Open A Small Business

Open a small business / Step 1 - Write a basic business plan. Answer these questions:

Very important! - Can I demonstrate that I am trying to make a profit?

What product / service / or idea am I selling?

Who is going to buy what I am selling / who are my potential customers?

Why would those potential customers buy from me / what makes me different?

When will I sell my product / service / or idea? Seasonally? Once a year? Everyday?

How do I find my potential customers? Where do they live / work / play?

Open a small business / Step 2 - Decide on what your business name will be.

If you have chosen to not use your last name in your business name you must file with the state and list your fictitious name in the legal notices of a newspaper in the county in which your business will be based. In Pennsylvania that website can be found at: http://www.dos.state.pa.us/corps/cwp/view.asp?a=1093&q=431168.

Open a small business / Step 3 - Create a filing and recordkeeping system.

In addition to records of your personal expenditures, every expense you incur, in which your small business had some part of, should be documented. Also document business transactions such as applying for licenses or permits. Keep the paperwork from everything. You and your accountant will be very glad you did this when it comes time to do your taxes!

Your filing system can contain these categories: Marketing, Advertising, Operations, Taxes, Legal, Sales.

*Taxes – documents in regard to taxes

*Legal – documents such as permits, licenses, your EIN number

*Advertising – documents regarding the actual advertisements you do and their expense

*Sales – documents regarding the activities you do and the expenses you incur in order to make the actual

            sale such as training, classes, and education materials. Additionally, what this step means to you is

            that you must carefully and accurately record any income you make from your small business. You will

            need that information so your accountant can properly complete your tax return.

*Marketing – documents regarding the activities you do and the expenses you incur in order to draw in customers – such as a website

*Operations – documents regarding the activities you do and the expenses you incur in order to prepare your products – such as materials to build it

Open a small business / Step 4 - Apply for an Employer Identification Number

Do this even if you will not be hiring anyone. That website can be found at: http://www.irs.gov/businesses/small/article/0,,id=102767,00.html

Open a small business / Step 5 - Apply for a sales tax identification number

You will go through this step only if you are not going to form a sole proprietorship. You can generally do this online through your state’s website. Note that my students form sole proprietorships. That website can be found at:

http://www.pa100.state.pa.us/

Open a small business / Step 6 - Apply for an operating or occupancy permit through the municipality if it is required.

Do this through the municipality building in the area in which you plan to base your small business.

Open a small business / Step 7 - Open a checking account at your bank under your business name.

The IRS loves to see you keep your small business income separate from your personal income from a job.

This will not affect your ability to take tax deductions.

You will need your EIN number and drivers license to open that account.

Open a small business / Step 8 - Work with a counselor who can work with your through any questions.

Save yourself time and expense by working with someone who has gone through this before. This should be someone that can point out additional opportunities to take tax deductions and walk you through things like marketing, advertising, and operations when you are ready to start selling. Additionally, if you ever need to hire someone, either an employee or contractor, don't settle for anything less than excellent performance. Receiving less than excellent performance from paid labor will kill your small business.

Open a small business / Step 9 - Look for deductions.

Remember, for our purposes, the point of starting a small business is to get your federal tax back at refund time! Question every penny you spend. Ask yourself – does this / can this expenditure have a business purpose? Can it be tax deductible?

Open a small business / Step 10 - Start selling!

Go make some money!   

About BowmansMoneyCollege.com

     Bowman’s Money College offers consulting and educational advice to individuals and families on personal financial matters such as starting a small business, writing and following a household budget, and rebuilding credit. For further information visit BowmansMoneyCollege.com or email mike@bowmansmoneycollege.com.

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