Starting your own business is an exciting as well as a challenging experience. Luckily, there is plenty of advice available about the key issues that you’ll face, including finance, insurance and legal issues. When you have an idea for your start-up, you’ll need to prepare a business plan if you’re looking for investors. The first thing that you should do is test out the market for your proposed new venture, whether this involves producing goods or delivering services. This market research is essential as it will help determine whether your start-up is going to be of interest to your intended customers.
Back to the future
To create a great business plan, you need to take a step back to recall your motivation for your commercial future. This means taking an objective view of the results of your market research while not losing any of your personal passion for the original idea. Your business plan sets out exactly what your ideas are, why you think they will work, what structure you will use, and how the business will be run. For instance, you may decide to initially run your business from home, with or without a partner. The plan is also a signpost to the future because you need to build in the potential for growth, creating an important tool for convincing partners that it’s smart to invest in your ideas.
Even if you plan to start off with a simple, home-based business, it’s likely that you’ll need some financial help to get things up and running. There are several options available to you, including bank loans, business award programs, crowdfunding and recruiting shareholders. The good news is that once your business has been established, there are further opportunities to bring in additional investment to help it grow. If you have already been successful in attracting finance, do check that you haven’t been mis-sold payment protection insurance (PPI) in the process. The deadline for reclaiming mis-sold Lloyds PPI is now set at August 2019, so it’s important to move quickly if you think that you may have a valid claim.
Location, location, location
If you are not going to be working from home, then your business location may turn out to be one of the most important decisions that you will make, particularly in the early days following your launch. This is particularly so if you’re opening an office, store or other brick-and-mortar premises. However, it also has implications if your intention is to operate a virtual or an online business as the location choices that you make could affect your legal requirements, revenue and taxes.
The same is true of the legal structure that you decide to adopt as this can impact your personal liability, including for tax purposes, and your business registration requirements. Choose carefully as this can affect your operations a good deal. It may be helpful at this stage to consult with your accountant, attorney and business counselors. There are a number of common business structures, and it’s also possible to combine different types. A few of the standard choices are:
- Sole proprietorship (sole trader in the UK)
- Limited liability company (LLC) (limited by shares or by guarantee in the UK)
- Corporation ( C corp, S corp, B corp)
- Close corporation
- Nonprofit corporation (registered charity in the UK)
At this point, you will also need to ensure that you remain legally compliant by checking up on whether you have the correct permits and all the required licenses. Remember that these can vary according to your industry, location and certain other factors.
What’s in a name?
The answer is: a whole lot. It can be surprisingly difficult to choose the perfect name for your new business. While your aim will be to accurately reflect your brand and communicate your enthusiasm for it, you will have to ensure that your preferred name isn’t already being used by someone else. This is particularly true if you want to make sure that you are highly visible in online browser searches. Besides this, you will want to protect your brand and your identity at a level that works for your business plan. For example:
- A domain name will protect your business website address
- An entity name will protect you at state level, while a trademark will protect you at a federal level in the US
- You may be legally required to have a “Doing Business As” (DBA) name in the US, though this doesn’t give your business legal protection
Registering your business
When you’ve decided on the right name, you should take steps to adopt it legally and protect your brand. If, for any reason, you plan to conduct business under a name that is different from your own, you have a requirement in the US to register with the federal government. In some circumstances, this may also extend additionally to your state government.
Regularize your business ID
In the US, there are several different layers of ID required for businesses. At the beginning, you can use your employer identification number (EIN) for the important steps that help you start up your business and grow it. This includes opening your business bank account and paying your taxes. In many ways, it’s similar to having a social security number for your business. In certain states, you may also be required to obtain an additional tax ID. If you are trading in the UK, you can get good advice from the National Federation of Self Employed and Small Businesses. Check the website startupdonut.co.uk for more information.
Finally, you will need to make sure that your business is insured. There are several different types of separate insurances in the US, not all of which will necessarily apply, depending on the nature of your trading activities. Briefly, these are insurances that cover:
- Commercial property (buildings and contents in the UK)
- General liability
- Employers liability (in the UK)
- Home-based business (personal accident in the UK)
- Product liability
- Professional liability (professional indemnity in the UK)
In addition, a Business Owner’s Policy is a package that combines all the different types above and simplifies the insurance process as well as often saving you money.