughout the year, and not just at tax season. Filing taxes can be complex and time-consuming especially if you are learning as you go. Developing a relationship with a professional early on can help set you up for success.
Step 11: Protect yourself with business insurance
It is important to protect your business and your personal assets. It is recommended that every business carry general liability insurance in case of legal claims. You may also need insurance to comply with contracts like setting up a booth at an event or working as a subcontractor on a larger project.
Step 12: Establish your online presence
An online footprint is critical for almost every business; especially if you want to sell products. Establishing a website and social media profiles early on can help you start developing relationships with customers and clients right away.
Step 13: Figure out how you will accept credit card payments
If your business takes plastic as a form of payment, you will likely need a third-party payment processor and a merchant account. If you accept payments in person, you will need a point-of-sale system too.
Step 14: Learn how to hire employees
You may not need to hire employees right away, but in the future, you may require the assistance of additional workers. This comes with its own set of insurance policies, software, etc. So be aware of these things as your business continues to grow.
Step 15: Get financing to grow your business
Once you have been up and running for six months to a year, you may start qualifying for business loans. Getting financing can help you grow and expand with things like new equipment, expanding your inventory, or float you through a slow season while you prepare for future increased revenue. Small-business loans are a great option to investigate.