Thinking about starting a business? There is plenty to do before you can open your doors to customers, and finding a good CPA and business attorney is at the top of the list. A lot of the pre-launch tasks for starting a business require extensive forecasting and planning. It’s a lot for a new business owner to work through.
From start to finish, this is what business owners will need to accomplish before they sell their first product:
Develop a Business Concept
Will the business sell a product or a service? What industry will it operate in? How will the business generate revenue and what are its likely operating costs?
These are important questions to consider before moving on to the next step.
Select and Retain Accountants and Attorneys
Starting a business comes with significant legal and financial responsibilities, including proper tax reporting and operating processes. These requirements ensure compliance with federal and state tax laws, so they must be rigorously observed.
This requires accounting and legal expertise, so businesses are strongly recommended to add an experienced accountant and attorney to their team. Accounting and legal expertise is frequently necessary to avoid costly mistakes and ensure everything is done according to federal and state law.
Select a Business Entity
There are multiple business entities to choose from, each with their own tax structure and benefits to consider. Among them are sole proprietorships, partnerships, C-corporations, S-corporations, LLCs, and some others.
Although business structure can be changed after formation, it may be difficult to do so. As such, it’s important to have an attorney and accountant in place to help make this decision.
Many high-level decisions also have to be made upon forming a business. This includes division of responsibilities among owners, who will contribute early capital, what backstops are in place in case additional expenses are incurred, and many more. Again, an experienced accountant and attorney are recommended here.
Determine Ownership Structure
Now that the company’s tax and operating structure is decided on, the organization’s leadership also needs to be defined. This starts at the ownership level. Determine who the named owners will be, who will be in charge of what, what their commitment level to the business will be, and gather their personal information for reporting purposes.
Complete a Business Plan
The business plan is the document that explains everything about the business and its mode of operation. It’s nearly impossible for owners to secure funding without a plan, and it’s difficult for outside experts – an accountant for example – to provide valuable guidance without a business plan to analyze.
Every business plan should include the following:
- An executive summary – The executive summary is a brief, high-level overview of the business and its operations. It should be kept to a single page and written after the rest of the plan, so every part of the plan can be succinctly summarized.
- A mission, vision, and description statement – The mission statement should only be one or two sentences long and explain why the company was formed. The company’s vision attempts to project what the business is intended to be in the future and is therefore used to set high-level goals among leadership. The company’s description defines its goals, objectives, business philosophy, target market, industry, and the legal entity under which the company will do business.
- A list of product and service offerings – The plan should also include a list of the company’s products and services, detailing pricing, unique features, and marks of quality. Technical literature, including photos and schematics, should be included in the plan’s appendix.
- A marketing plan – The marketing plan should include market research to define the company’s target clientele, as well as the measures to be taken to reach those high-value targets. Sales forecasts may be included, as well, to help with initial financial planning.
- An operations plan – The operations plan details the company’s day-to-day operations, including location, licensing, personnel, inventory, suppliers, credit policies, and managing payables.
- A financial plan – The financial plan should forecast initial cash flow in detail, as it’s the most important indicator of a new company’s near-term survivability. Investors will want to see this information described in detail. Further, the financial plan should include capitalization methods, including debt or equity financing details.
- Management and organization structure – The plan should also identify the company’s leadership and key employees, including what their specialties and experience are in managing the company. There should also be a section dedicated to what the business will do in the event a key employee is lost.
With these details firmly in place, the new company can begin attracting outside investment and expert third parties to facilitate the organization’s early stages.
Acquire Initial Start-up Capital
Every company must go through an initial round of capitalization, whether it’s debt funding, equity funding, or just a loan from a family member. In each case, the company’s initial capital must be invested into the company so that it does not mix with the owners’ personal finances. Intermingling personal and business finances can lead to severe legal consequences in the future, so separate accounting streams must be dedicated to any of the company’s capital. An accountant can ensure this is the case.
File for Organization with the State
Once the business is formed, its existence must be reported to state agencies – specifically the Secretary of State. The purpose of reporting is to provide publicly accessible information about a company’s owner and its principal place of business. Updated reporting is required periodically, and whenever there is a change to ownership or operating location.
Hold Initial Board of Directors Meeting
Regular board of directors’ meetings are necessary to chart the company’s performance and establish near-term strategy. It’s also a legal necessity in every state, as boards must meet at least once a year.
A good time to start this routine is right after the business officially forms. From here, many of the decisions will be strategy related.
Apply for a Federal Employer Identification Number (EIN)
An EIN is necessary to pay employees and manage the company’s taxes. An EIN is acquired through the IRS and functions like a social security number for businesses only. They can be attained by completing and submitting Form SS-4.
