There are so many details to take care of when setting up your own business. Based on my own experience with several small business ventures, including real estate rentals, I have put together a checklist of important items that you must do at the beginning.
Note: I am writing as a US-based small business owner. The UK, Australia, Canada and even US territories all have different laws, rules and terminology.
Depending on your city, county, state– or even country — some of the following items may be optional and others will be mandatory. Always, always check with local governing officials about what is required of you specifically.
Setting Up Your Own Business
Before you proceed with the steps below, ask yourself the following questions…
- Is the proposed activity legal? If you plan to have your business from home, is the activity allowed by local officials? (some cities have restrictive laws)
- Is there a business licensing requirement, mandated by local, state or federal laws? If yes, what are the costs of getting the license?
- If you plan to sell products, have you located wholesalers or suppliers?
- If you are selling services, have you determined your pricing?
- Have you attempted to forecast potential income?
Setting Up Your Own Business – Step 1
Choose A Business Name
This sounds obvious but many startup business owners don’t give enough thought to this step.
- Is the name easy to pronounce?
- Does it seem descriptive of your new business venture?
- When you answer the phone, would it sound professional?
- Is there a web address (domain name) available to match?
- Are you sure that the name is not already taken in your local business area?
Once you have chosen the business name, file the assumed name certificate (fictitious name certificate as it is called in some places) with your county.
Setting Up Your Own Business – Step 2
Choose the Entity
This step may require consultation with a tax professional or legal professional. In the US, the major entity choices would be: sole proprietor, partnership, corporation , LLP (limited liability partnership) and LLC (limited liability corporation). Or sometimes there is a mixture of several entity types, depending on your circumstances.
Many startups begin with the simplest entity, sole proprietor, and then make changes as the business grows in the future. If you choose to incorporate, or create some form of LLC, you can still operate in the original business name, but it would become a ‘dba’ of the new corporation or LLC. At the time that you take this step, you will be required to file additional paperwork and fees with your county and state.
Resource: You may need to hire a legal professional to prepare the documents for incorporation, LLP and LLC. Or, you can prepare the documents yourself with the help of a service like this: (click the banner below)
Setting Up Your Own Business – Step 3
Open Your Business Banking Account
Now that you have your assumed name certificate, also known as a ‘DBA’ (doing business as…), it is time to select a bank and open your business banking account. Some things to consider:
- What are the monthly service fees?
- What are the lobby hours and drive through hours?
- Are safe deposit boxes available on site?
- Does the bank offer merchant account set up or will you need to find this elsewhere?
- Does the bank offer online banking, with online bill payment services?
It is a good idea to also open a business savings account at the same time, so that you can segregate funds for sales tax payments or federally required withholding tax payments. (these are known as 941 payments for corporations)
Setting Up Your Own Business – Step 4
Create a Business Plan.
(I have to admit that I have skipped this previously. And then lived to regret doing so.) Again, this one probably sounds obvious, but many startup business owners just don’t do this step. There are some inexpensive software programs that can guide you through creating a plan; better yet, find a professional on a site such as Elance.com or Guru.com who can write a plan for you, based on a bit of information that you provide.
The business plan is your short-range and long-range blueprint. In order to arrive at a specific destination, you must know the address and location of that destination. It’s the same with your new business.
Where do you plan to take it, in terms of monthly income, employees and product offerings? Get specific with yourself. Get it on paper. And then refer to it often, when you begin to get off track.
Another great reason for getting a professionally created business plan? You will need this document if and when you approach your bank for loan money. All the more reason to get this done and have it ready to be used.
Resource: Don’t know how to do this yourself? Find a talented business professional here: (click the banner below)
Setting Up Your Own Business – Step 5
Your Place of Business – Home Office or Leased Office Space?
If you plan to start the business from your home, make sure that you have a room that can become your office — and that can remain somewhat separate from other activities in the home. Working from home saves money on office rent but it also comes with distractions and complications.
Dedicate an office space in an extra bedroom, the basement or the garage. Move your computer, file cabinet and other business items to this dedicated place.
If you plan to lease an office, warehouse or building, be sure to consult with an experienced commercial realtor who can help you find the perfect location, while keeping your monthly budget in mind.
Before signing on to leases and other agreements, always get the paperwork reviewed first by your lawyer. You will be putting up monetary deposits and signing legally binding agreements on behalf of your business.
Setting Up Your Own Business – Step 6
Don’t go it alone. You need professionals on your team.
Even if you can’t hire an assistant or sales staff at first, don’t try to do every detail yourself, unless you want to quickly burn out (and quickly make a lot of major mistakes). At the very least, make sure you have a competent accountant and an attorney. These professionals can help you to avoid many mistakes that could jeopardize your business.
Setting Up Your Own Business – Step 7
Consult with an insurance agent about your business plans. You may need general liability coverage, business equipment insurance, business interruption insurance, commercial vehicle insurance…don’t skip this and put your business (or yourself) at risk.
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Setting Up Your Own Business – Step 8
Small business software and solutions. Make the tedious and time consuming more manageable.
Thankfully, small business productivity tools are numerous and fairly inexpensive. There are smart phone apps, iPad apps and cloud based solutions for all sorts of small business needs.
See our small business software reviews and small business cloud software comparisons. (coming soon)
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