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Attenion Entrepreneurs! Five Key Steps to Starting Up a Small Business

2008-10-22 00:05:03 (GMT) (Caymanmama.com - Business News)

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Small Business

CaymanMama.com gives five essential steps to help you get started in confidence and expand your operations in rough and tough times.

Dallas, Texas (CaymanMama.com) — Some of the best ideas have turned into Fortune 500 companies expanding nationally and globally. All businesses originally began as a small company with high goals but they had to start from the ground up.

If you are thinking of starting a small business, the following are five essential steps to help you get started in confidence and expand your operations:

Step 1 - Obtain an Employer Tax ID

All businesses, large and small, are required to pay federal and state taxes. In addition, local taxes must be paid depending on the state the business is in. A business owner who is just starting out needs to obtain employer tax identification numbers from the IRS and the respective state revenue agency that identifies the owner and the business. Since not every business is required to obtain a tax identification number, it is important to do your research to learn more about the requirements in your state for your specific type of business.

To obtain your EIN, contact the U.S. Internal Revenue Service at 1-800-829-4933.

Step 2 - Decide on a Business Entity to Establish

When starting up a business, the next key step after obtaining a tax ID number is to decide what form of business entity to establish. A business identity determines how much regulatory paperwork that must be filed, personal liability regarding investments into the business, and taxes that must be paid to the government. The most common business structures include:

  • Sole Proprietorship
  • Partnership
  • Corporation
  • S Corporation
  • Limited Liability Company (LLC)
  • Non-Profit
  • Cooperative

After you have decided what type of business entity you wish to establish, the next step is to register the business and file all necessary documents with your state government. If your business is a sole proprietorship, you do not need to register your business with the state.

Step 3 - Choose and Register the Business Name

This is probably the most exciting step but there is more to naming your business than just coming up with a catchy name. Keep in mind that even though the name you picked may have a certain “ring” to it, the name must be run through state and local requirements for using “assumed” trade names. It is important to ensure that you don’t infringe upon the rights of someone else’s business name.

Step 4 - Obtain Licenses and Permits for the Business

Any type of business will need at least one (or more) federal, state or local licenses or permits to operate. These can range from a basic operating license to very specific permits such as environmental permits. Although regulations vary by industry, state and geographic location, it is still imperative to fully comprehend the licensing rules in the state where the business will be located. A business owner runs the risk of having to pay heavy fines and a loss of integrity by not complying with licensing and permitting regulations.

Step 5 - Keep Good Records

This step should come as a given. Good bookkeeping and record keeping will help the business owner to accurately monitor the progress of the business, prepare financial statements, track expenses, prepare tax returns, and more. Any reliable record-keeping system will work if it is suited to your business needs. Keep business records as long as they may be needed to prove income or tax return deductions.



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