How to start a business?

Starting a business can be a difficult process and it’s full of surprises. From taxes to financial reporting, making the twist and turns of having a business a daunting task for anybody. To help prepare and perhaps avoid those surprises I would like to give you a few tips and steps to consider in your planning process.

1. Research, research, and more research. A definite must. Because every business is different, you want to take the time and investigate your industry. Find out what makes it different or alike from other industries. Find out the industry’s best practices, costs, and market. A simple Google search will go a long way. Here are a few things you will want to research are:

a. What kind of insurances will I need?

b. Pros and cons of having employees?

c. Does my business require special licenses?

d. Will I need a Business lawyer?

e. What will start-up costs look like?

f. Will I need an accountant?

g. Where will my funding come from?

2. Business Entity. Another big decision you will need to make is what type of entity you will create. First, are you going into business by yourself or with somebody else? If you were going at it alone then your choices would be a sole proprietorship, LLC, or a corporation. If there are multiple owners, you will need to decide between a partnership, an LLC, an LLP, an S-Corp, and a corporation. As you can see there quite a few options. Some are more cost-friendly while others offer more protection for your personal assets. If you need further assistance in making a decision, consider setting an appointment with a local small business consultant. In Odessa, The University of Texas of the Permian Basin has a division for Small Business Development Center aimed to help start your local business. I also suggest you consult with a CPA; they will be able to explain the tax implications of the different business entities.

3. Accounting and Tax Return. The next thing you will want to think about is how you will track your income and expenses. This is an important step because you will need to gather all the information at the end of each year to file your tax return. Consider if this is a task you be doing yourself or will you hire someone to take care of it for you. A CPA is a great source at this point, they help guide you on what is tax-deductible and what is not. Keep in mind that you will have to budget this expense accordingly. In my experience, this is generally a huge surprise for people when it comes to paying someone for their tax services. Invest in accounting software, or some may consider tracking everything in Excel, but I do not recommend this practice unless your business has few transactions. If you would like an estimated cost for any of the services mentioned, feel free to contact me.

4. Bank Account and EIN. Last, you will want to decide whether you need a separate bank account. Most banks have a minimum balance required to avoid fees so it would be good to look around for the best rates and balances required. If you do decide you need a bank account, you will need to apply for an Employer Identification Number (EIN) through the IRS. Having a business bank account comes with benefits that a personal account wouldn’t such as overdraft abilities and greater protection for your personal assets.

Of course, there are many more things to think about, however, these are the main things I would suggest to get started. If you need help with any of them, please contact me for a consultation, and I will be happy to help you!