Starting a Small Business
Starting a business can be a very exciting time. 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 regards to finances and startup capital. Also, someone who is in a similar business may 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 is at succeeding. Listed below are a few essential items to have on your business start-up checklist:
- Choice of Entity – When starting a business, like a local restaurant, 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 etc. 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 I.D. Number – Information and registration can be found on the following site, www.irs.gov
- Register with the state – If the business’s headquarters is in the state of Wisconsin, visit https://www.wdfi.org 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 https://www.revenue.wi.gov/. Navigating the 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 a sales tax expert for more information on sales tax within your state.
- Payroll Taxes – If the business has employees, the following will apply. A Federal I.D 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 which is https://www.eftps.com.
- State Payroll Taxes – Visit https://www.revenue.wi.gov/ 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 https://dwd.wisconsin.gov/default.htm.
- Open a Business checking account – Pay everything through the business account. Do not pay 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 that sales number. Calculate all of the expenses the business will have, such as the electrical bill that heat the ovens and keep the lights on. Have a marketing plan to bring in customers.
- Hire an Accountant – Your Accountant can be one of the most important advisers selected. They help track the most important things in the business; finances and cash, help businesses avoid costly penalties and give advice on effective tax planning.
One last question to 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 consistency plan will provide comfort in this time of uncertainty.
Many people go into business because they are a great plumber, a great cook, a great mechanic. 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.