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4 Costly Steps New Businesses Make

By Edited Nov 13, 2013 0 0

Starting a business for the first time could be confusing at times on what to do first. There are several decisions that have to be made. Such as should I start out of my house or open up a store front. Those decisions will depend on the type of business you’re planning to run. There are three basic forms in which businesses are started: Sole proprietor, partnerships, and corporations. Within partnerships and corporations there are special types. In this article I will take you step by step on setting up your business.

The first thing you need to do is write a business plan. This plan will talk about your purpose, goals, marketing strategies, financial cost, industry outlook, etc. In this planning process you should search for an Account, Lawyer, and Insurance company to have on retainer. Business plans can be very time consuming but it’s a good thing to do on the front end. Some people seek professional help to develop their plan and others do it themselves with the aid of a book or software.

 

Step two if you are planning to start out as a sole proprietor you should contact your local county government office to search business name usage provided you’re not using your own to make sure it’s available. You will also need to register with their office as well and pay for any permits or start-up fees.

 

 

Your next step will be to request an Employer Identification Number from the IRS by filing form SS-4. This is like the business social security number. When processing your application over the phone you usually receive your EIN before the process completed.

Once you have received the EIN, Proceed to search for a bank to open a business checking account. You would want to do an initial funding at that time. This account should stand alone from your personal accounts. Only business transactions should flow in and out. This is an easy way of keeping up with business transactions. If you need to make a withdrawal a good practice would be to write yourself a check.

Last head over to the insurance company you picked out early to purchase liability insurance and any other insurance that pertains to your business.

Partnerships and Corporations will do the exact same thing as a sole proprietor, but they have an additional step. They will need to register with the state it’s based at their secretary of state website. Here is where the lawyer you have on retainer comes in handy. The lawyer will draw up the articles and agreements.

In closing, these steps are a blueprint to starting your business. You must do your research and talk with your Accountant or Lawyer to see which area is best for your business.

 


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