Don’t you just love capitalism and free enterprise? Here in America, anyone can start their own business and profit from it! That doesn’t mean that you can do whatever you want, though. There are rules and certain steps that you must follow if you want to start your own business, and if you mess up big somewhere down the line, then the IRS will either fine you or close your business. They don’t care if you didn’t know that you did something wrong. This guide will help you learn some basic steps that you need to take when starting a business.
Step 1: Come up with a strong and clear business plan
You’re going to need to figure out what kind of business that you want to start and what you want to achieve down the metaphorical road. Are you going to sell products? Maybe you’re going to provide services (plumber, electrician, taxi, etc). Perhaps you would rather open a restaurant or insurance company. Whatever you choose to do, start by writing down a business plan.
A business plan is a formal statement of business goals, agendas, and plans for reaching them and is a great way to avoid confusion or forgetting to add things when your business gets started.
A clear business plan should include the following:
- Customer needs
- Your solution on how to fulfill their needs
- A business model (How you’re going to make money such as how much you’re going to charge your customers.)
- Target market (Who are your customers, where are they located, and how many of them are there?)
- Competitive advantage (Your advantage over your competitors. What makes your company stand out?)
- Management team (Who is going to run your business? Make sure that they are qualified.)
- Financial summary (List where your money is and where it’s going: include a balance sheet, income statement, equity statement, and a statement of cash flows.)
- Funding (Will you need to take out a loan to start your business? You may need to include financial projections.)
Step 2: Name and register your business
After you figure out what your business plan is, the next step is to come up with a business name. A name is an important part of your business, so put some time into it. It should be creative and catchy, and something that people can easily remember. You should also give some thought to your website domain name, and check to see if your domain name is available. It took me several tries before I came up with TheEduCons because my other awesome domain name ideas were taken. You can refer to my article about The Most Trusted Domain Extensions guide to see which domain extension best suites your needs.
Here are some tips to help you choose, register, and protect your business name:
- Factors to consider when naming your business
Many businesses start out as freelancers, solo operations, or partnerships. In these cases, it’s easy to fall back on your own name as your business name. While there’s nothing wrong with this, it does make it harder to present a professional image and build brand awareness. What’s more appealing to customers, and which name gives their customers an idea of what food they serve? Mike’s Restaurant or The Breakfast Place?
You should also consider how your name will look on the web, part of a logo, and in social media. Is it appropriate? Can mothers mention your company’s name to their children without having to smack them if they repeat it? Does your name reflect your business philosophy and culture? Does it appeal to your market? Is it unique? A quick online search and domain name search will let you know if there’s one in use. For existing domain names, you can go to GoDaddy.com and use their domain name search tool to see which domain names are taken.
- Check for trademarks and existing domain names
Trademark infringement is never a good thing. Before you pick a name, use the U.S. Patent and Trademark Office’s trademark search tool to see if a similar name is trademarked.
- Claim your social media identity
As soon as you figure out what your business name will be, immediately set out to add social media pages using your business name. Social media is a great source to get your business noticed online, especially when people mention your business on Facebook or Twitter. If you have a website (which you should have), then make sure to link your website on all your social media pages!
- Register your new business name
Registering your “Doing Business As” name is simply the process of letting your state government know that you are doing business as a name other than your personal name, or the legal name of your partnership or corporation. If you are operating under your own name, then you can skip this process. Go to the U.S. Small Business Administration’s (SBA) website to see what your state requires you to do regarding business registration.
- Apply for trademark protection
A trademark protects words, names, symbols, and logos that distinguish goods and services. You can file for a trademark for less than $300. For more information on trademark protection, please visit the United State Patent and Trademark Office. However, I recommend you to take a look at their FAQ.
Step 3: Choose a location, apply for necessary permits, and beautify your location
Do NOT underestimate location. As any real estate mogul or geographer will tell you, it’s location. Location! Location!! This is probably the most important factor when starting a business!
If you’ve read my article Why Every Business Needs an Online Presence, then you will know about the business owner who lost his business because he wanted to save money on rent by locating his auto repair shop behind another business. It boggles my mind why some people decided to build their business where no one will see them, and it surprises me that city planners would okay such a project.
For more tips on locating your business, see our guide Choosing a Location for Your Business (Coming soon!).
- Apply for building permits
You will need to go to city hall and ask for building permits to build anything these days. You will first need to have the proper zoning in order to build your business. You can’t build or rent out a property for commercial use that is already zoned as residential. You can ask the city to rezone a current plot of land, however, but expect a fight.
