Starting a business can be an exciting time. But it can also be overwhelming. There’s a lot required to get your company underway, and completing the steps correctly is key. But just where do you begin if you’re a first-time business owner?
At Complete Payroll Solutions, we’ve helped thousands of startups get off the ground by advising on a variety of workplace issues that all new businesses face. As a one-stop-shop outsourced provider for payroll, benefits, and HR, we know the myriad challenges you have to navigate on the way to opening your doors. To help you understand what you need to consider, here we’ll discuss:
After reading this article, you’ll know some of the key steps for entrepreneurs to help your business get off to a successful start.
Once you have a marketable idea and solid business plan, you’ll want to take some basic steps to give your organization the foundation it needs to get underway.
When it comes to choosing a business structure, you have several options, and each has their pros and cons:
No matter what decision you make, you’ll want to make sure that you always use the company name to indicate that your business is a separate entity and keep your funds separate. You should also pay taxes from corporate accounts and not your personal ones.
Depending on the type of business you operate, you may need to register your business. For example, you don’t need to take this step with the federal government unless you’re looking to gain tax-exempt status.
And when it comes to state registration, that depends on where your business was formed and where you operate.For example, in Rhode Island, you’ll need to register your business in order to get a permit to make sales at retail. You may even need to apply for certain licenses or permits at the local level based on your business structure.
Just be sure to check the area laws to make sure you complete this important step if necessary. If so, it’s generally as simple as registering your business name with the government(s).
If you plan to hire employees, you’ll need to file for an Employer Identification Number (EIN) with the IRS, which serves as your federal tax ID. This step is optional if you’re a sole proprietor or single-member limited liability corporation since you can just use your Social Security number instead; however, many solo business owners choose to get an EIN for security purposes so they don’t have to share their Social Security number. To obtain an EIN, you can complete the application online or mail it in.
You may also need to get a state tax ID number in order to pay state income tax and unemployment tax. This may be called a state EIN, state employer ID, or state tax registration number. To find out if you need to get a state tax ID, you can visit your state’s Department of Revenue website.
In every state except Texas, businesses are required to carry workers’ comp insurance once you hire a certain number of employees. You may not have to worry about this right away as a first-time business owner, but depending on where you’re located, even sole proprietors may need to purchase it. Companies with just one employee whether they’re part time, full time or temporary may also need to purchase workers’ compensation insurance.
If you need to get workers’ comp and are in what’s called a competitive state, meaning the cost for coverage isn’t set by the state, you’ll want to shop around. Generally, you’ll purchase the coverage through a broker or, in some cases, from a commercial carrier if they sell directly to businesses. In some states like Ohio, you actually have to buy it directly from the state.
When it comes to paying your employees, you may decide to keep the function in house and use a bookkeeper, manual paper-based solution like time sheets, or an app or software to help. But since there’s a lot more to payroll than paying employees like withholding and depositing appropriate taxes, you may decide to outsource this aspect of your business.
There are lots of payroll providers to choose from so as you begin your search, you’ll want to consider a number of factors to find the right fit for your new business. Beyond cost, you’ll want to look at the available features and whether the system can scale with you as you grow. You’ll also want to consider the ease of implementation, including how well the platform integrates with your other business systems, and the type of support you can get when you sign on and over the long term. Lastly, you’ll want to ask about the vendor’s security features since a payroll data breach can be devastating to a first-time business owner.
Keeping track of your finances is essential to understand your business’ cash flow, especially as a first-time business owner. Like payroll, you may opt to handle your accounting yourself using one of a variety of available tools on the market like QuickBooks. But if you’re someone who finds this task too time consuming or confusing, you might want to partner with an accountant who can advise you as you start your business and also at all stages of your journey.
As you look for a CPA, ask if they just handle bookkeeping or if they can provide other services as well like tax planning and tax return preparation as well as other insight into your business that can help you grow like forecasts and cash flow analysis.
Health insurance and retirement plans remain the most popular employee benefits so if you’re planning to hire workers, you may want to think about offering coverage to help attract and retain workers. If you do, there are some things you’ll want to consider:
As a first time business owner, you may not plan on hiring workers right away. But if you do, you’ll want to make sure you bring on the right employees for your position and culture. That involves advertising for open jobs, holding interviews, and running background checks. You may want to consider an outsourced recruiter if you don’t have the time or expertise to handle these tasks yourself.
You’ll also want to make your offer attractive with benefits like we just discussed as well as competitive wages. You can help make sure your salaries are in line by using either paid market surveys or free resources like the Bureau of Labor Statistics to find a range for various positions.
Lastly, once an employee accepts an offer, be prepared to onboard them with as positive an experience as possible since employees who rate their onboarding experience as “highly effective” are 18 times more likely to feel highly committed to their organization. To help assimilate new workers into your culture and ensure they have the right tools to ramp up quickly, there are several steps you can take:
Since you’ll want to keep your personal and business accounts separate, you should open both a checking and savings account for your business. Look for options with low monthly fees, a convenient location or good online or mobile apps, and additional products you may need like loans.
Speaking of loans, since start-up costs can run around $3,000 for a microbusiness, you may want to think about how you’re going to fund your business. That could mean a small business loan, self-funding, or seeking investors. You’ll want to carefully consider your options based on the amount of control you want to maintain over your business as well as the personal risk you’re willing to take.
In addition to the tasks we’ve described here, there are other steps to take to ensure a successful start for your new business. These include having a business plan, marketing to potential customers, including having a great website and elevator pitch, and providing exceptional customer service that can generate referrals to friends and colleagues.,
By considering these 10 factors, you’ll be in a good position to get your new venture up and running. But since there’s so much to think about when starting a business, you may want some help with some or all of the steps, and want to consider outsourcing things like payroll, benefits, and recruiting.
If this sounds like you, Complete Payroll Solutions can partner with you to provide the personal guidance and tailored solutions you need to start strong. Visit our dedicated startups page to learn more about how we can help get you set up to succeed.