Getting Down To Business
Establishing A Plan
The first step you should follow in starting your own business is to establish an effective plan. To start, you should write down goals that contain the following:
- Explains the product that you will manufacture or sell, or the service that you will provide, and why you expect to be able to sell your product or service profitably.
- Sets forth the qualifications and experience of you and any other key individuals who will be involved in the business.
- Includes financial statements that project the income and expenses for your business for at least three years.
- Provides an explanation of the funding (capital) that will be needed to operate the business and your expected sources of such funding.
- Identifies any professional advisors that you will be using including an accountant, lawyer, tax advisor, banker, and insurance agent.
The plan you identify will outline all of the important issues and keep you on track to making a profit. Your Business plan will also ensure that when you find lenders/shareholders they are confident in giving your the loan or investing within your company.
Business Funds
Not every company starts out at the top. Nor do they always contain proper funding. Your first source of funding should always be your own personal savings. Other funding sources can be from a bank, team of investors, or even an individual.
When attempting to be granted a loan, understand that bringing financial statements, a well thought out business plan, and the appropriate references will establish more collateral for your businesses ability to repay the loan.
There is also the option of a capital investment. A Capital Investment is where a lender(s) invests within your business and is not paid back by interest but is a co-owner along side you.
Naming Your Business
Upon considering a name, ensure that it’s not identical or similar to the name that is already owned or used by any other company.
The majority of states have laws that regulate names for corporations, limited liability companies, limited partnerships, and business entities for professionals. Usually these statutes require that a word be included that clearly identifies the type of entity. An example being “Johnson Corporation”, “Johnson Corp.”, or “Johnson Inc.”.
If your personal name is not inside the business name, you may be required by law to register that name.
Ownership Conflicts
Being a business owner, you should consider protecting yourself against the situation of one of the other owners transferring his or her share to an undesirable third party. This is sometimes an issue for those who are not the sole owner.
Business owners can (and should) address these issues in the partnership agreement (all partnerships), the operating agreement (LLCs), and buy-sell agreements (corporations).
Federal I.D. Number
Employees & Taxes
If you plan on having employees, you should be aware that as an employer you’re required to hold Federal and State income taxes, and FICA taxes, from your employee wages. Many states also require employers to pay unemployment insurance to cover any employee benefits once they have become unemployed.
Licenses And/Or Permits
For all types of businesses, it is wise to obtain the required license or permit identical to the field of interest. When searching for the appropriate ones, consider: Local licenses and permits, State licenses and permits, Federal licenses and permits, and in special circumstances a “Sellers Permit”.
Insurance
Your state may require your business to obtain the appropriate insurance. A list of the applicable insurance is as follows; Liability Insurance, Workers Compensation Insurance, Property Insurance, and Unemployment Insurance. Without proper protection, misfortunes such as the death of a partner or key employee, embezzlement, a lawsuit, or a natural disaster could spell the end of a thriving operation.