Starting a business is very exciting and a little confusing. We have provided a business start up checklist. Use it when you’re setting up your business.
Laws vary from State to State, so check with your Secretary of State for any additional requirements. You will also want to check with the county and city for additional licenses or permits you may need for sales tax or income tax withholding.
- Seek Professional Advice
Once you have decided to start a business, you should consult a Tax Consultant or a CPA before you set up your business. They will be able to guide you on the best type of entity for your tax situation. Your tax consultant will help you decide if you should set up the business as a Sole Proprietorship, an LLC or S-Corporation. This is an important step because all of your permits and ID numbers will need to be set up under the correct entity type. During your consultation your tax advisor will discuss filing requirements for each type of business entity
- Write a business plan and marketing plan
Any good builder starts with a plan. A business plan is the blueprint for your business. A good business plan is a critical part of any loan application. It will show the loan officer you have done a lot of research on the business and have prepared for any obstacles.
- Business Name
Register your business name with your Secretary of State - almost all states now are online. You can also register your business name as a domain name
for later use.
- Register your Business Form, Licenses, and Permits
Check with your Secretary of State and look for the Corporations Division to find the form for Articles of Incorporation (to form a corporation) or Articles of Organization (to form a Limited Liability Company).
- Licenses and Permits
While you are waiting for the Secretary of State to send you the charter, contact your city, county and state tax departments. Ask each of them if they require any of the following:
- Business or Occupation License,
- Special licenses, such as, food handlers, liquor licenses, etc.
Some Professionals require a license as well as continuing education requirements. A few states offer booklets or checklists from the Secretary of State, Corporations Division.
- Employer Identification Number (EIN)
You will need a Federal Employer Identification Number (EIN) if you incorporate or become an LLC. If you are a sole proprietor you don’t need an EIN you can use your Social Security number. Although I would recommend you get an EIN even if you are a sole proprietor. In a day when identity theft is rampant, you don’t want your social security number being used on all your employees W2’s or your vendors 1099’s.
You can now apply for an EIN online. If you apply for your EIN online you can receive it and be on your way in a matter of minutes.
If you are not comfortable with applying online you can download the SS-4 form at www.irs.gov. Then you can call toll-free (866) 816-2065 to get your EIN in less than 15 minutes.
Now that you have your EIN number, you can file your S-Corp. election Form 2553. Or if you chose to form a LLC, you will also need to decide how you want to be taxed (as a sole proprietorship, partnership, S-corporation, or C-corporation), and make that election on IRS Form 8832. During your consultation with your tax advisor you will have decided on the most appropriate business entity for your goals and tax situation.
- State Business Identification numbers
Now that you have the federal EIN number, you will need to obtain business ID numbers for state sales and income tax withholding, and for the state unemployment tax. Complete the forms for these tax registrations and add your federal EIN, you are now ready to mail in the state forms.
Now that you have your business name and your EIN number, you can open a business checking account.
- Corporate Records
If you formed a corporation, then you will need to have Articles of Incorporation, Bylaws and a Minute Book. LLC’s are required to have an Operating Agreement. Don’t skip this step. It is important to have these documents to show you are operating as a business entity.
Most office supply stores sell incorporation kits. They usually are "fill in the blank" kits. They have blank stock certificates, bylaws, operating agreements, board of director’s minutes, stockholder meetings, stock ledgers, and incorporator meetings. They come with instructions to make your company official and legal.
If you are unsure about anything you should seek professional advice.
- Office space
After locating appropriate office or retail space check with local authorities about zoning. The lease or rental agreement should be in the name of the Corporation or LLC rather than your personal name. Not only does it limit your personal liability, it also reinforces the fact that you are doing business as a Corporation or LLC.
- Phone Service
Now that you have secured the location you can get a phone number and internet service. When you get the phone number, look into a yellow page ad. Yellow pages are only printed once a year so make sure you have done your homework on where you want your ad to appear. Research the appropriate heading and ad layout. Once it’s printed it’s in there for a year.
- Equipment and Furniture
Used equipment and furniture can save you a bundle. Watch the local classified ads for equipment and furniture.
- Accepting Credit Cards
How you will receive payment was decided in the business plan. If you have decided to accept credit cards, you will need a Merchant Account.
There are numerous companies that will set up a merchant account for you. Your bank will also set up a Merchant Account or check out the finance companies online that offer Merchant Accounts.
QuickBooks offers Merchant Accounts through Innovative Merchant Solutions. It is the only credit card processing company that integrates with QuickBooks Pro software.
Signing up for a Merchant Account doesn’t always mean you can accept American Express or Discover Card. They are processed differently so check which cards you can accept before you advertise.
If you don’t want the hassle or have a good enough credit score to qualify for your own merchant account, then you could consider a service that will process credit card payments for you. Paypal is a very popular credit card processor.
- Insurance
You will need business liability insurance. If you are renting office or retail space, you will most likely need fire insurance, sometimes called renters insurance. Your insurance agent will discuss other types of insurance you may need.
If you hire employees you will be required to have workers compensation insurance. Amounts vary by state so discuss this with your insurance agent as well.
- Employees and Required Forms
After you hire an employee set up a personnel file. Each file should contain an employee calendar and any personal contact information.
Each employee should fill out a Withholding Allowance form (IRS form W-4) and an Employment Eligibility Form (I-9).
Some states will require a form for employee income tax withholding. Be sure to get each employee to sign all forms.
Independent subcontractors should sign a Request for Taxpayer Id Number (IRS form W-9). Some states have similar forms and a few have possible state withholding requirements from selected contractors.
- Marketing / Advertising
Order business cards, stationary, brochures and other marketing materials. Organize the grand opening or other promotional activities.
Develop a website. A web site is the employee that works 24 hours a day 7 days a week. Even if your product isn’t something you can sell on the internet, a web site can answer commonly asked questions. It can be used for special promotions and give additional information about your business without having an employee on the phone.
- Grand Opening
Send out a grand opening announcement and press releases to local papers and business publications. This is great use of free marketing.
