So you have decided 2016 is the year to follow your dreams, step out on faith, and take the plunge. You are ready to start your own business and the sky is the limit. But you are thinking, where do I start? Making the decision to start your own business can be daunting and scary, but if you are prepared and understand the steps to take, this can alleviate some of your fears. Of course at this stage you have identified the products or services you will be providing for your business. Make sure to do your homework and thoroughly research the market you plan to enter. Next you want to think about the type of business ownership. Will you be a sole proprietor, incorporate, form an LLC (Limited Liability Company), or form a Partnership? Choosing the best ownership structure will be critical as your business grows and become profitable. Once you have decided the type of business ownership structure and narrowed down the name of your business, you will need to perform the following tasks to get you on your way to living your dreamspr:
- Register the business in your state. In the state of Maryland businesses must register with the Maryland Department of Assessment and Taxation.
- Set up a business tax account with your state, in Maryland, this is done through the Maryland Comptroller of the Treasury. If you are selling products, keep in mind that you will need to have a sales and use tax account set up, so you can remit the taxes withheld to the state.
- Obtain an Federal Identification Number (EIN) from the Internal Revenue Service (IRS).
It should be mentioned that there are companies online such as Legal Zoom or BizFilings that will perform the tasks of incorporating your company for a fee if you do not feel you are able to complete them on your own. You can also can contact a local CPA or lawyer who can complete the forms for a fee.
Once you have completed the task above, you will have to think about opening a business checking account at a local bank. You will need your company formation documents and EIN number to open the account. One major pitfall many small business owners make is comingling business and personal funds, this can create problems for the company, as you will not be able to accurately assess how the company is doing and if it is profitable, so make sure that all business expenses are kept separate from your personal expenses. You also want to make sure that you maintain proper bookkeeping and accounting records. If you are not able to keep these records on your own, you can hire a local CPA or a qualified accountant who would be able to maintain your records on a monthly basis and make sure that you are capturing all your revenues and expenses accurately.
After these steps, you are ready for your first customer!
Hopefully this blog provided valuable insight on what to expect if you plan to start your own business. For more information and insight contact us at (301) 797-8259