Taxes and accounting are obvious factors to consider when starting your own business. However, setting a solid and well-rounded foundation for your small business is crucial to reach financial success! One of the best ways you can ensure your business foundation is strong and balanced is to get the help of your accountant. Your accountant will be able to guide you through 8 of the most important steps when starting your small business.
Step 1: Research: Researching your business idea is crucial to ensuring you have the potential to thrive in your market. You must be an expert in your industry and product to get the buy in from clientele. Look into consumer reports regarding your product or service to determine the demand and demographics of your business. Knowing this can help you research the best possible location for your company. For example, if you have a product or service geared toward college students, leasing space near a college campus can earn you more business due to the demand.
Step 2: Determine the Entity Type: Example entity types are sole proprietorship, limited liability company (also knowns as an LLC), and corporation. Choosing which business structure to use is as important as it is complicated. Getting guidance from your accountant can you help as they know the tax laws, fees, and rules around each entity. For example, in the state of Arizona, there is a fee to file an application for an LLC, however there is no annual fee to maintain it.
- When choosing the entity type, it is also important to understand the owner liability associated with each one. Because this is a decision that can affect your personal life, you want to ensure you know your options.
Step 3: Create a Business Plan: A business plan entails all of the fine details to your business. It’s essentially a map to how you plan on running your company. Your accountant can help you get started or read over the final plan to help you reach your growth and financial goals. Your accountant may have a template you can use to get started, or you can reference the SBA website for examples. There is no right or wrong way to complete this plan. The most important part of the business plan is that you can reference it and update it as needed. Key things to include on your plan are:
- A summary of your business
- Mission statement
- Business execution
- Budget and accounting plans
- Future goals and growth
Step 4: Find Investors and Apply for Loans: In order to bring your idea for a business into something tangible, you need money to make product, build inventory, get a storefront, and advertise. Although you can contribute as much money as you are willing or able to, you may still need more. Adding an investor or partner can help you bring in more cashflow. If comfortable, you can also ask family and friends for contributions in exchange for equity of the business. Other options include applying for small business loans and earning funding online through websites that promote your business idea for donations. If you’re unsure where to start, your accountant can direct you to your best option and loan choice.
Step 5: Pick and Register Your Business Name: Once you have the idea and structure for your business down, you have to come up with a catchy name. Much like a book cover, people will either see the name of your business and instantly be curious and attracted to it, or walk right by it. Choosing a creative name that is catchy and fitting for your product and demographic is crucial. Once you have the perfect name, you need to register it with the IRS and the state. For example, in Arizona, you will need to register with the Arizona Corporate Commissions Division.
Step 6: Open a Bank Account: Now you need a place to hold your money for business purchases, payroll, and revenue by opening a bank account. Depending on the business entity, will depend on how you structure your bank accountants. Each bank has their own fee schedule and rules so you may want to shop between banks to find the best fit. Your accountant may be able to give you contacts to get started.
Step 7: Determine Internal Accounting Processes: The next step is to determine your internal accounting system. If you have staff, you may want to look into payroll services which can help with your employee tax forms, pay, and time off balances. Otherwise, you will still want to look into a bookkeeping system. If you have a small business you may be able to get away with doing your own bookkeeping, but as your business grows you may need to hire a bookkeeper or use the services offered by your accountant. Having a proper bookkeeping system will ensure you know where you are at in your budget and where your money is coming and going.
Step 8: Invest in Marketing: After you have your business name, location, products and services, and accounting setup, you have to advertise your business! As a new and local company, it is important to set aside a budget for your marketing. Hiring a marketing team can assist you in building a website that is fit for your brand and mission. Marketing teams can also aid you in advertising. Thanks to social media, ads are reaching more eyes than ever before. The more people you reach, a bigger presence you will have in the community.
Bringing a new business to the marketplace is exciting and challenging. In order to set yourself up for success in the long run, you must start by setting a strong and well-rounded foundation. Enlisting the help of an accountant will ensure you can check off each item on the list above and turn your dream into reality.