Though the economic climate and U.S. culture both support the idea of entrepreneurship, there is still a great deal of risk and responsibility involved. So if you’ve got a great idea for an innovative new product or unique service, consider following these 10 steps.
10 Steps to Starting Your Small Business
1. Write Your Business Plan
A well-defined, strategic business plan is your roadmap to success. Start with a description of the product or service you’ll offer, what will differentiate you from the competitors and how you intend to grow revenue in the next 3-5 years. This step involves a great deal of research to determine what the market looks like in your chosen industry and where it’s expected to be future. If executed correctly, a business plan lays a firm foundation for the growth of your new business.
2. Make an Appointment with Your Local SBDC Counselor
The Small Business Development Center provides free, in-depth counseling and consulting services on a range of topics, from financial analysis to strategic sales plans. SBDC counselors have a wealth of experience and access to critical resources to assist entrepreneurs and small business owners. Whether you’re early in the idea phase or about to open your doors, a counselor can provide invaluable information to help you succeed.
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3. Decide Where to Set Up Shop
Choosing a business location is about much more than finding the cheapest rent or the easiest commute from your residence. Business owners must consider long-term implications of a selected property. Will your suppliers be able to find you and make deliveries with ease? Do your target customers live nearby and will they feel comfortable visiting your location? Does the location allow for future expansion? Are your commercial neighbors complimentary or competitive? Will your business comply with zoning requirements? Choosing a location is one of the most important decisions a business owner will make, so be sure to do your research.
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4. Acquire Necessary Funding
Most entrepreneurs recognize that starting a business requires a great amount of capital to get things up and running, but before you dive in, be sure you’ve made a realistic projection of how long it will take to turn a profit. Accurate financial forecasts will help you gain a better understanding of how much funding is necessary. Many types of loans are available to small business owners. Do some research on what best fits your needs and seek the guidance of a professional, such as your local SBDC counselor.
5. Define the Legal Structures
Choosing a business structure determines your direct responsibility for the company’s assets and liabilities. Legal and tax implications vary by the structure chosen.
- Sole Proprietorship
- Limited Liability Company (LLC)
- S Corporation
6. Claim Your Name
If you choose to do business under any name other than your own personal name, it must be registered with the appropriate authorities. For all businesses operating in Texas, your, “Doing Business As,” or DBA name must be registered with the Secretary of State. Take note that a name may not be used by more than one corporation in the state.
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7. Take Care of Tax Obligations
An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. You may apply for an EIN in various ways, including online application. The federal government levies four basic types of business taxes, income tax, self-employment tax, taxes for employers and excise taxes. Federal and state income tax requirements will vary by your legal structure. In addition to federal employment taxes, business owners with employees are also responsible for paying certain taxes required by the state. All states require payment of state workers' compensation insurance and unemployment insurance taxes.
8. Obtain All Applicable Licenses and Permits
It is of the upmost importance that you fully understand the requirements for operating your business legally. You will need to find out which federal and state licenses and permits apply to your business and what you need to do in order to comply.
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9. Understand Your Responsibilities as an Employer
There are a number of responsibilities involved with hiring employees. From setting up withholding taxes to verifying an employee’s eligibility to work in the United States, obligations far exceed simply hiring extra help. The U.S. Small Business Administration provides an overview of legal requirements as well as additional information about how to retain employees.
10. Repeat Step Two
If you haven’t been working with an SBDC counselor or a different type of adviser throughout the process, now is a great time to check back in. Your counselor can review your plans and processes to ensure you have the greatest opportunity for success once the doors are open. This is also a great time to finalize marketing plans and determine how you’ll launch your new business.
For additional information about processes, guidelines and requirements for starting a business in Texas, visit the websites below. Thank you to these organizations and entities for providing information that encourages and advises entrepreneurship in Texas.
U.S. Small Business Administration
409 3rd St., SW
Washington DC 20416
Texas Economic Development Corporation, Office of the Governor
P.O. Box 12428
Austin, TX 78711-2428
Texas Secretary of State
P.O. Box 12887
Austin, TX 78711-2887
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