The American Dream is the set of ideals by which the freedoms offered by our nation allow for individual opportunity, prosperity and success. For many—more than a third of working-age Americans—that dream includes starting a business of their own. If that’s a dream of yours, read on to see how to transform that dream into a detailed vision and a successful reality.
First, begin with an honest evaluation of your business idea. Will this type of business suit you? Can you make money with this business? A break-even analysis can help determine if your idea is a money maker. Develop a business plan, including a profit and loss forecast and a cash flow analysis. Establish a marketing plan and seek out sources of financing if you don’t have sufficient resources to get the business started.
Next, consider the legal structure of your business. Will there be co-owners or are you the sole proprietor? How much protection will you need from personal liability? Research and understand the various types of ownership structures—and the tax advantages available for your type of business. A business advisor or business attorney may be helpful in the decision process to help you make the best choice between a Sole Proprietorship, a Limited Liability Company, a Partnership, or a C- or S-Corporation.
With a solid business plan and a decision on the legal structure of your business, it’s time to choose a name for your business. Evaluate several different names. An attorney can help verify the availability of a company name with your Secretary of State and can also help with trademark research and the availability of your internet domain name. The attorney can also help create the necessary legal documents and ensure they are filed with the appropriate state agencies.
Does your business require a “bricks and mortar” location? If so, your business plan should have identified the requirements you have for a physical business location. What features and fixtures will you require? How much rent can you afford? Does the location you’re considering have the proper zoning for your business activity? Before you sign any commercial lease, and certainly before you purchase property, be sure to have your attorney look over the details as well. That could save you a lot of difficulties as well as unforeseen costs down the road.
Now it’s time for you to get all the necessary licenses and permits you’ll need for your business. Obtain a Federal ID number, any business licenses you need and a sales tax license if you are a retailer. You’ll also need ID numbers for any employees in your business. Contact a reliable insurance advisor or broker to determine the types of insurance you’ll need and the coverage options available. Get insurance for any vehicles used in the business as well as liability insurance if you’ll have customers or clients visiting your business establishment. Don’t forget liability insurance that will cover the products you provide or manufacture. If you use your home as your place of business, be certain that your homeowner’s policy covers damage or theft of business assets as well as liability for business-related injuries. Consider health and disability insurance—and perhaps life insurance—for yourself, your business partners and your employees.
Finally, you’ll need to decide how you’ll record your business activities. While this is essential for tax purposes, you’ll also need this information to determine how your business is performing and to help assess the feasibility for many of your business decisions. Will you hire a bookkeeping service, or an employee to handle this important function or will you do the books yourself? For many, hiring a bookkeeping service ensures you get well-qualified assistance, along with the bonus that it frees you, the business leader, to focus on those aspects of your business that ensure performance, growth and success. If you decide to handle this aspect yourself, you’ll need to evaluate the bookkeeping software available and arrange for training. Regardless of who handles the books, you’ll need to make decisions regarding your accounting basis—cash or accrual, your fiscal year and the types of record keeping systems. Establish your business bank accounts and set up your receipt and invoicing systems. Set up a system to handle the essential function of paying your employees and determine whether and when you need to start paying yourself a salary. Don’t forget Uncle Sam! Consult IRS Publication 334 and the IRS Tax Calendar for Small Business for important tax details and the relevant dates when estimated tax payments and returns are due.
Bradshaw, Gordon & Clinkscales, LLC has established a solid reputation for being a great partner to entrepreneurs throughout our market area, helping them establish successful companies. Contact us to learn more about the benefits we can bring to your vision for your own business. We can help make it a successful reality!