The entrepreneurial path can be challenging but rewarding. This blog recently discussed business plans which are important but it is also important to note that there are a number of important steps to be familiar with when establishing a business. Initially, most businesses start with brainstorming ideas. New entrepreneurs may be focused on providing a product or service they are passionate about or filling a gap in the market. It is important to evaluate your competition and understand how you can provide a superior product or service.
A business plan is the next step and should include the position of the business, the customers for the business, the goals for the business and how you plan to finance it. The business plan can be used to outline the direction of the business, plans to overcome difficulties the business may face and how to sustain the business from its start to success. In addition, one of the most important decisions you will make is the business entity for the business.
Business formation is an important consideration because it determines tax liability and general personal liability. A sole proprietorship makes the owner solely responsible for the obligations of the company. A partnership provides that the partners of the business share the obligations of the company. Corporations shield owners and shareholders from personal liability for the obligations of the company. Limited liability companies offer a hybrid option that does not hold owners personally responsible for the obligations of the company but provides the tax benefits corporations do not enjoy. Corporate taxation is sometimes referred to as double taxation because the corporation is taxed and the owners or shareholders are also taxed which is a situation LLCs avoid.
It is also necessary to ensure that all registrations, such as government and tax registrations, are complied with. There is much to consider when starting a business including the selection of partners, building a team, marketing considerations, technology and insurance selections and other housekeeping matters. It is initially important to decide which business form is best for the business you are starting and for the future of the company. Getting off on the right foot when starting a business can help position it for success as it grows and into the future.
Source: Business News Daily, “How to Start a Business: A Step-by-Step Guide,” Nicole Fallon Taylor, Sept. 22, 2016