Starting a small business can be an exciting but stressful time for an individual. He may believe that there's a great opportunity in the marketplace for a particular business. However, he may be overwhelmed by the number of steps that are required to start the business. Although businesses may vary to a great degree, there are several key steps that an individual should follow in starting a small business:

  • Identify a business opportunity - the idea for a business should be identified by studying the marketplace and discovering a product or service that's needed by people
  • Write a business plan - the plan should map out the goals of the new business and what the individual is attempting to accomplish
  • Obtain financing to start the business - determine how much money will be needed to start up the business and obtain the funds from a bank, a family member or other source
  • Choose a name for the business and register it - make sure you choose an original name that hasn't been taken by another business and register the name pursuant to federal, state and local laws; the name can be registered as a trademark to prevent another business from using the name
  • Select a business structure - decide whether the business will be formed as a sole proprietorship, a partnership, a corporation or a limited liability company; the business structure will determine the income tax return that'll need to be filed
  • Obtain an Employer Identification Number (EIN) if applicable - the EIN is used to identify the business and is needed for most businesses, such as corporations, partnerships and businesses with employees
  • Obtain any federal, state or local licenses and permits - this will depend on the location of the business and the type of industry
  • Set up an accounting and recordkeeping system - the individual must properly maintain accurate financial records of the business for tax purposes
  • Purchase adequate insurance for the business - search for the broadest coverage and the lowest rates to protect the business from lawsuits or natural disasters
  • Choose a location for the business - the individual must take into account various factors that'll affect the business when choosing a location, such as demand, supply and labor
  • Purchase supplies for the business - multiple suppliers should be examined to find the best quality and prices
  • Hire employees - choose employees with skills that'll best fit with the goals of the business
  • Set the prices for the products or services - examine the marketplace to determine what prices the customers will be willing to pay
  • Advertise the business - create a marketing plan and make sure the name of the business is known in the marketplace
  • Create a day-to-day plan - make sure that there's a plan in place for the daily running of the business before the doors are opened the first day

Questions for Your Attorney

  • What are the pros and cons of forming a small business as a limited liability company instead of a partnership? How will this affect the business taxes?
  • Where can I find out what licenses and permits are needed to start and run a small business?
  • Is it okay to name a business with the same name as a business that's located in another country? What if the business is located in another state?