Five Steps to Starting a Business

Five Steps to Starting a Business

Starting a business can be a rewarding experience, but it 
can also be very time consuming and difficult. Many 
resources are available to assist you, but information 
overload can cause you from moving forward. 

Keeping it simple is often the best way of maintaining the 
momentum necessary to get your business started. There are 
a series of steps to ensure success.

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The first step toward getting your business going is 
deciding on a name, for example "New York Landscaping." 
Any name that you do business under other than your own 
given name is called a "fictitious" or "assumed" name, and 
certain steps need to be taken in order for you to do 
business under that fictitious or assumed name. 

Depending on where you live, different government agencies 
track which names are available. Look in your local phone 
directory, under government agencies to find the number, or 
contact your local Secretary of State. 

Check to find out if the name you want has been taken. If 
it is available, you may need to file a fictitious or 
assumed name certificate with the state or local fictitious 
name office. Some areas will also require you to publish 
a notice in the local paper about your new assumed name. 
Both state and federal law regulates the use of names and 
"trademarks". To avoid conflicts with other businesses 
regionally or nationally using your business's name, or the 
names of your products, you may want to consider 
registering your trademark on the federal or state level. 
Contact an intellectual property attorney for trademark 
search and registration services. 

The second step is knowing that different areas have 

differing licensing and permit requirements depending on     

the type of business you are going into. Most businesses   

that require a license will have a local licensing 

authority that can guide you through the process.

Find out the licensing requirements on federal, state, and 
possibly even local levels for your type of business and 
get licensed. Failure to be properly licensed could result 
in penalties such as fines, closure of your business, and                                             
imprisonment in some cases. 

The third step is getting insurance. When things are going 
smoothly, insurance can seem an unduly burdensome expense 
on a small business. But when things go wrong, whether or 
not you have insurance can mean whether or not you and your                                                                                                        
business survive a catastrophic event like a lawsuit, fire,            
or natural disaster. 

Liability insurance protects you against liability in the 
event of injury to others or damage to other persons 
property. Liability insurers most often have two duties: 

1. The duty to defend you. Hire a lawyer, if you get sued 


2. the duty to indemnify you. Pay for damage or injury to 
others. Both duties are extremely important, but the 
first is often overlooked by small businesses

The cost of defending a lawsuit can easily run into the 
tens of thousands, or even hundreds of thousands of dollars 
even if you win. That's why being careful is no substitute 
for liability insurance. 

Make sure you have adequate coverage for your vehicles and 
those of your employees when used for business purposes. 
You can be sued and held liable for injury or damage done 
by your employees if it is within the course and scope of 
their employment. 

Property and theft insurance may be an important 
consideration, as well as product liability or service 
liability insurance. This is often called "errors and 
omissions" coverage. 

Interview a few local insurance brokers and find one that 
seems knowledgeable and that you feel comfortable with.                                                                                     

Then ask the broker to do a risk assessment to determine 
what coverages you might need and why. Remember, the 
broker makes money by selling you insurance "products" so 
be sure to question the types of coverage and amounts. If 
your broker can't explain why he or she is recommending the 
types and amounts of coverage in the risk assessment, find 
another broker.

The fourth step is recognizing and implimenting taxes. Sole 
proprietors need to be conscious of local, state and 
federal taxes and registration requirements relating to 
their businesses. 

Hiring an accountant or bookkeeper to help set up a simple 
accounting system, or using a software package is a good 
place to start. 

Hiring a tax professional knowledgeable about local and 
state taxes relating to your business, or contacting the 
local tax authorities before you begin generating revenue 
or expending money can help you stay organized and be ready 
for tax time. 

Additionally, the IRS offers assistance for entrepreneurs 
starting a small business in various publications. You can 
download IRS Publication 334, entitled "Tax Guide for Small 
Business", and Publication 583, entitled "Taxpayers 
Starting a Small Business" from the IRS web site.

The fifth step is hiring employees (if needed). Though many 
small business people start out running their own shop, 
success will often bring the need for expansion. When an 
employee is added, you must obtain an Employer 
Identification Number from the IRS. You can download Form                          
SS-4 from the IRS web site.                                                                                                                                       

In the United States, the Workers Compensation scheme does 
a lot to protect employers from lawsuits by employees 
injured on the job, while also providing employees with 
easier compensation for workplace injuries. Be sure to 
talk to your insurance broker about workers' compensation 

Talk to your tax adviser, and make sure you register with 
your state for payment of unemployment compensation taxes. 

Download IRS Form W-4 from the IRS web site to take care of 
employee withholdings. You should get copies of INS Form 
I-9 to verify your employees' eligibility for employment in 
the United States. 

Finally, issues regarding wrongful termination, 
discrimination, workplace harassment, and other legal 
issues have come to the forefront in today's business 
environment. Make sure you have an employment agreement 
that spells out whether your employee is "at-will". ex: can 
be let go at any time without cause, or the terms of the 
employee's contract for employment.

Make sure you Draft employee guidelines or an employment 
manual to make sure there are no misunderstandings about 
what expectations, rules and responsibilities are in place. 
Document any issues relating to your employees well and be 
proactive about handling disputes. A little planning in the 
beginning can save a lot of headaches and legal expense 
later on. 

In conclusion- hiring independent contractors is often a 
good way to avoid the administrative burdens of hiring 
employees, but be precautious. There are many pitfalls to 
hiring an independent contractor who is for all intents and 
purposes an employee. Talk to a lawyer and your tax advisor 
about who is an employee versus a contractor. 

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