Thursday, June 14, 2007

How to Start Up a New Business


Starting a new venture can be very confusing as well as exciting. To help you make it as simple as possible, we have included the following checklist.

Step One - Prepare Business Plan

Planning is key to success. Prepare a Business Plan. The Business Plan will serve two purposes. It will help you make sure you have researched and thought out all the aspects of running the business so you don't have any big unpleasant surprises. Also, the plan will help convince a bank or potential investors that you are worthy of receiving some help in funding this new venture. Remember that the plan itself will NOT get you funding, since new startup businesses are very difficult to find capital. As the business owner, you should expect to have to supply all the startup capital necessary from your savings or from a bank loan based on income other than the business.

Step Two - Business Form, Taxes, Licenses, and Permits

Check with your Secretary of State - almost all states now are online - and look for the Corporations Division to find the form for either Articles of Incorporation (to form your own corporation) or Articles of Organization (to form a Limited Liability Company). Most entrepreneurs today are forming a LLC since it requires less paperwork to maintain it.

While you are waiting for the Secretary of State to send you the charter, contact each of our city, county and state tax departments. Ask each of them if they require any of the following:

Business or Occupation License,

Business Personal Property Tax registration,

other specialized licenses for the type of business you are starting.

Requirements will vary widely, with some states having county personal property taxes (like Ohio or North Carolina) but many other states having none, while other states may have a city license or tax (such as Philadelphia or New York) but no county tax on businesses, to just a state license, etc. Some businesses will have more licenses than others, such as a restaurant that may have to get a local or county business license, a food or health department license, and a liquor license from the city or county (or both), and possibly a city fire inspection or occupancy license. Some state departments of taxation (or revenue in some states) may have a booklet or checklist on what tax registrations are required, and a few states offer booklets or checklists from their Secretary of State, Corporations Division.

Also, contact your state Department of Revenue (or Taxation) to register for sales tax (if you plan to make retail sales of tangible items, or if you live in Florida you must pay sales tax even on services), and to register for state income tax withholding (if you plan to have employees, including yourself as employee of your own corporation, if you live in a state that has an income tax).

If you will have employees (including yourself as an employee of your corporation) contact your local state unemployment office, and ask for the forms to register for state unemployment taxes. Most states now offer these registration forms online.

Step Three - Employer Identification Number (EIN)"

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