Achieve Financial Freedom : Open Your Own Business
Owning your own business is a dream for some people and an appalling concept to others. If you
are part of the former, ask yourself seriously whether you have the personality to be your own – and other people’s – boss. Are you a risk taker? Are you independent, able to ignore conventional wisdom? Are you inventive, able to find new ways to solve problems? Can you sell? Do you have support from the key people in your life for what will be a difficult journey?
So you have all those qualities, a great idea, an entrepreneurial spirit and enough money to launch the business. Now what?
Lets start with what not to do:
Do not buy or lease anything you do not absolutely need right now. Until you know how much revenue the business will generate keep cash outlays to an absolute minimum.
Don’t hire anyone who is not critical to the business. Yes, that likely means you will be working long hours.
The lease for space or the individual hired to give you a break can tank a new enterprise. We’ve all seen promising companies who failed because rosy revenue forecasts led to higher operating expenses than the company could handle.
Start With The Planning. Write your business plan. It will help you in myriad ways because it will force you to look at realities you hadn’t considered. It may alter the business model, the start up timing, or help you determine that the concept isn’t workable. See the Business Plan Template and be realistic about the probable income.
If your new business will require a location other than your home, begin looking at the price and availability of space, the cost of build out, and the relative merits of various kinds of locations.
There are free counseling services from the SBA and others. Use them, particularly if this is your first business.
Legal Structure; You will need to determine what form of ownership will best suit you. Each of the common legal structures (corporations, sole proprietorship, LLC, S Corp, partnership, nonprofit) has impacts you should understand prior to filing your papers. See a lawyer or accountant skilled in this area.
Once you have decided on the type of company, choose a name and register with the state. You will file a DBA (Doing Business As) to inform the state that you are using a fictitious name. (If your name is Mary Smith and you are doing business as “Mary Smith Consulting”, you must still register as “Consulting” is not part of your name.) Check with your state to find out how to register a name.
Federal & State Tax ID Numbers: You will need to get tax ID numbers from both the IRS and your state taxing authority. While you are on the IRS website or talking with an IRS employee, find out what reporting is required, how often, how and where tax deposits are made. For information on your state’s requirements, go to the state’s website, Most will have information on tax numbers and filing requirements.
Taxes: Depending on the state, you may have:
Business Income Tax
State Workers Compensation Insurance
You will need to get all the information on employer taxes and reporting. There may be legal requirements you must meet to hire employees.
Get Your Business Licenses and Permits. The number and type will vary by business and location. A restaurant or medical office will require far more licenses, permits and inspections than a tax preparation office.
The Laws: Depending on the kind of enterprise there may be a host of laws which decree how you do business, provide protection, dictate how your employees are treated, and otherwise circumscribe your ability to fly by the seat of your pants. Not only are there a variety of Federal laws which will affect you, there are also state and local laws. You may, for instance, be governed by environmental laws, online law, labeling laws, workplace safety laws…the list is long and you will need to find out which apply to you. Business associations may be helpful, the SBA and your local small business agencies, lawyers, others in your profession can all be useful guides.
Set Up Your Accounting Whether you are writing numbers in a ledger, using a software package or hiring an accountant. Begin early – don’t plan on playing catch up when you have time. You will never have time. It will keep you out of trouble and you will learn from the process.
I’d advise talking to other people who have started businesses. Ask what problems they had, how they managed the start up. Take advantage of the free or paid consulting available for entrepreneurs.