You’re excited about your new business and ready to take on the world, right? Awesome. But before you get too far into your new venture, take some time to address some of the less glamorous parts of starting a business.
It’s all too easy to overlook some of these things, but doing your homework up front will assure you are set up for success and less problems down the road! To download a PDF of this checklist, click here.
____ 1. Choose a Business Entity
Choosing a business entity is an important first step to launching your business.
If you’re a solopreneur with no employees, you most likely are choosing to be a sole proprietor or an LLC. Which is best for your business? Be sure and talk to your accountant or lawyer for guidance.
You can also visit http://www.legalzoom.com for more information on the differences between the entities.
Keep in mind you can always start as a sole proprietor and switch to an LLC or Corporation as your business grows.
____ 2. Register a trade name (if applicable)
If you are operating as a sole proprietor or LLC under any name other than your own name, you’ll want to register a trade name. Visit the official website for the state or province in which you live to register your trade name.
For example, in Colorado, I would go to the Colorado Secretary of State website and register a name online. Cost can range anywhere from $20 to $60.
When you register your trade name, it’s also a good idea to apply for an EIN (Employee Identification Number), even if you don’t have employees. This way you can use the EIN instead of your social security number to identify your business.
If you form an LLC, you’ll get an EIN number. And if you have an employee, an EIN number is required.
____ 3. Open a separate business checking account
Be sure and open a new checking account for business use only. You don’t want to combine your personal and business money. When starting your business, you can put personal money into the business account as start-up funds, but from there, use that account for business expenses, not your personal account.
When you go to the bank to open your business account, be sure and take your trade name registration paperwork (if applicable).
____ 4. Register for required licenses (if applicable)
Be sure and research any required licenses you need for your business. For example, if you are selling products, you may be required to get a city and state sales tax license.
The requirements for licenses will vary by location and by type of business you are running. Visit your state’s official website for details on required licenses for your particular business.
Since you’re just starting your business, you may not be thinking about bookkeeping just yet, but the truth is, this is the best time to setup your bookkeeping system.
Don’t wait until you have a shoebox of receipts and a mess of paperwork to get organized with this very important part of running a business. Be savvy from the start.
Your bookkeeping system doesn’t have to be fancy, but you will want a software and a simple system to help make your bookkeeping easier and more efficient.
QuickBooks Pro (desktop software) or QuickBooks Online (cloud-based) are both great options to get your books in order and keep them in order as your business grows.
If you need help with setting up QuickBooks or a bookkeeping system, visit the http://www.shebuildsabusiness.com/training-studio/ for helpful tips and training.
____ 6. Purchase necessary insurance
Determine if you need insurance for your business. For example, if you are providing a professional service such as accounting you may want to look into professional liability insurance to protect yourself in case you were to get sued.
If you are starting a house-cleaning business, you’ll want to investigate general liability insurance.
If you manufacture a baby product, you’ll want and need general liability insurance. If you own a brick and mortar store, you’ll need business liability insurance.
If you have employees, you’ll want to get worker’s compensation insurance.
If you are offering graphic design services or coaching and have no employees, you may not need insurance – but it’s always a good idea to do some research and protect yourself and your business.
____ 7. Create necessary contracts or agreements (if applicable)
I know it’s super easy to hit the ground running and start doing your dream work, but don’t forget to establish any necessary contracts or agreements you may need.
For example, if you are a bookkeeper, or any service provider, you’ll want to establish a general agreement with new clients that spell out the terms and conditions of your work together, especially if the work is spread over a long period of time or is recurring.
You don’t need to overcomplicate this, your agreement may be a simple two paragraphs, but if you are providing a service it’s important to put the scope of work and terms on paper with the client’s signature.
Also, if you hire contractors, like a VA or a marketing person, be sure and get a W-9 from them and have them sign an independent contractor agreement. You can find templates for this on the internet. Your accountant (or you) will need to issue them a 1099 at the end of the year.
____ 8. Employee paperwork (if applicable)
If you hire an employee, you’ll need specific paperwork from that person on file. For example, if you are in the U.S. and you hire an employee, you’ll need an I-9 and a W-4 on file.
You’ll also need an FEIN (Federal Employer Identification Number) and a state payroll tax account number so you can file federal and state payroll taxes.
Talk to your accountant and be sure you’re paying all the appropriate federal, state and city payroll taxes.
You can either run payroll through software like QuickBooks or outsource to a payroll company.
The most important thing is to not feel overwhelmed!
Tackle one thing at a time. Keep a checklist, and cross things off as you complete them. Good luck!!
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