In my last post, I discussed some basic steps you’ll want to take if you’re considering starting up a small business. Small business startups are in good company – more than one-half million new small businesses open each month, but keeping the doors open sometimes depends upon how much planning and preparation you’ve put into some basic business startup considerations.
3 more business startup items on your to-do list
You’ve written the business plan and gotten some good advice from locally available business resources. You’ve also selected a location for your business and consulted an attorney about how your business startup should be structured in the legal sense of the word. Now what?
Financing. Financing your operation is a big business startup consideration! If your business is small, and you’re the sole service provider, you may not have much in the way of business startup costs. That’s good, but you’ll also need money to cover both your business expenses and your living expenses while you build your business. Most business startup ventures that fail within the first year do so because they’re undercapitalized. Starting a business and getting it onto a solid financial foundation takes time. Don’t underestimate how much money you’ll need to see your business startup through its first year.
Small business loans, backed almost fully by the federal government, are available through local banks. Think carefully before accepting “loans” or “investments” from friends and family members. To make family “loans” acceptable to the IRS, your backers will need to charge market-rate interest. If you call their cash an “investment,” you’ll have to give up part of your ownership stake in the business. That means your investors could lose some or all of their cash if things don’t go well. You may not want to introduce complications like that into family relationships and friendships. An impersonal lender may, in fact, be your best bet for financing your operation.
If working capital is even remotely likely to be a problem, consider taking out a Small Business Administration loan to tide you over. Even if you don’t spend the loan proceeds and return it to the bank later, having a cash cushion in the bank is almost always a good idea.
Register your business name. Registering a business name could be included with the services you receive from an incorporation attorney or you may have to take care of this business startup task yourself. Registration is a simple process, and may involve nothing more than filling out a few papers and paying a filing fee for the county clerk, or submitting papers (and paying a fee) to your state. Registering your business name gives you protection from other entrepreneurs who might try to use the same name, either in your state or elsewhere. It can also help you discover businesses that have already registered the name you want to use.
Get right with the IRS. Another major business startup task involves taxation. Plan to pay your taxes on time and in full! Being prepared to pay taxes may mean getting an Employer Identification Number (EIN). If you have employees, are organized as a corporation, collect excise taxes, sell tobacco, alcohol or firearms, operate certain types of businesses or offer a retirement plan as a benefit of employment, you’ll need to request an EIN. You can apply online, by fax, by mail or by phone to the Internal Revenue Service for an EIN.
If you have a sole proprietorship – you work by yourself for yourself – and you have not organized your business as any type of corporation at all, you may use your Taxpayer Identification Number (TIN) – also called your Social Security Number – to file and pay your taxes. You will not file a separate tax return for your business, but you will account for your self-employment income on your personal tax return every year.
Grantstreet Creative is a marketing and design support firm located in Dover, OH. If you would like more information about marketing your small business, please contact our Creative Director, Dave Ramsell or give Dave a call at (330) 243-0651 to set up a consultation.
Photo Credit: djshaw, via FreeImages.com