Key Things You Need When Starting Your Own Business
Starting a business is an exciting prospect and according to U.S. Census Bureau statistics, an incredible 5.4 million new business applications were filed in 2021, smashing the record of 4.4 million, set in 2020.
While no two businesses are the same, to be successful all entrepreneurs must follow the same key steps before launching their company. Here’s our guide to the most important things to look out for when starting your own business.
Test Your Idea
So, you’ve come up with a great idea that nobody else has ever thought of and you’re going to make millions of dollars because nobody else does it like you? If only it were that simple. Before wasting your precious time and money, it’s important to test your idea out to see if there is a demand for it.
- Why are you launching this business – is there a need in the marketplace?
- Are there already companies out there in your market?
- How is your idea different to their proposition?
- How is your idea better?
- What is a unique about the service you can provide?
Knowing your business’s market, what the competition is doing, and how your company is different, is a critical part in successfully establishing your business.
Write a business plan.
A business plan is a crucial step in analysing the financial merits of your business and its chances of success. It is a document that all investors will demand and shows you have properly thought through your idea.
Business plans give investors a detailed overview of your business venture and help them better understand the opportunity, financial requirements and potential rewards. It will also help you analyse any potential weaknesses in your business idea.
Government and IRS registration
Now you have identified a market and written a business plan, it’s time to register your company with the Government and the IRS. This will make sure everything is legal and ensure you benefit from any financial packages and tax breaks available for your business.
There are a variety of business licenses and legal documentation that will need filing before you can legally operate your business. They can include:
- Employer identification number (EIN) – Having an EIN will protect you and your identity, allow you to file business taxes separate from your personal taxes and help establish credit for your business.
- Income tax forms and Taxpayer Identification Number (TIN) – You need to file certain forms in order to meet federal and state income tax obligations. The required forms are determined by your business structure. Check your state’s website for information on state-specific and local tax obligations.
- Federal, state, and local licenses and permits – Requirements vary from state to state. Some businesses may require federal, state or local licenses and permits in order to operate. You can register for a seller’s permit through the state government website of whichever state you operate in.
- Articles of Association – These are public documents and every company has to have one by law. This includes business name, purpose, corporate structure, stock details, etc.
While these requirements may seem daunting to a new entrepreneur, using the correct business forms will help simplify the whole process and guide you through everything you need to do to get up and running as soon as possible.
Other documents to consider are:
- Founders’ agreement or Partnership agreement
- Intellectual property and assignments
- NDAs and confidentiality agreements
- Contracts with customers and suppliers
- Shareholder and investor agreements
- Directors’ service agreements
- Employment contracts
Choosing the correct business insurance for your company is vital and will protect you against costly and damaging lawsuits. There are several types of insurance for businesses to consider, including:
- General Liability – This covers property damage, bodily injury, and personal injury to yourself or a third party.
- Directors and Officers
- Workers’ Compensation
- Professional Liability
Be sure to check local regulations which may require your business to carry other specific types of insurance.
The best time to start a business
When you’ve ticked off all the key points above and have the finances in place, you’re ready to launch your business – but not before. Running a business is an exciting, long-term project, so take your time and make sure get the foundations right.