If you have an entrepreneurial spirit and dream of becoming your own boss, you may eventually look into starting your own business. Many people have the desire and solid ideas for starting a business venture, but may either lack the courage to take the first step or simply don’t know where to start. Here are a few things to keep in mind that may help guide you in taking those first steps.
Develop a business plan. A business plan is important for obtaining a business loan to set up operations. It acts as a blueprint of your operations for the coming years. Make sure the plan covers the type of business, product or service offered, the type of customers, pricing, start-up capital, revenue and expense forecasts and marketing plans.
Registering a business. You’ll need to decide if you’re going to start a business alone (as a sole proprietor) or with others (as a partnership). Some states will allow you to simply start a business; others require you to register the type of business and follow certain guidelines before opening the doors.
Tax considerations. Most businesses need an employer identification number (EIN) to file tax returns. To obtain an EIN, you’ll have to file Form SS-4, which you can get from me, the IRS or the Social Security Administration. Your state may also require a state ID and/or sales tax number. If you need more information on obtaining these ID numbers, please let me know.
Employees. If you plan to have employees, it’s important to know that you’re generally responsible for payroll taxes, social security taxes, Medicare taxes and unemployment taxes. You’ll also need to collect federal and state withholdings (where applicable) and the employee’s share of social security and Medicare taxes.
Start-up costs. You may need to separate some expenses, such as:
• Those you incur in exploring and setting up the business. In general, you may deduct $5,000 of start-up costs. The remaining expenditures are amortized over 180 months, beginning in the first year your business begins.
• Those you incur from the time the business officially begins (currently deductible).
Other considerations. Before starting a business, it’s also important to consider the following:
• Record keeping
• Business location
• Capital expenditures
• Liability and asset protection
• Fringe benefits
• State and local requirements