Crafting a business plan can provide you with a blueprint to run your business, one of several steps needed to provide a successful launch of your enterprise.
1. Choose your business structure.
You may not be required to form a business structure before you launch your business, but it can be a good idea to proceed that way. With a solid business structure in place, you can establish separate credit and raise capital.
You have several choices for choosing a business structure, with your accountant offering guidance on how best to proceed. You can operate your business as a sole proprietor, create a partnership or form a corporation. Some business structures, including a Limited Liability Company (LLC), allow owners to reduce their personal liability and treat their business income as a pass-through expense.
2. Obtain your licenses.
Certain types of businesses must be licensed by the state. Hairdressers, doctors, electricians and other professionals will have to show licensing as a condition for doing business.
Licensing is also required of all businesses that are registered with their respective state. You’ll need to file articles of incorporation with your state, pay the related fee and file an annual report. Many communities require additional licensing for liquor sales or to operate a business out of a home. Learn from your municipality what licenses are required locally.
3. File with the IRS.
You’ve registered your business with your state. Now it is time to notify the IRS. You need to do this even if you do not have employees.
The IRS will obtain your business name and assign it an Employer Identification Number (EIN). This 9-digit number is your business’ ID number, working in much the same way that your Social Security Number is used for you personally. Your EIN is useful for establishing credit, opening up a business bank account or otherwise separating your personal financial information from your business financials.
4. Raise Capital
How will you launch your business financially? Some businesses can get started with very little up front money while other businesses require a generous amount of cash to get going. You need to identify your business costs and anticipate your expenses for the first six to 12 months.
Emerging businesses often get started with owners tapping their personal resources to fund the operation. Your options here include borrowing from your retirement account, taking equity from your home or using your personal savings. With a solid business plan in place you might also attract investors who will front you the money in exchange for a piece of the business or a slice of the profits.
Your business launching endeavor has other steps to take as well. If you need to buy supplies or equipment, you will need capital to accomplish that. And, well before you open for business, you may need to locate, interview, hire and train your workers, having everyone in place and ready to go so that you can open for business.