Although the exact process for starting a business will vary depending on where you live or what industry you’re in, there are some key things that every new business should focus on. If you’re looking to create a business of your own, here are 5 initial steps to help get you started:
1. Choose a business structure. One of the first things you’ll want to decide is how to legally structure your business. Will it be a sole proprietorship, a partnership, a limited liability company (LLC) or some type of corporation? The business structure you decide to operate under will determine several things, including your own personal liability, how you’ll be taxed, and what steps you’ll have to take to register your business with the state. A sole proprietorship is one of the simplest options, but many entrepreneurs choose to structure their businesses as LLCs, also known as Limited Liability Companies. An LLC is a popular option because it offers some of the benefits of a corporation while avoiding much of the complexity. Partnerships are another popular business structure.
2. Name your business and obtain an EIN. You will need to choose a name for your business in order to register it with your state. Information about registering a business in Massachusetts can be found here and you can learn more about registering a business in Rhode Island here. Both states also offer the ability to search the names of existing businesses online, so you can be sure to choose a business name that is not already in use. You can search the names of Massachusetts businesses at https://corp.sec.state.ma.us/corpweb/CorpSearch/CorpSearch.aspx and the names of Rhode Island businesses at https://business.sos.ri.gov/CorpWeb/CorpSearch/CorpSearch.aspx. If you will have employees, you will also need to file for a federal Employer Identification Number (EIN). You’ll use this number for anything tax related. Depending on your business structure, you may need an EIN even if you have no employees.
3. Create a business plan. When starting a new business, you should create a business plan. Not only will it help you to steer your business in the right direction, but it’s also commonly required when applying for business financing. A business plan typically includes basic information about your business, such as your products and services and how your business is structured. It should also include information about how you plan to market your business, and it should detail your business financials, or the projected financials you have for your business. There are many resources available online to help new business owners draft an acceptable business plan. Once you establish a relationship with a business lender, they may provide feedback on your business plan as well.
4. Determine license requirements. Your business may need either a certificate or a license, depending on its structure. Specialty or professional licenses are required for certain industries as well. Contractors, electricians, and pesticide companies all have special licensing requirements. The Massachusetts Permit Regulatory Office can help you determine if any specific requirements pertain to your Massachusetts business. Likewise, the RI Department of Business Regulation provides information on special licensing requirements for businesses in Rhode Island.
5. Assess insurance needs. Business insurance needs can vary depending on several factors including whether you have employees, how many employees you have, and what industry you’re in. If you have employees, you must carry worker’s compensation insurance in both MA and RI. If you have 50 or more full-time employees, you are also required to offer health insurance.
Although these steps may require some patience, having an understanding of the basic path to getting your small business off the ground can help ease some of the stress. If you’re a new business owner in Massachusetts or Rhode Island, BankFive’s Business Banking Team can help provide guidance on setting up a business checking account and the requirements for business financing. BankFive also offers an array of solutions to help streamline business operations such as business credit cards, payroll services, cash management, and payment processing. Contact us today.