Owning a business is a privilege, not many enjoy. Not to forget, it is not in the capacity of every individual to start and own a successful business. It takes time and effort and surely is not for the weak hearted. Get ready to put everything aside, even including your family and relatives if you wish to become the next big entrepreneur.
If you’re still here, then you must have made your mind to open your own company someday. In that case, we’ve got you covered. We all know a great business idea is just a step taken in the long road to make that idea transform into reality. There is a lot of groundwork that needs to be done before opening a company that includes many financial and legal formalities, especially if you are in the US.
If you’ve been wondering about how you can open your own business in the United States, then here is a list of do’s and don’ts to keep in mind. This list would ensure a smooth transition of things and would eventually land you on the positive side of things. Take a look:
#1. Prepare a Business Plan
What will your company be all about? What are you planning to sell to make money? For all this, the first and perhaps the most important step is to devise a business plan for your business. A plan that would define you, your business, and the products or services you have on offer and outline all that with the goals and returns that you want from your new business. Starting a new business needs investment in the upwards, and sometimes it becomes impossible for an individual to raise the required money on his own. So if your business needs loans from banks or other investors, then that too has to be a part of your business plan. Make sure your plan includes a marketing approach, so people are aware of what you're selling and how to find you. Also, remember the last rule with a business plan is that it should be flexible. While you are setting up your business, there might be several unexpected happenings, and thus your program of activities has to be made to adapt to all those changes.
#2. Create A Business Logo
A business logo helps in establishing your company’s identity and helps potential customers find and remember you.
#3. Meet Legal Requirements
Of course, incorporating your business or forming an LLC with the state is important because it protects your assets from business debts and liabilities. Other benefits of forming a corporation or LLC include tax advantages and greater credibility with customers, vendors and business partners.
#4. Hire An Attorney and Accountant
You cannot be the master of all trades. So let the specialists do the work for you as you see your business flourish. In fact, 85% of small business owners seek assistance from attorneys and accountants in the US. However, make sure that you get the right man for the job. Successful business owners will tell you how important it is to have a strong team for success. Ask people you know, including your friends and relatives if they can get you in touch with the kind of an expert that you’re on the lookout for.
#5. Get Necessary Tax Identification Numbers, Licenses And Permits
A federal tax identification number, or employer identification number (EIN), acts as a social security number and is required for corporations and LLCs that will have employees. Contact your state's taxation department to learn if a state tax identification number is required in your state. Also, keep in mind that most businesses need licenses and permits to operate—in your city, municipality, county, and state.
#6. Insure Your Business
Buying an insurance cover for your business is one of the most crucial things that you have to do at any cost. Your business needs to be insured from all kinds of mishaps like financial chaos, thefts, and robberies, fire, and natural calamities so that you can remain at peace in your heart. It would eventually let you focus on other areas of your business and in turn, would benefit your business hugely. Some industries have specific insurance requirements. Discuss your needs with your insurance agent to get the right type and amount of insurance. Remember to look into any other government tax and insurance requirements that might apply to your business, particularly if you have employees. For example:
#a. Unemployment Insurance
#b. Workers' Compensation
#c. OSHA Requirements
#d. Federal Tax
#e. State and Local Tax
#f. Self-employment Tax
#g. Payroll Tax requirements (such as FICA, Federal Unemployment Tax, and State Unemployment Tax)
#h. Sales and Use Tax
#7. Financial Preparations
It is crucial to separate business finances from personal ones, so open a business bank account. Most banks require company details, such as formation date, business type, and owner names and addresses. If your business is not incorporated, most banks will need a DBA (doing business as or fictitious business name). Contact your bank about requirements before opening an account.
#8. Start Applying For Loans
Once the entire roadmap is ready where you have successfully checked all the boxes, now comes the important part of finally raising money for your business. You may want to use an accountant, or handle finances yourself with a small business accounting solution. Either way, adequately account for all disbursements of activity, payments received invoices, accounts receivable/accounts payable, etc. And if you don’t have enough capital to start a business, this is also the time to seek for funds from banks or through Small Business Administration (SBA) loan programs.
