If you’ve been operating out of the ‘hobby zone’ or have talked about wanting to take the plunge into entrepreneurship but haven’t taken action, now is the time to stop lollygagging and make some serious commitment to set up your business. I have put together a business setup checklist to help keep things in perspective.
For Better Or Worse, Until Success.
Hope you won’t get all commitment phobic on me. There are no rings to exchange here just a business to set up and a sincere pledge to work hard and be consistent. Granted, the administrative maze you will need to navigate is hardly fun for any entrepreneur but worry not, I have your back.
But first, let me take a slight detour – if you are not quite clear on your business idea, you need to take some time and sort that out before you jump onto this band wagon. Remember that if you don’t know where you are going, there is no telling where you will end up. You can read the first post in this series for some guidance on staying focused.
Oh and by the way … I am not an attorney. I am simply speaking from experience so use what I share to empower you and by all means engage a professional to assist you as needed. Alright – disclaimer out of the way, let’s proceed.
Business Set up Checklist
- Pick Your Business Structure and Register it: If you are in business to make a profit then you need a legal entity to represent your business. There are different types of businesses you can start. Below are just some of them. Keep in mind that the guidelines around how to set up your business legal structure differ by state. To help you find out what business structure is right for you, click here.
- Sole Proprietorship: This is the most basic form of business with just one owner. It is easy to set up with nominal costs. The drawback is that you will have unlimited personal liability. You can learn more about setting up a sole proprietorship here.
- Partnership: This is not too different from a sole proprietorship with the main exception being that there are 2 or more equal owners with shared financial commitments. One of the drawbacks is the joint and personal liability by each partner not only of their decisions but for decisions made by other partners. There are 3 main types of partnerships. General, limited and Joint Ventures.
- Corporation: You can also set up your business as a corporation. There are different types of corporations. S Corporation, C Corporation, Limited Liability Corporation. The rules around incorporating your business differ by State. If you want to set up your business as a corporation, be sure to get familiar with the laws of the state where your business will be located in and the guidelines.
- Register Your Business Name: If you are planning to do business with a name different from your name, then you will need to register a business name also known as DBA (Doing Business As). This can be done through your County Clerk.
- State/Local Tax Obligations: Some states have State/Local tax obligations. You can find out what requirements are for the State you choose to register your business in, at this link.
- Get Relevant Licenses and Permits: If you are in a specialized business, you should check with your State and Local governments to find out what your obligations are.
- Get your EIN: This is easy to obtain from the IRS. It is required in order for you to hire anyone. However, even if you are not ready to hire anyone, you will most likely need it to set up your business bank account.
- Open a business Bank Account and fund it: You do not want to commingle business expenses with your personal finances. Open up a business account. There are many great options out there so go for the account that has no monthly fees or minimums. Credit Unions are particularly awesome about this. You can check out Digital Federal Credit Union, my favorite credit union. If you do not have adequate capital, you can use crowd funding
- Set up an Accounting System: This is quite important. You will need to set up a system where you will manage your income and expenses.
- Register a domain and Set up your website: You need to establish a presence online quickly so be sure to have a website where you can connect with your customers. You will also need to include an eCommerce component.
- Set up your business’s Social Media Profile: For this initial set up, I suggest you account for Facebook, LinkedIn and Twitter at minimum.
- Set up Email and Phone: You will need a professional email. Also set up a phone line. You should think about using a Virtual Phone line with a professionally recorded greeting where your customers can reach you.
Check out My Toolbox for some of my favorite tools that will help you on your journey.