I started writing this post last week and got a little side tracked when thinking about the leadership I had the opportunity to work for over the past 10 years. I was brainstorming of business ownership and became inspired by the successes, the struggles and the overall entrepreneurial journey of the business owners I knew well, that I felt drawn to write about the Top 5 Traits of a Successful Entrepreneur instead. But today is going to be solely focused on things to think about when starting a business!
There is a Journey Ahead That You Know Nothing About
So you have an idea, a product or a service that you want to either sell or offer to the world. I imagine you are feeling a mixture of passionate, excited and partially terrified about it. There are so many unknowns in the world of entrepreneurship. There is a journey ahead that you simply know nothing about in this very moment – no clear path, no guaranteed dollar signs and no finish line with a medal at the end of it.
By choosing that entrepreneurial path, you are putting yourself out there, exposing yourself to the great unknown future of starting a business. You are taking a risk.
But I think we have all heard the old adage – no risk, no reward. Without risk, without courage, without overcoming fear – how will you ever understand the magnitude of which you are capable of?
I have every belief that you can create and make whatever it is that you want a success and my goal with this post is to help guide you through that decision to start! To start your own business – how amazing is that?!
When you start a business on your own, you are not only responsible for providing an incredible service or product but you are also responsible for running the business. First and foremost, the priority is ensuring that what you are selling is providing significant value to others. Check, yes, that’s covered. But next, you need to consistently be running the business.
What I Want Business Owners to Ask Themselves Prior to Starting A Business
Running a business could take many different forms as every industry and stand alone business is not like the other. But generally speaking – this is what I want business owners to think about prior to starting their business. This is your roadmap.
- WHY am I starting this business?
- How will I serve or help my clients or customers?
- What will I do to set myself apart from my competition?
- How will I market my brand, product or service so that people will even known I exist?
- How will I make money?
- Who will I need along the way to guide me in succeeding in areas of running my business that I am unsure about?
No matter how small or big you plan to grow this business, creating a roadmap for yourself will be an invaluable tool for you as you move forward. It will, no doubt, change over a hundred times during your entrepreneurial journey but this is your starting point. This is where it all begins.
The roadmap is a means to guide you, prioritize your time, remind you of your purpose and mission and then give you room to expand on it over time. It will also serve as a sentimental opportunity for you to reflect back on your beginning days as you grow and scale your business.
OK, So How Do You Get Started? Here Are The First 3 Steps to Take
So aside from coming up with a name for your business, having an understanding of the product or service you will be providing and creating a roadmap & business plan…here are the first 3 things I suggest doing to begin the official business ownership journey.
Seek Out Professional Guidance From a CPA
- Depending on the services provided, products being sold and the degree at which you hope to scale your business, one of the first things I would do is have a conversation with and/or hire a CPA (an accountant).
- What will a CPA help you with? (This will depend on your needs but here are a few examples…)
- Determine which legal, tax entity you should identify as. Sole-Proprietor, LLC, S-Corporation, Partnership, Corporation, etc.
- Note: I typically have not advised the Sole-Proprietor route as it does not provide protection for or a separation from your personal assets or personal credit. If you choose an LLC or Corporate structure, your business becomes its own legal entity. Keep that in mind when proceeding with which entity to choose.
- Identify which local, state and federal tax forms you will be required to file and when.
- If needed, they will manage all the tracking and reporting of your income and expenses and will provide you with financial statements. (Financial statements are requested when applying for any business loan and they are also necessary in accurately filing a business tax return)
- File all necessary local, state and federal tax forms. Note: If you are selling a product, you may be responsible for sales tax as well. Many CPA’s assist in the filing of your state and local sales tax forms.
Register Your Business with the IRS & the State in which You Will Do Business
- In most circumstances, you have the ability to apply for all of the Federal and State licenses by going directly online to the IRS website or to your State government website. However, this is also something that your CPA or attorney can assist you with (with a cost associated with their time).
- State – You will be required to get licensed to do business in the state in which you will operate.
- Federal – You will be required to get an Employer Identification Number – EIN – (unless you are a sole proprietor you are not required). This number is like a social security number for your business.
Open a Business Bank Account
- Once you have an EIN issued to you from the IRS, you will be able to open a business bank account, credit cards, etc.
- One of my biggest pieces of advice when starting a business is to do everything you can to keep business and personal separate. Why? First & foremost for legality purposes. Second, so that you are accurately capturing all of your income and expenses related to the business. You are streamlining that process by having everything in one place and not mixing your personal expenses with your business expenses.
- Another positive of opening up your separate business bank account and credit card is that you will begin building credit for your business, giving you the opportunity for lending in the future when you are looking to expand.
A Few Other Things to Think About
- Discuss with your CPA about the opportunity for you to start and contribute to a Solo 401K or SEP IRA associated with your new business.
- Based on your entity structure and whether or not you may employ other people, you may need to look into a payroll provider like Gusto or ADP to set up your payroll for yourself and employees.
- Again, I can’t stress enough the importance of keeping your business expenses separate and apart from your personal expenses and personal life.
I wish you the very best of luck in your business venture and am here for any questions or concerns along the way! I have a soft spot for business owners and entrepreneurs as I have an incredible respect for the courage it takes to get started. Please reach out to me with any questions!
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