How to Set Up a Small Business
The dream of small business ownership lures many people each year to open their doors. In 2006, there were more than 7 million businesses with fewer than 10 employees across America, according to the U.S. Census Bureau. Unfortunately, according to Gaebler.com, two-thirds of new small businesses fail within the first two years, and by the fifth year, less than half of the remaining businesses are still open. If you have a great idea for small business, understanding how to set it up from the beginning can help you avoid the common pitfalls.
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Instructions
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Contact your local government to determine whether you need a business license for your type of business. If so, apply for one. If your state charges a sales tax and you are going to sell products, such as from a mom-and-pop convenience store, you will need to report your sales periodically and pay sales tax to the government.
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Choose a business location. Whether you are going to lease a pre-built space or build your own store, it is important to choose a location that will provide for your needs. If your business will depend on walk-in street traffic, choose a location that is in a busy area. If your business will be primarily conducted on the telephone or through the mail or if you will be providing services to your customers in the field, you can look for a more out of-the-way location. Be sure to ask the landlord about what is included in the lease with respect to utilities, repairs, and landscaping.
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Hire an accountant who will be responsible for estimated taxes, payroll, and other costs to running your business. Set up your in-store bookkeeping system with your accountant so you know how to keep things ready for him to use.
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Purchase equipment. Obtain receipts for each piece of equipment you purchase so your accountant can properly deduct it at tax time. Don't overbuy but do be sure to purchase everything you will need to run the business from the day you open. For example if you are opening a business that rents landscaping equipment you want to be sure you have enough lawn mowers to get through the busy spring and summer seasons.
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Contact vendors that can provide your product inventory. Check their delivery, customer service, and return policies to be sure they will work well with your new business. Set up delivery dates and accounting deadlines. If you will make purchases on credit, set up a line of credit with each vendor. Request a letter of credit from each vendor that can be used to approach new vendors with when the need arises.
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Design and have business cards, stationery, and letterhead printed. Do the same for signage and pick it all up so it is usable before you open the doors. Be careful to choose logos and designs that you will be happy with for the long run. These things can be changed but you want your customers to identify with your business name and look without having to get used to a different look.
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Send notices announcing your opening day to everyone you know. Church directories, Christmas card lists, businesses you support, and others are all potential customers that should be contacted about your opening. Plan a grand opening. Advertise in local publications and ask them to publish grand-opening photographs if you send them in.
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References
- Photo Credit store front image by Derek Abbott from Fotolia.com
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Comments
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This article is helpful. A few more details - you will need a registered agent, likely in Delaware. This is basically a middle-man - you can't deal directly with the state (kinda weird). You pay them fees to be your agent (a few hundred bucks / year). CSC global does this - they are pretty expensive and I don't recommend them. Others are cheaper. Also, you have to pay $250 in taxes every year (on top of the registered agent fees). Lastly, you have to pay a $200 fee to shut down the entity (paid to Delaware). This quirk in the law should be changed. Small businesses are being penalized for going out of business.
