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Starting a Business? 10 Steps Every Entrepreneur Needs to Know

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Starting a Business? 10 Steps Every Entrepreneur Needs to Know

By Caron_Beesley, Contributor
Published: May 2, 2012 Updated: May 21, 2012

Starting a business? Confused about the planning, legal and regulatory steps you should follow?

Did you know that home-based businesses are required to hold permits to operate legally in most states? What about incorporation? Many new businesses assume they need to incorporate or become an LLC from the get-go – but the truth is, more than 70 percent of small businesses are owned by un-incorporated sole proprietors (although even this group is required to register their businesses).

So, variables aside, there are still some fundamental steps that any business needs to follow to get started. SBA has compiled 10 steps that can help you plan, prepare, and manage your business – while taking care of the startup legalities.  Not all these steps will apply to all businesses, but working through them will give you a sense of what needs your attention and what you can check off.

Step 1 – Write a Business Plan

Yeah, yeah, you know you should write a business plan whether you need to secure a business loan or not. The thing is, a business plan doesn’t have to be encyclopedic and it doesn’t have to have all the answers. A well-prepared plan – revisited often – will help you steer your business all along its growth curve. Try to think of your business plan as a living, breathing project, not a one-time document. Break it down into mini-plans – one for marketing, one for pricing, one for operations, and so on. Take a look at SBA’s Business Planning Guide for more ideas.

Step 2 – Get Help and Training

Starting a business can be a lonely endeavor, but there are lots of free in-person and online resources  that can help advise you as you get started.  Check out what‘s offered at your Small Business Development Centers; SCORE (which offers free mentoring services); Women’s Business Centers, or your local SBA office.

Step 3 – Choose Your Business Location

Where you locate your business may be the single most important decision you make. Many factors come into play such as proximity to suppliers, the competition, transportation access, demographics, and zoning regulations. Check out SBA’s Tips for Choosing a Business Location and this blog: How to Choose the Best Location for your Business.

Step 4 - Understand your Financing Options

You may choose to bootstrap, fall back on savings, or even keep a full-time job until your business is profitable, but if you are looking for an external source of financing, these resources explain your options.

Step 5 – Decide on a Business Structure

Going it alone or forming a partnership? Thinking of incorporating? What about an LLC? How you structure your business can reduce your personal liability for business losses and debts.  Some choices can give you tax benefits. To help you determine the right structure for your business, here’s an overview of your options and some information on how to file the necessary paperwork in your state and the tax implications of your decision. You might also want to read:

Step 6 – Register Your Business Name (“Doing Business As”)

Registering a “Doing Business As” name or “trade name” is only needed if you name your business something other than your personal name, the names of your partners, or the officially registered name of your LLC or corporation. Here’s how to register your “Doing Business As” name.

Step 7 – Get a Tax ID

Not every business needs a tax ID from the IRS (also known as an “Employer Identification Number” or EIN), but if you have employees, run a business partnership, a corporation or meet certain IRS criteria, you must obtain an EIN from the IRS. You’ll also need to start paying estimated taxes to the IRS; this blog explains more about this process.

Step 8 – Register with Tax Authorities

Employment taxes, sales taxes, and state income taxes are handled at the state-level. Learn more about your state’s tax requirements and how to comply.

Step 9 - Apply for Permits and Licenses

All businesses, even home-based businesses, need a license or permit to operate. This guide explains more and includes a handy “Permit Me” tool that lets you determine what your permit and licensing needs are, based on your zip code and business type.

Step 10 - Hiring Employees

If you’re hiring employees, follow these 10 steps. If you’re working with a contractor or 1099, read 5 Things to Know About Hiring Independent Contractors.

Related Resources

Check out SBA’s Starting and Managing a Business for more tips and guides.

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

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Thanks for sharing such an informative post all your ten steps are just superb. Writing a business plan is the most effective way, as I feel is a good start is half finish. Planning helps to come across various pros and cons in a business. Sharing ideas, views, suggestions with any intellectual is of great help. They can help as a Guide, Mentor in the mission and vision of the business.
i think this is useful...but im still young.
I agree with your 10 points, however I would add an 11th,. As a very first step try to do a rough break even or viability analysis or a very preliminary Cash Flow analysis. Then start on your Business Plan. I do question the order in which you present the 10 points. The Business Plan should include information regarding company structure, location,so points 3 and 5 should be decided before finalizing the Business Plan
Caron I agree with all comments, especially the first by United Virtual Office. However, Since I am a CPA-40Yrs to small business owners I would put as absoultely NUMBER ONE in your list IS, FIND & ESTABLISH a Relationship WITH a knowledgeable "ACCOUNTANT" and knowledgeable "small" business TAX person. The TWO are NOT aways equal! You will NEED that Accountant, daily, monthly and at Year END. You will also need Atty, Banker, Insurance Agent etc. but not as often. This is NUMBER ONE, WHY? "BECASUE" you have already MADE the decision to become an entrepreneur! Accounting is NOT a "checkbook" accounting, it is the science that provideS entrepreneurs' with what their daily decisions and lack of decisions translates into their financial profitability (or LOSS) This FIRST Step will help you DO all TEN on your list, including knowledge from the "trusted" advisor on WHAT should or should not be in you business plan, including what type of tax entity to operate in!
Great tips and all so important. I would like to add that in addition to training and education to find a personal mentor - that go to person who can help with individualized answers. Also always remain teachable and open to new ideas.
Very useful to read these Ten tips to get some good ideas before starting business.
In this competitive world, setting up a new business is a great challenge for any entrepreneur. The last thing to focus while starting a business is failure. However, an important point which needs to be mentioned here is, that a legal and financial advice should be taken before making any important business decision.
Thanks for useful tips. We can see the big picture, if we can
This is a good checklist for someone who plans to start his or her own business. Whether you plan to hire employees on the onset or do a one-man show at first, having everything planned and thought about thoroughly is a must-do.

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