I started writing this post but quickly found myself reflecting on the incredible leaders I’ve had the privilege to work with throughout my career. I began thinking about what it truly means to step into business ownership, and was inspired by the stories of success, struggle, and perseverance from the entrepreneurs I’ve come to know well and personally learn from. 

That reflection led me to write about the Top 5 Traits of a Successful Entrepreneur but today, I’m turning back to what I originally intended to share: the first foundational steps to take when starting a business.

Because here’s the truth. Your entrepreneurial journey is going to take you down a road you’ve never traveled before.

The Journey Ahead: What To Expect When Starting a Business

So you have an idea, a product or a service that you want to either sell or offer to the world that you can’t stop thinking about. You’re probably feeling equal parts excited and terrified and believe me when I say, that’s perfectly normal. Entrepreneurship comes with more unknowns than answers at the beginning. 

There is a journey ahead that you simply know nothing about – no guaranteed path, no finish line and there’s definitely no medal waiting for you at the end.

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’ve all heard the old adage – no risk, no reward. Without risk, without courage, without overcoming fear, how will you ever see what you’re truly capable of?

I believe wholeheartedly that you can create something successful. My goal with this post is to give you a starting point and a simple roadmap that makes those first steps a little less overwhelming and a lot more strategic.

Questions to Ask Yourself Before Starting a Business

Running a business could take many different forms as every industry and stand alone business is not like the other. But in general, before you get into the logistics, I want you to pause and ask yourself a few important questions before jumping in to start your business: 

• 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? What makes me different?
• How will I market my brand, product or service so that people will know I exist?
• What’s my plan to make money? And how much money do I really need to make to make the business sustain itself and my lifestyle?
• Who do I need on my team (mentors, experts, advisors, assistants) to fill the gaps in what I don’t know or don’t have time to do?

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 in my mind, change over a hundred times during your entrepreneurial journey but it grounds you in purpose, helps you prioritize your time, and gives you something to look back on as your business grows.

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.

So, How Do You Get Started? Here Are the First 3  Steps to Start a Busines

So aside from coming up with a name for your business, having an understanding of the product or service you will be providing and sketching out the “why” and the “how” of your business, it’s time to move into the practical side of business ownership. Here are the first three foundational steps I recommend.

Step 1: Seek Out Professional Guidance From a CPA

One of the smartest moves you can make early on is talking with a CPA or accountant. Depending on your goals and the type of business you’re building, a CPA can:

• Help you choose the right legal and tax entity (LLC, S-Corp, Partnership, Corporation, etc.).
  They’ll walk you through the pros and cons of each structure this guidance is invaluable as it has the potential to save you taxes down the road, protect your personal assets from business assets and set your business up for future success.

• Identify which local, state and federal tax forms you will be required to file and when to file them.

• Help you track and report your income and expenses, generate financial statements (which are required for tax reporting and business loans), and keep you compliant (and prepared!) come tax season

• 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.

Bottom line: A CPA saves you time, stress, and costly mistakes so you can focus on building your business.

Step 2: Register Your Business with the IRS & Your State

Once you’ve chosen your business structure, the next step is making it official with the IRS and your state. Sole proprietors don’t need to register, but keep in mind this setup offers little protection for your personal assets.

• Federal: You will need to apply for an Employer Identification Number (EIN). This number is like a social security number for your business. You’ll need it to open a bank account, hire employees, and file taxes. 

• State: Register your business with your state government. Each state has its own process (they like to make things complicated for us, don’t they?!), but you’ll typically apply for a license or certificate of some sort to legally operate your business within the state.

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 if you’d rather not deal with the paperwork.

Step 3: Open a Business Bank Account

Once you have an EIN issued to you from the IRS, you will be able to open a separate business bank account, credit cards, etc. 

Why does this matter?

• Legal protection: One of my biggest pieces of advice when starting a business is to do everything you can to keep business and personal assets separate. 

• Clean, streamlined bookkeeping: When you separate business activity from personal, it makes tracking income and expenses easier, keeps everything in one place so it’s easier to navigate and saves you so much time and headache come tax time.  

• Builds business credit: 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.

This is one of those seemingly small steps that makes a massive difference in keeping your finances for your business in order. 

A Few Other Things to Keep in Mind

• Ask your CPA about retirement plan options like a Solo 401K or SEP IRA – business deduction + retirement savings for you!

• Based on your entity structure and whether or not you need to hire employees, you may need to research payroll providers 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 from your personal expenses.

A Personal Message to End With

Starting a business is brave and takes a lot of guts. It’s equal parts exciting and scary, but with the right foundation and guidance, you can give yourself the best shot at long term success.

My hope is that this blog post will help make your first steps in starting a business feel less overwhelming and more empowering. And remember, you don’t have to do it alone, lean on advisors, mentors, and your support system.

II have so much respect for entrepreneurs who take that leap, so please know that I’m cheering you on from a distance! 

If you want to follow along my entrepreneurial journey, make sure to follow me on Instagram @finpoweredfemale. 

And if you want more personal finance and business ownership support, please reach out to me to learn more about how I can best help you in your financial journey!