Don't Miss These 8 Steps When Launching Your Startup
You may be tempted to use shortcuts when launching a new business. It’s understandable. You’re excited, motivated, and inspired. The last thing you want to do is lose momentum. Some of the most important steps to launching a startup are the easiest to forget. But there are 8 important steps to launching a startup that you do not want to skip. Save this blog post (and print out the free checklist) to make sure you aren’t missing anything that could trip you up down the road.
1. Pick Your Location
If you are opening a physical location for your business, this may seem like a no brainer. But there are several factors to consider before signing on the dotted line.
Research regional expenses. That would include minimum wage, business insurance rates, utilities, and local government fees. Look up zoning laws to make sure it’s legal to run your business from your location. Take into consideration state and local taxes.
What if you are planning on working from home or providing services on-location? Make sure to set up a dedicated office space in your home and calculate the square footage. If you provide services outside of your home, you can still use this space for storing your supplies and taking care of admin tasks. Having a home office will help with tax deductions.
Also be sure to research local business loans, grants, and incentive programs for your state, county, or city. You may also qualify for federal programs based on your location. For example, HUBZone (historically underutilized business zones).
2. Choose a Business Structure
Your business structure will have an impact on a lot of areas. For instance, your income, taxes, operations, registration, and even your personal assets. Check out our blog post that breaks down the different types of business structures. Pick one that will be the right fit for your business in the next 1-5 years.
Types of business structures:
Sole Proprietorship (best for freelancers)
Partnership (best for small businesses owned by two or more people)
Limited Liability Company or LLC (best for medium or higher-risk businesses)
Corporation (best for businesses that plan to go public or eventually be sold)
Cooperative (best for organizations)
3. Choose a Business Name
This may be one of the first things you did when starting a business. But did you know there are several types of business names you can register for?
An entity name protects you at a state level. A trademark protects you at a federal level. Some governments require you register a DBA (doing business as) trade name. And a domain name is the web address or url that you own that will go to your website.
It’s a good idea to do some homework before deciding on a business name. Check the official trademark database to make sure you’re not infringing on an existing trademark. And do a domain name search to make sure the exact domain name for your business is available. If it isn’t, you may want to rethink your business name, since a domain name is such a huge part of your online presence and brand.
4. Register Your Business
If you conduct business as a sole proprietorship using your own name as your business name, you do not need to register anywhere. You may still want to register your business though so you can have protection and tax benefits. Here’s where to register depending on your circumstances.
Federal
Register with the federal government if you want a trademark, tax-exempt status for a nonprofit corporation, or you want to create an S corp.
State
Register with the state if you have an LLC, corporation, partnership, or nonprofit. Most states want you to register with the Secretary of State’s office or a Business Agency.
Do your research for your specific business structure and local government. Make sure you’re meeting all the requirements for registration.
5. Get Tax ID Numbers
Getting state and federal tax ID numbers is free and necessary for opening business bank accounts, getting loans, and paying taxes. It’s like a social security number for your business. You can get your EIN (Employer Identification Number) online.
6. Apply for Licenses and Permits
If your business activities are regulated by the government, you’ll need to get the correct licenses and permits. Check the websites for the issuing agencies or your local government websites to find out if you need special licenses. These are some common areas that are regulated by the state or federal government:
Agriculture, alcohol, wildlife, firearms, transportation, broadcasting, construction, restaurants, retail, dry cleaning, and plumbing.
7. Open a Business Bank Account
This is a crucial and often overlooked step in launching a startup. Even if you’re starting small with a few hundred dollars transferred here and there, you need separation from your personal finances.
It’s easy and affordable to open business accounts when you’ve completed the previous steps. And it looks so much more professional to have checks and payments in your business name. Not only that, but taxes will be much easier when you have business transactions separated into their own accounts.
Get the following payment accounts set up as soon as you start accepting or spending money:
Checking account
Savings account
Credit Card
Merchant services account
Merchant accounts are the least familiar to new business owners. This is the way you will collect payments online or via card. You may only need an online payment processor if you are starting an ecommerce business. If you have a brick and mortar store you’ll want a Point of Sales system. Some merchant services provide both, keeping things simple.
Cash apps like Paypal and Venmo are becoming increasingly popular for small businesses. That’s fine, but make sure you have separate accounts for your business. And don’t think these methods will keep business transactions under the table. New legislation is making companies like Venmo accountable for reporting business income.
8. Get Business Insurance
Even the smallest of startups can benefit from business insurance. Look into your options and get quotes to see if you can fit this into your budget from the start.
Depending on your business and circumstances, you may be legally required to get business insurance. If you have employees or do business in certain states, you will have to have certain types of coverage.
If your business is at higher risk for lawsuits, business insurance protects your personal assets and provides peace of mind. For example construction, retail, food and drink, healthcare, and casinos.
It’s also a good idea to insure against anything you wouldn’t be able to pay for on your own. Even if your business is considered low risk.
Bonus Step: Get the Right Guidance
Once you’ve completed these 8 steps you’ve given your startup a solid foundation for growth. It may seem tedious or overkill to take care of these items when you’re just starting out. But it prevents major headaches and complications from arising down the line.
Are you getting bogged down with the details? Do you want to be extra thorough in your business setup? Consider getting professional guidance. Pioneer Accounting Group does more than bookkeeping. We hold our clients' hands through every part of their business journey. We can provide you with the guidance and insights you need to reach success. Don’t hesitate to start a live chat with a real accountant, or reach out on our contact page.
Free Download: Printable Start-Up Launch Checklist
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