7 Steps to Starting a Small Business
If you’re looking to become an entrepreneur. Look into utilizing these 7 steps to starting a small business so you can jumpstart your career:
Step 1: Put together a business plan
There are a lot of resources on the Internet with guides on how to build a business plan. What exactly is a business plan? A business plan is essentially a detailed roadmap on how you plan to achieve defined goals.
The level of detail in the plan varies greatly depending on the entrepreneur. Some plans have very elaborate projections, industry and competitor analyses, and financial forecasts. While other plans simply set some goals, some steps to take, a location, and a financing strategy.
Regardless of how detailed it’s, setting a realistic plan is an important first step for both evaluating the idea before spending money on it and for giving you a sense of direction during the building process. Be sure to have a plan for a difficult first year or two; the beginning is often more difficult than anticipated!
Step 2: Reach out to an advisor
Many small business owners try to pinch pennies and wait to consult with a certified public accountant (CPAs), attorney, or business coach until there is a legal issue, tax filing requirement, or something else is going unexpectedly wrong. This is a major mistake that happens far too often.
First off, many CPAs will provide a lot of great ideas and advice in an initial meeting that will help with the rest of the setup process. In fact, it is not unusual for CPAs and other advisors to provide a free or low cost consultation, especially with an agreement to become a client.
Secondly, you can usually get very good feedback from advisors that may present new ideas that could change your approach or tip you off to something you are not considering already. CPAs in particular are a great sounding board for providing feedback on your business plan’s goals and estimated figures.
Lastly, a CPA, attorney, or business coach is very likely to have other clients or connections in your industry that they will be willing to introduce you to.
Step 3: Determine the legal structure and register the business
There are many different business structures available, and they all have pros and cons. The most popular entity for a small business of the last few years has been a limited liability company (LLC), but it isn’t always the best choice. There are a lot of considerations when choosing a business entity, especially from a taxation perspective. This decision should be something you discuss with a CPA or attorney.
Step 4: Get a tax identification number from the IRS
Once your business entity is set, you can easily get a tax identification number from the IRS website. If you are having a service or attorney setup your business entity, they will often offer this step as part of the package.
Step 5: Register with state and local tax, business license, and permit departments
Speak to your CPA and/or attorney about registering for state and local taxes, a business license, and any applicable business permits. Depending on your industry and location, you will have different requirements.
Step 6: Create a bank account for the business
Once you have a business registered with the state, a tax identification number, and business license, you are ready to open a business bank account.
Step 7: Reevaluate your business plan one more time and… profit!
The first year is typically far more difficult than entrepreneurs anticipate. But being a small business owner can be very rewarding.
Continue to reevaluate your business plan and update it as your business grows.