#9. Establish A Business Line Of Credit
A well thought-out business line of credit will help reduce the number of times your company prepays for purchased products and services. It also helps establish a strong credit history, which is helpful for vendor and supplier relationships. Getting a Dun & Bradstreet (D&B) DUNS (or D-U-N-S) number for your business is advisable, as it is often used to check business creditworthiness.
#10. Know Your Demography And Work Accordingly
You are the best judge of your product. You know why you created it, and you know who to sell it now. After you make sure that all the technicalities and legalities are in place, you can then start advertising for your product. Now many people prefer old traditional tools for promoting their product, however, in this age, it just doesn’t work as efficiently. With the advent of technology, you can now try and advertise your product on social media or resort to guerilla advertising. This would yield you maximum results with minimum financial input.
Starting your own company might have been the biggest aspiration of your life. It might have made you work tirelessly to make it a reality. However, many people make the mistake of thinking that our own business would let us forget our monotonous 9-5 jobs. Owning a business is as much challenging as having a job, perhaps even more. They say to own a successful business; you need nerves of steel and impeccable work ethic. Make sure your business means the world to you before you consider owning one. If for you owning a business is just an escape from your monotonous life, then perhaps you should reconsider your decision. Such people often fall prey to faster benefits in a short time, and this becomes the reason for their business finally shutting down. Successful business owners will swear by the fact that it is like planting a seed and watering it every day as it eventually turns into a tree that bears you fruits. It takes time and immense patience.
According to the Bureau of Labor Statistics, 50 percent of all small businesses fail within the first five years. About 30 percent survive only two years. Here are a few things that you should keep in mind before opening a company. These are the things that you should never do:
#1. It Takes Much More Than an Idea
The idea is just the beginning. You need to frame all the details of your plan from start to finish, including game-planning and preparing for ‘what-ifs.’ You’ve got to create a solid foundation that you can build on. There’s a lot more. First and foremost is a good work ethic.
#2. Spending Money Too Soon
Sure a successful business needs a lot of investment. However, that doesn’t mean that you mindlessly spend the necessary money that you’ve raised from loans or investments. You have to be cautious in the amount you spend and also on the things that you spend on. It is critical to have a balance between investing good and overinvesting, and you should know the boundaries.
#3. Mixed Priorities
The reality is that it’s almost impossible to put the amount of work needed for starting a business while you’re still working elsewhere. A new company needs your full attention to get off the ground. You can develop the plan and start accumulating finances in your spare time while you’re still engaged with another company. Once you’re ready to make the leap, you have to be willing to devote 100 percent of your time to it.
#4. Having Someone Else Run Things
At the end of the day, it’s your business. Treat it like it’s your baby. You need to be not only in charge of it, but you have to be hands –on with the day to day activities, at least to start with. You need to make the decisions. You should be the one determining agendas, schedules, vendors and organizational structure. If you have a partner or partners, you need to create a clear-cut division of responsibilities from day one.
#5. Not Having A Good Lawyer And Accountant
As discussed earlier, there are a lot of legalities that are associated with opening a company. There are laws to followed and kept in mind. You should never make the mistake of not having a lawyer and accountant because if the hammer falls on you someday, the IRS won’t take it lightly. Having a lawyer and accountant is kind of a legal insurance for your company.
So that’s that. Understandably, this is your dream, and you’ll do everything in your capacity to make your dream come true. No one ever said that the path to success was going to be easy; it never will be. Circumstances will arise time and again, that will push you and your business to the brink of extinction; however, successful entrepreneurs have a substantial mettle and will withstand the test of times. Once you've got all the groundwork to your business done and once you start taking charge of your company, it would only be a matter of time until you establish yourself as a successful person with a successful business to envy!
(Gif Courtesy: Giphy)
(Featured Image Courtesy: Innovation Trail)
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