Do visions of launching a business dance in your head? Don’t say sayonara to that 9-to-5 gig yet. There is a series of actions you should take between dreaming up a business idea and opening your doors.
Ahead, we provide a checklist for starting a business to help you avoid missteps.
Why should I start a business?
Your friends and family might have given you an earful about why you shouldn’t start a business. But here are some reasons why you should:
- In the first place, you can be the boss and build your ideal organization from the ground up
- There is the potential to gain increased financial and personal freedom
- You can do the work you want, where you want, through a workload and schedule that you own
- It creates an avenue for growing your business and financial acumen over a lifetime of learning
- In due time, you can deliver a unique product or service that improves the lives of others.
Your checklist for starting a business
Use the steps below as a checklist for starting a business.
1. Do market research and competitive analysis. By far, this is the most important step in your checking for starting a business. It helps you gauge whether a market exists for your business offering and how to set your business apart. Likewise, market research involves doing surveys, questionnaires and interviews of your target market. Competitive analysis entails surveying the local competitive landscape.
2. Write a business plan. Start with an executive summary. Add in a business description, market analysis, a management structure and business offering. Then, add a marketing and sales plan, a funding request and a financial forecast. Round out the document with an appendix of supporting documents.
3. Put financing in place. Unless you plan to self-fund your business, you will need an infusion of capital to start a business. The source of financing you choose will depend on the amount you need. Investors, loans and crowdfunding are all options.
4. Pick a location. Your choice of location, both the state and the municipality, is a crucial one. It will affect the taxes imposed on your business and the laws that will govern its decisions.
5. Settle on a legal structure. After all, legal and tax benefits and ease of opening all factor into your choice of entity. You can open a sole proprietorship, partnership, LLC or corporation. Otherwise, start a cooperative that works for the mutual benefit of a group of people.
6. Pick a business name. It’s better to settle on a brand-appropriate and unique name from the outset than to change it later. Make sure another business does not have the name in mind. Review the USPTO trademark database to rule out duplicates.
7. Register with the government. Your location and legal structure determine whether you need to list your business. If you do, file at the federal and state level on where you plan to operate.
8. Get tax IDs. Request an employer identification number (EIN) from the IRS for paying taxes. Of course, get a state tax ID if your state requires it.
9. Get business licenses and permits. You may need to get business licenses or permits at the federal, state and local level. The reason for this is so that you stay compliant with the law. Knowing your business niche, location and regulations dictate which ones you need.
10. Open a business bank account. Having one of these accounts keeps business transactions separate. Also, the separation simplifies tax preparation. You may need to show supporting documents (e.g., an EIN) to open a business bank account.
What do people forget when starting a business?
As you work your way down your checklist for starting a business, don’t forget to:
- Do a proof of concept. It’s a good idea to gather evidence that your business offering is viable before you launch it. One way to do this is to make and roll out a minimum viable product (MVP). Essentially, it’s a product with enough features to meet the needs of early adopters. Then you can incorporate feedback about the MVP to improve upon the final product.
- Think hard about site selection. The specific site at which you operate is as important as the city and state in which you do business. Additionally, make sure that the part of town you select get a lot of foot traffic and has affordable office space. It should also be free of zoning issues.
- Register a matching domain name. In reality, a mismatching business and domain name can create confusion. Make sure that the domain name for your business is free before you pin down a business name.
- Hire quality suppliers and staff. These are the people who will provide the goods and human resources to make and sell your product. Therefore, it’s important that they are skillful, reliable and efficient.
- Have a plan for roll-out. Make sure a strategy to distribute your product or service is in place. At the same time, think about how it might take place in phases to various segments of your target market. Or, it might occur in one shot to your whole market.
MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.