Starting your own business can be exciting, but it also presents some challenges. Having the proper tools and skills in place will help you map out how to start and run a successful business.
Seeking advice or getting professional help is a great first step, especially if this is your first business venture. Accountants and bankers can give expert advice in regard to finances and startup capital. Someone who is in a similar business may also be able to provide worthy advice based on their past experiences, as well as mentorship. The more knowledge in your arsenal, the better your chance of succeeding. Listed below are a few essential items to have on your business start-up checklist:
- Business Entity Selection
When starting a business, contact an accountant or attorney to determine what type of entity to operate for tax purposes. To establish an LLC, Partnership, or Corporation, you may need to contact an attorney to set up the entity and possibly establish a buy-sell agreement. The agreement should outline the terms of the partnership, the percentage of ownership, how the profits are distributed, and how the business is valued if one partner wants to exit or sell their portion.
- Obtain a Federal ID Number
Information and registration can be found on the IRS website.
- Register with the State
If the business’s headquarters is in the state of Wisconsin, visit the Wisconsin Department of Financial Institutions website to register for all the necessary permits. If the business resides in another state, inquire with that state’s government to register.
- Sales Tax
To determine whether to collect sales tax in Wisconsin or not, visit the Wisconsin Department of Revenue. Navigating sales tax laws can be one of the biggest challenges for a small business owner; therefore, it is highly encouraged to contact an accountant or sales tax expert for more information on sales tax within your state.
- Payroll Taxes
If your small business has employees, the following will apply. A Federal ID number is required before setting up any of the following:
- Federal Payroll and Unemployment Taxes: The best way to file federal payroll taxes is online through the EFTPS website.
- State Payroll Taxes: Visit the Wisconsin Department of Revenue’s website to get set up in the State of Wisconsin.
- State Unemployment Taxes: Every employer is required to file and pay unemployment taxes. In Wisconsin, please visit the Wisconsin Department of Workforce Development.
- Open a Business Checking Account
Pay everything through your business account. Do not pay for things personally
whenever it can be avoided. Also, avoid paying with cash and keep all receipts.
- Create a Business Plan and a Budget
A business plan is imperative. Estimate what sales will be, how many clients will be serviced daily, and how many items need to be sold to hit your sales number.
Calculate all of the expenses the business will have, such as the electrical bill that keeps the lights on. You should also have a marketing plan to bring in customers.
Together, these plans will help you compare expenses with potential revenue and give you insight into a reasonable budget.
- Hire an Accountant
Your accountant can be one of the most important advisers selected. Accountants help track the most important things in the business — finances and cash— while helping businesses avoid costly penalties and offering advice on effective tax planning.
There’s one last question you should ask yourself before going into business: What could go wrong? And if something does go wrong, how do I cover my bases? Will I still be financially stable if something goes wrong? A consistent plan will provide comfort in times of uncertainty.
Many people go into business because they are a great plumber, a great cook, or a great mechanic. But going into business also requires business skills and tools like managing money, reading financial statements, and managing employees. Familiarize yourself with these skills because they are just as important in running a business as being able to deliver an excellent product or service.