Although they may not be as prevalent in the mainstream media or across social media platforms, small businesses account for 99.9% of all US businesses.1 With over 33 million small businesses operating nationwide, joining the pool may be a little intimidating. However, it is possible to start a small business—and what you need is operational and compliance understanding, a great idea and a bit of patience.
In 2021, 5.4 million new business applications were filed in the U.S.2 Are you unsure of how to start a small business? to help, here are general steps to consider. You should also consult with your finance, tax, and legal advisors.
One of the first things you should consider doing when starting a small business is to conduct market research on your business idea. This can help you better understand the demand surrounding your product or service and provide you with insight into the current competition. Market research is also important to establish your target audience, understand their demographics and fine-tune your marketing strategy.
During the beginning of your journey, you should also take some time to establish your “why.” This is the motive behind your business—your passion or drive for starting it. Establishing your “why” from the start can help you create your mission plan, values and will help shape your company culture from the start.
Now, it’s time to start developing a business plan. This will help explain your goals and how you plan to achieve them. You’ll want to consider including things like start-up costs, potential options for funding, descriptions of your product or service, value propositions, marketing strategy, target audience information and other small details that go into running a business. It may take some time, but the more detailed your business plan is, the better. Sections in your business plan may include:
While developing your business plan and strategy, you should also start to brainstorm options for a business name. Your business name is important, as it will be the base for branding, marketing and future company reputation or customer loyalty. You don’t need to be completely sure of your name yet, but starting the brainstorming process early is a good practice. You will also want to confirm with the state agency of name availability and other registration and naming requirements.
As part of your business plan, you’ll need to define your structure. How your business is set up may impact future tax and legal implications, so this is one of the most important decisions you’ll need to make. You should speak with a tax advisor or business attorney on what the best options are for your new business. Some options for business structure include:
Another important step in starting a business is learning about your finance options. You’ll need to be able to cover start-up costs and operating expenses. Some of the most common options for small businesses include:
Depending on the industry of your business, you’ll likely need a few different licenses or permits. These will be required for legal operation, so don’t skip this step. Each industry will require specific licensing or permits, and some companies may also require federal licensing. You should speak with a business lawyer about what federal, state and local licensing you may need.
There’s a lot of paperwork that goes into starting a small business. You’ll need to make sure that you fill out the required documents and submit them to the proper agencies. These can include:
In order to start operating, you’ll need to apply for a federal employer identification number (FEIN) with the IRS. This can be done quickly online.
Once you’ve figured out funding options, it’s time to open your very first small business bank account. You should consider separate funds for personal and business, which is important for both tax and legal purposes. You will need to give the bank your legal business name, FEIN and other documentation ) when opening a small business bank account.
To help safeguard your business and adhere to state or federal requirements, you’ll need a to consider certain insurance coverages for your small business. Some possible coverages include:
Once you get all the logistics done with setting up the business, you’ll want to focus on your internal operations. The first step here will be to figure out payroll and accounting, as you can’t hire any employees until you do. Payroll and accounting can be a bit difficult, but working with a professional employment organization (PEO) such as TriNet can help provide the payroll processing services and guidance you may need.
The type of benefits you offer your employees will also play a role in your overall company's success and growth. Top talent is attracted to big-company benefits, including health insurance, retirement plans or non-traditional benefits. A PEO can help you offer your employees access to attractive benefits without expending too many resources.
Rather than hiring an internal HR department, consider outsourcing. Outsourced HR experts work with small to medium-sized businesses to help with HR support that is cost effective and help with turnover and generate more opportunities for revenue growth.
Starting a small business is not an easy venture, but it’s worth it in the end. While it will require long hours and late nights, there are ways you can help offset employee management while boosting overall experience. When you work with TriNet, SMBs can gain access to traditional healthcare and insurance benefits alongside a variety of non-traditional benefits that don’t break the bank. Learn more about how TriNet can help support you on your business journey.
This communication is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance.
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