Starting A Small or Home-Based Business

 

So, you've decided to start your own small or home-based business...exciting isn't it?  You already have your business ideas in place and are ready to hit the ground running...or are you?   

Starting a new business is a busy and hectic time for any entrepreneur.  It's easy for critical steps to be overlooked in the process.  While there are different business types (sole proprietor, partnership, corporation) that you can set up; the information contained here will mostly focus on the Sole Proprietor, but can be used as a guideline for any business type.

Below is a checklist to help get you started on the right foot. 

 

Basic Business Start-Up Checklist


Business Name & Structure: 

  • Decide what your business name will be.   You should do a little research here to make sure that the name you choose isn't being used by any other company.  It's a good idea to check your local phone directories and an internet search just to see who might be using the name or a closely-related name.  If you'll be operating on the Web at all, you also want to do a domain name search.
 
  • Decide what business structure you will use.  Most small and home-based businesses start out as a sole-proprietorship.  Many states require a sole proprietor to use their own name unless they formally file what is called a Fictitious Business Name Statement to use a different trade or "dba" (doing business as) name. 
  • Filing a Fictitious Business Name Statement: Depending on your state law, most businesses that operate under a fictitious name are required to complete a fictitious business name statement, publish the statement in a newspaper of general circulation, and then record this information with the County Recorder where the business is located.  There is small fee, usually somewhere around $25 for filing the statement, along with whatever your local newspaper will charge to publish it.

  • Corporations are generally exempt, as are businesses that use the individual proprietor's own name. If you are "doing business as" (d/b/a), generally you need to comply with fictitious business name rules.  Contact your local County Clerk's/Recorders office for information specific to your situation.



Business Licenses and Permits:

  • Federal Requirements:  Most business types, with the exception of Sole Proprietors, must apply for an Employer Identification Number (EIN) regardless of whether or not they have employees.  To see if you're required to have an EIN, go to Do I Need an EIN?  This will link to the IRS website where you can find additional information for starting a new business.

  • State Requirements:  Licensing requirements from state to state will vary.  It is best to check with the state in which you live for specific information according to your specific business.  (You can find your state's business resource website by going to http://xx.gov, replace the "xx" with your states two letter abbreviation).

  • City/County Requirements:  Again, check with your local city/county for requirements specific to where you live and the type of business you are starting up.  Visit your city's business resources website or contact your local Chamber of Commerce for more information.


Open A Bank Account:    Most banks will require a minimum of the following, but may require more depending on the type of account.  You should call the bank and ask for their requirements before trying to setup the account to insure you have the proper documentation.


  • Valid State Drivers License
  • Fictitious Business Name Statement (If you are opening an account under any other name but your own)
  • Minimum Deposit (Check with your bank)
  • Business License (may or may not be required)



Order Business Checks: You can get temporary checks from your bank to get you started.

 

Setup Accounting/Record Keeping System:

This is one area that many people don't think about initially...then all of the sudden they realize that it's tax time and all they have is a box full of receipts.  Not only is this a bad business practice, but you could be losing thousands of dollars by not keeping 'good books' and following some basic bookkeeping principles.

Things that will help you in this area ~

  • Get a good accounting software like Quickbooks.  The benefits to you will far outweigh the expense of the software.
  • Take time daily to record your daily activities and expenditures.  If you do it daily, you won't be scrambling come tax time.
  • Have an accountant prepare your taxes.
  • If you will be operating your business from your home, educate yourself on the tax benefits available to home-based businesses.  This is a must or you may as well be working for someone else!

 

Other Items To Consider:

  • Develop a marketing plan.  This is another very important area that many new business owners don't spend enough time thinking about and planning.  You can have the best business in the world, and if nobody can find you or knows about you, you're dead in the water.
  • Business Telephone - What phone number will you use for your customers/clients (if any) to contact you?  Do you need a second line?  Do you have a professional message that your customers hear if you don’t answer the phone?
  • Are you going to need an internet connection?  It's hard to believe that anyone doesn't have a computer with internet access, especially if they have a business.
  • Office Equipment - Desk, filing cabinet, computer, etc.
  • Office Supplies - Paper, forms, envelopes, stapler, pens, etc... (This seems like such a minor thing, but when you don’t have the necessary supplies you can’t get the job done right).
  • Obtaining a Line of Credit - Either through your bank or a credit card company.  (This will be invaluable for purchases when you don’t have the necessary cash flow).
  • Insurances - Depending on the type of business you are starting.
  • Prepare a business plan.
  • Put a budget together (and stick to it).
  • TIME MANAGEMENT - I put this in bold/capitals because it will be one of the most important things that you must master.  You must be organized, and set a schedule for yourself and stick to it.  No longer will there be a boss there to tell you what to do and when to do it.  If you fail at this one item for any length of time, you won't be in business for yourself for very long!


While I can't give specifics due to the fact that there are so many different business scenarios, I have provided just some of the very basics of starting a legitimate business.  While businesses differ in type, location, requirements, etc... Following the above guidelines will get you going in the right direction.

 

Good Luck and Best Wishes!