Develop Website and Technology Plan, Including Cybersecurity
Your company’s website will likely play a major role in lead (and sales) generation and brand building. As such, part of the organization’s early planning should be dedicated to website construction.
Cybersecurity must be part of that planning process as small businesses are increasingly being targeted by bad actors online. Cybersecurity experts can help implement multiple layers of security, from online data encryption to physical, device-level security.
Establish Big-picture Accounting Procedures
Reliable bookkeeping and accounting are irreplaceable elements of a successful business. All financial reporting and strategy is based on the books, so maintaining accurate records is critical for tax compliance and ensuring adequate cash flow.
Given its importance, owners should decide on their overall accounting approach early on. Many decide to partner with an outside accounting expert to simplify accounting decisions, establish best practices, and ensure tax compliance.
Many companies also opt for accounting software that can simplify bookkeeping. If software will be integrated into the company’s processes, the right solution should be identified and adopted early.
Apply for Business Financing and Solicit Investors
Business owners can raise additional capital through various means once the entity is formed and initially capitalized by the owners. Options include traditional bank loans, SBA loans, credit union loans, loans from various nonprofits, grants, crowdfunding, venture capital investors, angel investors, and plenty more.
Once the business is established and has a history of performance, more of these options will open up to the organization. This is another area where an experienced accountant can clarify what business owners should expect.
Open Business Bank Accounts
Separate bank accounts and accounting measures must be in place for business purposes only. As mentioned, business owners must avoid intermingling their personal finances with the company’s finances, as this will expose the individual to any liabilities sustained by the company.
An accountant can ensure their clients have their personal and business finances properly divided.
Apply for Required Permits or Licenses
States vary greatly in their permitting and licensing requirements, but it’s likely that your business will require one or the other to legally operate. State licensing agencies provide general information about which companies are beholden to licensing requirements, but an attorney can also fully explain what requirements apply.
Select an Insurance Agent and Purchase Insurance
There are several forms of insurance that companies may need to operate safely. They include general and professional liability insurance, commercial property insurance, workers’ compensation insurance, commercial auto insurance, data breach insurance, hazard insurance and more.
A trusted insurance agent can help your company determine which insurance products are appropriate.
Select a Commercial Real Estate Agent and Obtain Work Space
A commercial real estate agent can help business owners match the right property to their operations. A restaurant obviously needs a different facility than a manufacturing center. With a trusted agent on call, companies can quickly identify the right facilities for their needs.
Acquire Furniture and Equipment
Once the company’s space is established, the appropriate furniture and equipment can be ordered and installed at the facility.
Select a Payroll Processing Company
A payroll processing company can oversee a company’s payroll, ensuring employees are paid on time and that taxes are properly withheld. Payroll processing is a time-consuming endeavor and therefore is frequently delegated to a third party with experience in this area. This will free up company leadership to address other, more pressing concerns.
Select an Employee Benefits Company
Major components of your company’s employee benefits plan – medical and retirement benefits, most notably – will come through a third-party provider.
Benefits plans are valuable employee retainment and employee incentivizing tools, but they come with a significant financial cost. It’s highly recommended that business owners consult with their accountant and attorney before choosing a plan, as they will be able to align the organization’s resources and goals with the right benefits package.
Hire and Train Staff
With all employee support services in place, the business can “sell” itself to potential employees and make hiring decisions. Prior to hiring, there should be a training plan in place that will be executed prior to the grand opening. Give staff lead time prior to opening to ensure they’ve got their duties down.
Execute the Marketing Plan
Your marketing plan should also include a healthy dose of digital marketing (SEO, social media, website development, etc.) along with any promotional campaigns and traditional advertising initiatives. Now that the business is close to launch, it’s time to move on this plan.
If needed, consider partnering with an experienced marketing firm to fine-tune and professionally launch your marketing efforts.
Order Inventory and Begin Production
Space, equipment, and staff are in place, so the last thing to do is acquire the material needed to begin production. Whether it’s raw material that your business will add processing value to, or inventory that your business will resell, now is the time to secure it. Ideally, your business will have an ongoing partnership with suppliers to guarantee this inventory – a necessity during uncertain supply chains.
Set the Date for the Grand Opening
Once the above items have been completed, all that’s left is to set the date for the grand opening. Make sure your marketing, staff, inventory, and processes are all in place and you’re ready to join the business world.
Hopefully this guide has given you a good idea of what to expect when getting started, but if there’s still confusion, an experienced business accountant or attorney can walk their clients through every step.
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