The best thing that you can do is check with the city planning department or city clerk. They will let you know what and where you can build. Don’t be afraid to ask too many questions. They can get irritated all they want with you, but they are not the ones that will pay a fine if you do something wrong. You can check your city for zoning maps and bylaws to see what the city allows businesses to build. For example, some towns will not allow you to build more than 6 stories tall or allow you to build near wetlands.
Expect to step into city hall frequently! You are going to go through a lot of paperwork for applications, building permits, construction documents, expected occupancy, and other documents before the city will give you the green light. You will probably have to attend a planning board meeting or two as well. If all goes well, then expect a visit from the city building inspector (or conservation agent and other inspectors) to check your lot. A good idea is to check your city’s website for zoning regulations and building permits to get an idea of what you need to do to get the building inspectors to inspect your lot and to see how much the fees are.
- Beautify your business
You also want your business to stand out, so make sure that you have big and bright signs so that people know you are open! You should also invest in beautifying your business, both inside and out. When people see your business from the street and they think that it looks like a dump, then they will more than likely keep on driving by and not give your businesses the benefit of the doubt. The same goes for making the inside look nice. If you do get people to step foot into your business, then make sure it looks presentable and doesn’t smell like the dump. I’ve personally walked out of businesses that looked like someone from Hoarders was living there. It’s disgusting. It’s unpleasant. It’s unprofessional. Clean up!
Step 4: Get a TIN and an EIN
Before you start making money, you’re going to need to get a Taxpayer Identification Number (TIN) for your individual taxes and an Employer Identification Number (EIN) for your businesses.
A (TIN) is an identification number used the Internal Revenue Service (IRS) in the administration of tax laws. It is issued either by the Social Security Administration (SSA) or by the IRS. A Social Security Number (SSN) is issued by the SSA whereas all other TINs are issued by the IRS.
An Employer Identification Number (EIN), which is also known as a Federal TIN, and is primarily used to identify businesses. For more information regarding TINs, EINS, and other tax information, go to the Internal Revenue Service’s website.
For small businesses and the self employed, you can apply for a TIN and an EIN at the IRS’ website: www.irs.gov. If you would like to contact the IRS directly, then please go to their contact us page or call them at 800-829-4933 for businesses or call 800-829-1040 for individuals.
Step 5: Register for federal, state, and local taxes
If you think that taxes more confusing than old spice commercials, then you’re definitely not the only one! The IRS wonders why some people don’t pay taxes. It’s just so darn confusing! Regardless of whether we like it or if we’re confused, we have to get it done.
Here are the steps you need to take to register your taxes:
- Apply for a TIN and EIN (if applicable)
- Select a business structure (Are you a sole proprietorship, partnership, corporation, or limited liability company)
- Choose a tax year (calendar year or fiscal year)
- Have all employees fill out Form I-9 and Form W-4
- Pay your taxes (income tax, estimated taxes, self-employed tax, employment tax, and excise tax)
If you have any questions regarding taxes, then please go to the IRS’ checklist for business taxes. There’s more information for small businesses and self employed individuals to the left of their main page. If you would rather talk to someone in person, then contact your local IRS office. They will clear up any questions that you have!
Step 6: Learn employer responsibilities
If you are going to hire employees, then you are going to need to know their rights, have them file their tax information correctly (have them fill out Form I-9 and Form W-4), and safety protocols to name a few of your employer responsibilities. You should familiarize yourself with the rules and regulations monitored by the Occupational Safety & Health Administration (OSHA).
You might just avoid a lawsuit if you know how to provide a safe working environment for your employees. Unfortunately, a lot of employers skip the rules laid out by OSHA and find themselves in a lawsuit because one of their employees died from not having the right safety equipment. Trust me when I say that it is worth taking the time to view OSHA’s website and look at their laws and regulations page regarding your particular industry/business. Safety should be a priority, no matter how inconvenient it is for an employer!
In fact, if you are a worker and you think that you are concerned for your safety, then you can file a complaint at OSHA’s website. Please take action before it’s too late!
Step 7: Ask for assistance and training
I’ve said it to my students, and I’ll say it to everyone, there’s nothing wrong with asking for help. If you are overwhelmed learning about how to start a business, then check online for local workshops or courses that will help you get started. You can start by going to the U.S. Small Business Administration’s (SBA) Learning Center to see which courses they provide. Their online courses cover various topics for starting and running a business such as managing a business, financing, marketing, and government contracting. It’s definitely worth taking a look.
For further reading, I recommend you to visit the SBA’s website about hints and tips for starting and managing a business.
Let’s Hear From You!
Do you own a business? What type of business is it? Which processes did you need to take in order to start a business? Did you have to go through all of the above steps, some of those steps, or none of the above? Would you like to add a step or process? Which advice would you give to people that are looking to start a business?