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Have you ever thought about starting a business?
Outside of owning your own home, this is the american dream for many people. There is often nothing more rewarding than opening up "your own shop" and working for yourself. However, without proper business planning, even the most talented and energetic folks often times fail in their pursuit. In order to start a business properly and to give yourself a chance for lasting success, you must take care of many legal and business-process issues first. Here are some of the most important issues that should be addressed before you put up the "open for business" sign:
- You must choose the legal form of operation for your business. You should take into account issues such as legal liability protection level, tax treatment, complexity (or simplicity) of formation and cost. For many folks, it is best to consult a business attorney and CPA for this part. For some, the legal portion can often be done through self-help websites such as legalzoom.com or through a particular state's secretary of state website. However, tax issues are often very complex and unclear, so a qualified CPA should be consulted.
- If you are planning on hiring any employees, you must be set up to process payroll and payroll taxes due to the federal, state and local government authorities as well as workers compensation and unemployment insurance. You can again look to a CPA or a qualified payroll service to assist you in this area.
- You will most likely need some form of liability insurance as well as property and casualty insurance, especially if you are offering a professional service or will have a physical location(s) where you deal with the general public.
- You will need to set up a banking relationship to open up a checking account for your business at a minimum and you may need additional banking services such as credit/purchasing card access, mortgages, lines of credits or other types of borrowing.
- You will need to set up and maintain a bookkeeping system to account for your revenues, expenses, assets and liabilities to track your business' financial performance and to be able to accurately have any tax returns prepared.
- You will often need to obtain a vendors license from your state and/or local government authority in order to be able to conduct your trade or business and you may need to remit sales taxes on your sales as well in many states.
- You should have a written business plan in place that outlines key components of your business such as your mission, primary product/service, competitors, target market/demographic, financing plan, advertising/promotion plan amongst other issues. Luckily, there are many great examples of good business plans available by searching the web, contacting your local chamber of commerce or college/university, consulting with your CPA, banker or other business consultant.
TaxSmarty can help with many of the above issues! Please contact us if you would like to discuss your prospective business idea further.
Here are some links to websites that may be helpful to you in regards to starting your own business:
Listing of Secretary of State Websites
U.S. Small Business Administration
Free Quickbooks Accounting Software for Small Business
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