Considering starting your own business? Congrats! Once you’ve conducted the necessary market research and created a preliminary business plan, what comes next? Here we take a high-level look at the various to-dos you need to tackle prior to launch.
Strategically decide on your business location.
You may love where you live, but it may not be the best place from which to operate your business, especially when looked at from a cost perspective. You’ll want to consider everything from state and local taxes, government incentives, zoning laws, regulations, and more.
This decision should be made strategically and can come out of your market research, and must be completed prior to registering your business.
Figure out the financing.
Will you be bootstrapping your startup using your own savings? Do you intend to borrow money from friends, family, or your financial institution? Or are you hoping to raise capital from investors?
Your business plan should help you outline just how much money you will require to start. Of course, a financial advisor can help you sort through the impact of each funding option on your personal and business finances.
Select a business name and register it.
Confirm that your business name isn’t already being used by another business; otherwise, you could be subject to legal consequences and quite a few headaches. You can simply Google the name to determine whether it’s already in use. You should also check availability with your state’s corporation commission (in Arizona, you can check here).
Once you’ve settled on a name, you need to register that name to protect it. You’ll have four different ways that you can opt to register your business name, each with a different purpose:
- Register an entity name to protect your business at the state level.
- Trademark your name to protect your business at the federal level.
- Register a DBA (doing business as) name (also known as a trade name) if required (note that a DBA doesn’t offer legal protection).
- Register a domain name to protect your online presence.
In Arizona, you can secure and form your entity with these three options:
- Reserve your name for 120 days with the Arizona Corporation Commission, allowing you time to submit the paperwork to form the entity.
- Register your business name as a trade name with the Secretary of State’s office.
- Form your entity by filing paperwork with the Arizona Corporation Commission. If forming an LLC, you will submit Articles of Organization.
Determine a business structure.
Your business structure is a key decision because it impacts quite a few things, from taxes to raising funds, to personal liability and legal protections and benefits.
Options include a sole proprietorship, partnership, limited liability company (LLC), cooperative, or corporation. If you opt to create a corporation, you’ll need to elect a status for tax and other purposes: C corp, S corp, B corp, close corporation, or nonprofit.
This is definitely a spot where your financial advisor or accountant can weigh in and help you determine the best structure for your business.
Apply for an Employer Identification Number (EIN) or Tax Identification Number (TIN).
You’ll need one of these IDs to open a business bank account, pay federal taxes, hire employees, and even apply for business licenses and permits.
In some states, you’ll need a separate state tax ID, but in Arizona, you’re able to use your EIN. If you’ll be operating as a sole proprietorship, then you’ll be able to use your Social Security number.
Apply for the necessary permits and licenses.
You may need a combination of permits and licenses from both state and federal agencies depending on how your business activities are regulated.
In Arizona, you can check out the Arizona Commerce Authority Small Business Services website for help understanding licensing requirements.
Open a business bank account.
A business bank account offers a variety of protections and benefits by keeping your business funds separate from your personal assets. It also makes it easier to handle day-to-day transactions and financial tasks.
To open a business bank account, you’ll need your federal and state tax IDs, your Articles of Organization or other formation documents, and perhaps ownership agreements and business license.
Get your accounting system setup.
Set yourself up for success by getting your books organized as early on as possible. You’ll need to be able to run payroll (even if you’re the only employee), conduct bookkeeping, and pay taxes, for starters.
If you aren’t sure where to start or don’t have the bandwidth to play accountant, you don’t have to. Outsourcing can be a great way to accomplish the many tasks of running a business, financial tasks included.
Get help from a financial professional.
All the ins and outs of setting up your small business can feel dizzying. Even after you launch, it’s important as a business owner not to get caught in the day-to-day financial weeds. Yes, you should know what’s going on with your business down to the penny, but having the help of a trusted advisor or accountant with bookkeeping, taxes, and so on, can free you up to do what you do best: run and grow your business.
Are you a small business owner or soon-to-be founder? Ironwood Wealth Management has the expertise you need for a successful launch, and we’re here to help you manage all the financial aspects of your business. Learn more.
Are you a small business owner or soon-to-be founder? Ironwood Wealth Management has the expertise you need for a successful launch, and we’re here to help you manage all the financial aspects of your business. Learn more.
