Success from the Start - Steps to Starting Your Own Business

So you’ve been thinking about turning your side gig into a real business because the number of hours in a day aren’t enough to do it alongside your full time job anymore. Or maybe you’ve suddenly found yourself unemployed and you’re done working for “the man,” so it’s time to make your dream of being your own boss a reality. (That second one was me!)

Making the decision to start your own business is exciting, but it can also be overwhelming! I have been in that boat a few times now, and I know how the exhilaration can quickly get overtaken by the stress of researching all the things you need to accomplish to finally be officially in business. So instead of watching my fellow entrepreneurs stumble through the steps, I decided to put together a checklist of the things you SHOULD do before you dive into your business. **I say "should" because these steps are not 100% written in stone, but let’s just say that it sure makes it easier to get all this done beforehand, rather than say, at tax time.

This list picks up after you have already done the work to create a business plan with a name, mission, vision statement(s), purpose, the market you are serving, etc. You may think those details are just fluff, but they really do help you hone in on the WHY of your business! Plus, a well-written business plan can help you acquire investors, if needed.

1. Register your business name with the state in which you live. You can find details on how to do this on your state's Secretary of State website. Depending on the business structure you choose and the state you live in, you may need to hire a business attorney to complete this. There will be a fee for registering your business (i.e. $50 in Colorado, plus $10 each year).

2. Apply for your federal tax ID (EIN). You can complete the application on the IRS website. Your EIN is free!

3. Register with local agencies. Some counties and cities require you to file for business licenses. Most likely, there will be small fees associated with local business licenses.

4. Apply for industry licenses and permits to conduct your business. This is completely dependent on your specific business. The fees are also dependent on your specific business or industry in which you work. (i.e. cosmetologist)

5. Set up a business bank account. You will need to bring the letter from the IRS that identifies your business and your Employer Identification Number (EIN). Make sure all the signors in your business are listed on the account. If you are the sole member (owner), then you will be the only signor. But if you have business partners, they need to be listed on the account as well.

6. Set up your accounting software. There are a number of software options to choose from. Of course, I always recommend Quickbooks Online first, but it is not the only one. However, if you think that is too much of an investment from day one, at least set up an Excel workbook. Email me and I can help you out with that!

a. This requires a sub-point since bookkeeping is obviously my profession. When you commit to a bookkeeping system, STICK TO IT! It will not do you any good to set it all up and then forget about it for months. Your CPA will not appreciate it come tax time, and frankly, you will have to pay them more money just to clean up your mess. If managing your books is too much, hire someone like me to take the load off. I promise we are worth it 😉 Ok, sales pitch over!

7. Figure out a system to organize the paperwork of your business, like receipts and invoices. See 6 Things to Start Tracking in Your Small Business Today for my tips on keeping track of your business's most important documents and information.

8. Become familiar with your business’s financial statements. While these may not be pertinent for the first few months while you still have a baby business, it is important to learn how to read them. The three statements that are most crucial to look at monthly are the balance sheet, income statement, and statement of cash flows. You will be able to pull these statements from your bookkeeping software. They can even be created on Excel, if that is the route you are going for keeping your books.

Once you have completed these steps, you are ready for business! Keep in mind that having a successful business will not happen overnight, but setting yourself up for success from the start will make a huge difference. As always, if you have any questions about anything I have written here, please do not hesitate to reach out!