- Plan. Have a plan. Don’t make it sacrosanct like some make the Bible or the Qu’ran, but have a business plan. You’ll need one for credit with banks, and to determine if you are succeeding. You’re in business to make money and to succeed. Failure to plan is planning to fail.
- Form a business entity. This entity will house your business activities. Most people select between an LLC and an S Corp for small business. Sometimes people may choose a C Corp but those are the exception, not the rule. Professionals will need a professional entity.
- Tax. Related to issue number 2, engage a tax adviser to understand which tax elections you’ll make. Will you be a flow through entity? Which one?
- Licenses. Once you have a plan, an entity, have elected your tax options, you’ll need to understand the regulatory framework. It will start with a basic business license from the city or county, and sometimes state to complex regulatory frameworks. Most business services require a specialized license other than a basic business license. You should ask a professional and research yourself which licenses you will need.
- Capital. Understand how much money you will need to finance your operations. This should be included in your business plan. If possible, once you’ve established a budget, add twenty percent for inefficiencies and mistakes. Be prepared with the answers to these questions: Will you finance any of the business through credit? Will you have other people contributing capital? What will the relationship of the “partners”, “members” or other “stockholders” be? Most small businesses fail because of under-capitalization.
- Assets. What tools, equipment and other assets are needed to conduct your business? How will these be owned? Solely in your business entity or through some other relationship?
- Employees. Will you have any? What insurances have your procured? You will need workers compensation insurance, and you’ll possibly health insurance if you employ fifty or more employees. Do you have them covered? Do you have employees on a written contract?
- Business Location. Do you own space or will you be leasing? Are you working from home? Who will draft your lease? Who will review your lease? Whenever possible, sign the lease in the name of the business entity. There are a number of reasons. It aids in tax filings and can limit your personal exposure.
- Marketing. What professional relationships do you have? You must continue to build upon these relationships and network as well as return referrals. In today’s world, it is almost essential to have an internet presence. Who will build your website? What do you need to have fresh content? How do you maximize exposure?
- Audit. Review the success and failure of your activities. Are your marketing efforts successful? Do you need other assets? Do you need more capital? Do you need more employees? Review quarterly and annually. Software now tracks visits to websites to let you know how effective your internet marketing is. You should use other means to track your non-internet marketing.Again plan to succeed, implement the plan and consistently review the plan. If you have questions, feel free to contact me. Good luck.
— Jeffrey Whitehead, Esq.
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