This post is part of a series called “Starting a Small Business,” where we look at the steps to start a business and make it big.
Now you have an idea, a business plan, and market research. You have decided your idea is solid and you are ready to open the doors. You have a few last steps to work through to make sure you are legal and can take payments.
First, register your business name with your state. If you are in the United States, contact the Secretary of State’s office for your state to find information on registration. Remember that you can’t take someone else’s trademark. It is also a good idea to trademark the name you choose. When you register, you will need to choose a legal structure for your business. The easiest and most common is a sole proprietorship. In this structure, you are a DBA (doing business as) on your bank documents. You are personally liable for anything that goes wrong, which is a negative, but the costs to start and track are lower than other businesses. The income taxes for a sole proprietorship show up on your personal income tax return. You may also be interested in starting as an LLC (limited liability company) or standard C corp. I am not a lawyer or tax expert, so I will not expand on this topic further. If you are really starting a business that you plan to use as your primary income source, I urge you to contact a professional lawyer and accountant to save you costly mistakes later on.
Next, you need a location. If you are going to start an online business, all you need is a website and address. You can easily buy a URL from a discount registrar like GoDaddy and pick hosting from about a dozen discount hosting companies. If you don’t know a lot about building a website, it is probably a good idea to hire a professional. If you can do it on your own, make sure your site is professional and works in all major web browsers. If you are starting a traditional “brick and mortar” business, find a good location that gets a lot of traffic and visibility. Picking a better location is more expensive, and it is up to you to find the best value and location for the best price.
To accept payments, you have to choose between several methods. Brick and mortar businesses generally accept cash, checks (many do not accept personal checks these days), and credit cards. If you are online, credit cards are a must and supplements like Google Checkout and PayPal can be great as well. I take PayPal payments for my rap group’s CDs, which also gives me access to credit cards. Your local bank likely offers merchant services (credit cards for businesses), but make sure to shop around for the best price. You also need a business bank account, check book, and credit/debit card for your day to day operations.
If you are only selling online and across state lines, you do not have to worry about sales tax. However, if you sell within your own state or in a brick and mortar location, you need to work with your city, state, and possibly county to make sure you are following all laws. Depending on the nature of your business, you may need additional licenses from your state as well. If you sell liquor, prepared food, cosmetology services, do any kind of tattooing or piercing, gambling, financial services, or any other of a laundry list of goods or services, you need to be licensed.
If you are hiring any employees, you are opening a whole new can of worms. If you have a staff, you need to have payroll tracking services, you need to pay certain payroll taxes (these can be outsourced for a fee), workers compensation insurance, and decide about offering any additional benefits.
If you are selling a product, you need to source your product and make sure you do not run out of stock. You need to pay the best price and, if applicable, get a sales tax re-sell certificate. Make sure you only sell quality products to keep your customers happy.
Finally, you have to get your customers. Marketing is key to success. Make sure your target market knows you are there and open for business. You can do anything from traditional newspaper, television, and radio advertising to newer strategies such as online advertising and hiring a guy to stand on the street waiving a sign. I am a big fan of guerilla marketing, but it can be difficult and expensive.
Now you are there. You are an entrepreneur. You are a small business owner. Take a moment and pat yourself on the back. But don’t take a break for too long; running a successful business takes a lot of time and hard work. About 90% of all new businesses fail, so put everything you have into your new company to make sure you are in the 10% that succeeds.
If you have opened a business before, please share your unexpected problems, stresses, and advice for the new guys.
Please read all of the posts in the series:
- Starting a Small Business
- The Idea
- Why Write a Business Plan
- Testing Your Idea
- Open For Business
- Increase Revenue and Cut Costs
- Go For The Big Time
- The Exit
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