Question by Tyler: What are the initial steps to starting a small business?
Right now i’m building a site for affiliate advertising to make some extra dough. I have a full time job and am saving up, in hopes to start a small business with a good friend of mine, as my dad is an avid business owner, and my friend starts college for business in a week. I’d rather consult my dad as little as possible though. I feel as though he’d laugh at the thought and don’t really need the subtraction of confidence right now. I know i have a lot to learn, and this is kind of far off, but once i have a reasonable amount of money saved, I’d like to know what comes next.
Answer by Henry
Starting a business involves planning, making key financial decisions and completing a series of legal activities
Step 1: Writing a Business Plan
This written guide will help you map out how you will start and run your business successfully. Go to http://sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html or http://www.score.org/template_gallery.html for instructions on how to write a business plan and sample business plans.
Step 2: Get Business Assistance and Training
Take advantage of free training and counseling services, from preparing a business plan and securing financing, to expanding or relocating a business. Go to http://www.score.org/mentors and enter your zip code. On the next screen, you will get information on the nearest SCORE chapter. Call them and arrange for a free meeting with a volunteer SCORE mentor. They will guide you through the process and you can meet with them as many times as you need.
Step 3: Choose a Business Location
Get advice from a commercial real estate agent and a SCORE mentor on how to select a customer-friendly location and comply with zoning laws.
Step 4: Finance Your Business
Find government backed loans, venture capital and research grants to help you get started. Any bank will require a business plan that shows that you can pay back the loan. You should have a credit score of at least 700. You will personally have to put up 30% of the funds as no bank is going to assume all of the risk. If you cannot get a loan, look at peer to peer lending sites such as http://www.kickstarter.com/ and http://www.prosper.com/
Step 5: Determine the Legal Structure of Your Business
Decide which form of ownership is best for you: sole proprietorship, partnership, Limited Liability Company (LLC), corporation, S corporation, nonprofit or cooperative. If you decide to become an LLC, you can do it yourself by going to your states website and then to the Secretary of the State section. There you will find a downloadable form. Fill it out and mail it in, together with the filing fee and in about a week, you will be an LLC.
Step 6: Register a Business Name (“Doing Business As”)
Register your business name with your state government. Go to your states website and then to the Secretary of the State section.
Step 7: Get a Tax Identification Number
Learn which tax identification number you’ll need to obtain from the IRS and your state revenue agency. http://www.irs.gov/businesses/small/article/0,,id=98350,00.html
Step 8: Register for State and Local Taxes
Register with your state to obtain a tax identification number, workers’ compensation, unemployment and disability insurance.
Step 9: Obtain Business Licenses and Permits
Get a list of federal, state and local licenses and permits required for your business. Your local Chamber of Commerce can help.
Step 10: Understand Employer Responsibilities
Learn the legal steps you need to take to hire employees. http://www.irs.gov/businesses/small/article/0,,id=172179,00.html
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