If you've been dreaming about starting a business for a long time but haven't been able to pull the trigger, you probably fall into one of two camps:
- You're still waiting for the perfect idea, or
- You're intimidated by the apparent complexity of starting a business
Are you stalling because you're waiting for an idea? If so:
- Stop thinking you can't start until you have a great idea. For every great idea that launches a company, hundreds of thousands of businesses succeed by outworking, out-executing, and out-lasting existing businesses. Most successful businesses take an idea or model that already exists and with time and effort learn to do it a better.
- Stop worrying about making millions of dollars or developing exit strategies. Too many people don't start until they think they can see the finish line. No one can predict the finish line.
Are you stalling because you're unsure and even a little intimidated by the process of starting a business? The key is to get off square one and in motion. Follow these steps; they're easy, and can all be accomplished in one day:
- Choose a name. Forget branding and unique selling propositions and all the business identity stuff. There is no perfect name. For now, don't worry about finding the perfect URL or website design or promotional literature. You're putting those carts way before the horse. Just pick a name. Your business can operate under a different name than your company name. Plus, you can always change the name later.
- Get an EIN (Employee Identification Number). An EIN is the federal tax number used to identify your business. You don't need an EIN unless you will have employees, plan to form a partnership, LLC, or Corporation. Even so, get one: It's free, takes minutes, and you can keep your Social Security number private and reduce the chance of identity theft. (If you don't have an EIN, your SSN identifies your business for tax purposes.) Apply for an EIN on the IRS website.
- Register your trade name. If you won't operate under your own name, your locality may require you to register a trade name. Easy: Fill out the form, file at the courthouse, and in most cases receive your approved registration form on the spot.
- Get a business license. Your county or city will require a business license, again using a form that takes minutes to fill out. Bring your EIN and your approved trade name registration form. Note: You'll probably be asked to estimate annual gross receipts. Do your best to estimate accurately, but don't fret: It's only an estimate.
- Fill out a business personal property tax form (if necessary). Businesses are taxed on "personal" property just like individuals. Where I live, no form is required for the year you establish your business. If completing a form is necessary, and you plan to work from home using computers, tools, etc., that you already own, you won't need to list those items. If you purchase tangible personal property during your first year, you'll identify those items when you file your business personal property tax form next year.
- Ask your locality about other permits. Every locality is different. In my area, for example, a "home occupation permit" is required to verify that a home-based business meets zoning requirements. Your locality may require other permits. Ask; they'll tell you.
- Get a certificate of resale (if necessary). Also known as seller's permits, if you plan to sell goods instead of services, a a certificate of resale allows you to collect state sales tax. Your state department of taxation website provides complete details, forms, etc. Some entrepreneurs decide to skip this step; don't.
- Get a business bank account. Probably the easiest way to mess up your books or run afoul of the IRS is to commingle personal and business funds (and transactions.) Get an account using your business name and EIN, and use that account for all business-related deposits, withdrawals, and transactions.
- Set up a simple accounting spreadsheet. You can set up business accounting software like QuickBooks later. For now, just create a spreadsheet where you can enter money you spend and money you receive. Bookkeeping is simple, at least at first. As long as you record everything you do now, creating a more formal system later will be fairly easy.
And you'll be an entrepreneur. You'll have the documents to prove it.
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