When you decide to start your own small business, you may look around and find that there are a ton of ways to start your own business. Then, as you delve into the details, you may feel overwhelmed and lose hope towards ever getting off the ground.
Don’t Despair.
It is fairly simple to get started and you can work on the details as you go with proper research and help. The first step, however, is to get up and running.
That being said, here are the first things to consider when starting up.
1. Who will own the company?
If you are the only one (sole proprietor) or if you have a partner, it makes a difference on how you can form your company. Know who has control and how much each person will own.
2. Choose the type of company you want.
There are advantages and disadvantages to each type of company. From the amount of taxes to how much paperwork you need to file, to which one is allowed to raise capital from investors (not salary), it all differs. Here is a good guide from fitsmallbusiness.com that lays out a bit more about this.
REMEMBER: You can often change your business model with proper paperwork but it pays to get it right the first time. A free initial consultation with a Certified Public Account (CPA) can help you with that.
When working to file the paperwork, make sure to call your state’s DOS (Department of State) to make sure you are doing everything you need in the correct manner.
3. How much do you expect to get paid?
Knowing this will help you decide what type of business model you need. If you don’t plan on making much, perhaps an LLC (Limited Liability Corporation) will suit you better than an S-Corp.
As you make more, you can elect to file your LLC as an S-Corp for tax purposes or switch the entire model of the company. Again, a CPA or researching it yourself will help you decide.
4. Keep your money Separate from your personal accounts
Go to your bank and set up a business checking account. This way, you can always see how much the company is making and spending without your personal money getting mixed up with it.
Pay yourself from this account and there is a good record for you and when filing your taxes.
5. How are you going to record and file your records?
This is VERY important as you get your business running.
- Do you have a business e-mail?
- How will you keep track of your earnings and expenses? (When it comes time to deduct expenses for taxes, you will need this)
- Where are you going to keep contracts, receipts, or other paperwork?
- If you work hourly, how will you log your hours?
- Do you use your car? How will you keep track of your miles?
- Do you work from home? Have a dedicated work space. You can often deduct your space and some utility usage if you are accurate about it.
- What else pops up and where will you file it?
There you have it.
After getting your business started other details will certainly pop up. But, no worries! Your business is up and running!
If needed, you can always research answers or hire a professional for at least the first year to help you manage everything you will need to make your business model successful.
Good Luck on becoming a new small business owner!