Starting your own business can be one of the greatest joys in life. But for first-time entrepreneurs it can be an endeavor filled with unexpected challenges and potential pitfalls. It’s more than just opening a store or posting a web site and beginning to sell your goods or services. It is complying with legal requirements, obtaining financing, and making sure you don’t run afoul of other’s trademark rights.
Within this context, we have assembled a checklist for start-up businesses. We were there once too. So let us help in making your dream a reality.
1. Prepare a Business Plan: An important first step is preparing a business plan to define your business, products and services, and to outline your goals, operating procedures and competition. If your company needs funding from a traditional loan or venture capitalists, a business plan will be required. Make sure your plan includes a marketing approach so people will be aware of what you’re selling and how to find you.
2. Get Start Up Financing & Budget: Determine how your business will be financed and prepare a budget. Will you use your own savings, traditional lending, or perhaps venture capital? Whatever the case, you should also establish a budget and stay within that budget while you initiate and grow your business.
3. Secure Your Trademark Rights: Protect your company and product names as trademarks. It is critical that before you form your business entity you must make sure your entity’s name is available as a trademark under federal trademark law. In short, you don’t want to select a name for a business only to find out you can’t use the name because it violates another’s federal trademark rights. This is equally true for any unique service or product names you may select as well as specific logos that may be used with your goods or services. A proper trademark protection plan should include having both a research report conducted to determine the availability of your trademark(s) and, if available, registering your trademark(s) on a federal level.
For more information concerning trademarks see our Trademark FAQs. If you would like assistance to in researching the availability of your trademark(s) see our Trademark Research Packages. To register your trademark(s) see our Trademark Registration Packages.
4. Register a Domain Name: Hand-in-hand with protecting your trademarks, most new business should secure rights in a domain name that matches or closely resembles their proposed business’s name. Note, it is important when selecting a domain name that the domain be cleared through a trademark research report first as selecting a domain name that resembles another’s trademark could lead to allegations of trademark infringement.
If you would like assistance to in researching the availability of your proposed domain name see our Trademark Research Packages.
5. Select a Business Structure: When beginning a business, you must decide what form of business entity to establish. Your form of business determines the type of taxes you have to pay as well as potentially providing you with an important legal shield against personal liability for the business’s obligations. The most common forms of business are the sole proprietorship, partnership, corporation, S corporation, and Limited Liability Company (LLC). Once you have decided on the form of your entity, organize it with the relevant state agency or hire a company or law firm to do so for you.
For additional information on which type of entity is right for you, see our article What Entity is Right for Your Business? Once you have decided what entity is best for you, if you would like assistance in forming your new business see our Business Formation Services.
6. Select Your Business Location: If you are opening a brick and mortar store, now is the time to choose your business’s location. In doing so, always keep in mind how will you drive traffic to your store. If you will operate a business that is exclusively online, its physical location is of less consequence but a similar question should be asked: How will I drive traffic to my web site? Through SEO? Paid search services like Google Adwords or the Microsoft Ad Network? Perhaps viral networking? Whatever the case, you should have a plan in place so that when you open your doors the traffic will come.
7. Get a Tax ID Number: A federal tax identification number, or employer identification number (EIN), acts like a social security number and is required for corporations and LLCs that will have employees. Also, contact your state’s taxation department to learn if a state tax identification number is required in your state.
8. Register for State & Local Taxes: Conduct research in the state in which the business will be located to determine what state and local taxes will need to be paid. Typically, this will include state income tax for the business, sales taxes, as applicable, and unemployment taxes if you intend on hiring employees. Check with your state and local authorities to determine those taxes that will need to be paid.
9. Open a Business Bank Account: Make sure to open a separate business checking account for the new business. For both liability reasons as well as accounting purposes never co-mingle your individual funds with those of your business. A separate business account will allow you to have greater control over the business’s finances while instantly providing you with a financial snapshot of the health of the same.
10. Establish a Business Line of Credit: This 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. It may also provide a critical temporary gap in funding when your receivables outpace your cash flow.
11. Secure any Licenses or Permits Required to Operate Your Business: Keep in mind that most businesses need licenses and/or permits to operate. Check with city, municipality, county and/or state licensure requirements before opening for business.
12. Get Accounting Software or an Accountant: You may want to use an accountant, or handle finances yourself with a small business accounting solution. Either way, properly account for all business disbursements, payments received, invoices, accounts receivable/accounts payable, etc.
13. Open a Merchant Processing Account: Do you plan on accepting credit cards? If so, you will need to open a merchant processing account. A merchant processing account allows you to accept payments from credit cards and, when the payments clear, deposits the funds electronically into your business’s bank account.
14. Purchase Insurance: Some industries have specific insurance requirements. Discuss your needs with your insurance agent to get the right type and amount of insurance (e.g., general liability coverage). Remember to look into any other government tax and insurance requirements that might apply to your business, particularly if you have employees (e.g., unemployment and workers’ compensation insurance). See our article Does Your Home-Based Business Need Insurance for an overview of this topic.
15. Understand the Legalities of Hiring: Before making your first hire you must understand today’s anti-discrimination laws and similar rules.
16. Build and Launch Your Website: Whether your business will be exclusively online or your website will be a supplement or advertisement for your physical location, have your website built and live by the time you open for business.
17. Ready Your Workspace: For home-based businesses, ensure you are meeting city zoning requirements for your area. For non-home-based businesses, you’ll likely need to lease office space. Don’t forget to purchase or lease furniture and office equipment to get your business up and running. Also, you will need to secure all utilities as well as phone and Internet access.
18. Make Sure Your Delivery Systems are in Place: If you are on online retailer selling specific goods make sure you are ready to ship those goods when your orders start rolling in. What type of packaging will you use and who will be your shipping provider?
19. Create a List of Resources: Create a service provider list for everything from your janitorial services to your internet service provider. That way when you need the same you are prepared and know who to call. A good list will include the non-emergency number for the local police department, your cleaning service, computer service providers, your landlord or other premises maintenance numbers, a plumber, heating and air condition maintenance, phone and internet providers, a locksmith, the electric company, flood restoration and a glass company to repair broken windows or doors.
20. Open for Business: Open for business and launch your marketing efforts. Track your marketing efforts obsessively. Double down on what works and drop that which does not like a bad habit.
21. Pay Your Taxes: Nothing can kill a fledgling business faster than back due taxes and the interest and penalties associated there with. The form of business you operate determines what taxes you must pay and how you pay them.
As always, if you have any questions regarding this or any related topics Contact Us at TTC Business Solutions.
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