Many people dream of owning their own business . . . and it’s a good thing. According to to the Bureau of Labor and Statistics small businesses (defined as those with 1-49 employees) typically accounts for just as much U.S. job growth as large business (those with 5o0 or more employees).
The challenge for most would-be entrepreneurs is that they have no idea where to begin when it comes to starting a new business. If you are thinking of starting your own business, here are five basic topics you should consider:
- Business Idea. Of course, you need to have an idea about what business you want to be engaged in. The idea doesn’t need to be earth-shattering or absolutely original, most ideas aren’t. However, you do need to understand what product or service you want to offer and who your target market is. Additionally, you need to develop an understanding of the cost to provide the product or service and whether your model can produce a profit. Try putting your idea on paper. If you struggle explaining your idea in writing, you need to develop it further.
- Entity. Choosing how you want to organize your company is an important initial step. Two common entity types are the corporation or the limited liability company. Both provide liability protection and an organized structure for your company.
- Funding. Acquiring funding is always a concern when starting a new business. You will need to identify what the up front costs are and where the funding will come from. Typical sources include personal savings, loans from family members, bank loans, or contributions from limited partners or preferred stockholders.
- Company Accounts. When you set up an entity you will need to acquire a Taxpayer Identification Number. Use this number to set up company bank accounts and have a strict policy that all company revenues and expenses be paid out of company accounts. Nothing leads to business failure faster than failing to control the revenues as they start rolling in.
- Payroll. If your business plan requires employees, you must bone up on the basic rules and regulations relating to employers. In general, you must treat employees fairly, pay them on a regular basis, pay workers compensation insurance premiums, pay unemployment taxes, and remit payroll taxes and withholding to both the state and federal governments. If you are new to payroll, it is advisable to hire a payroll processing company or other expert to assist you. Making mistakes with payroll can create large liabilities for your new company.
Being a business owner is challenging and exhilarating. By offering the right product, utilizing the right procedures, and hiring the right people your chances of success will greatly improve. Good luck!