Starting a business can be daunting; it’s not for the faint of heart. That said, it’s not impossible, either. But you do have to have a plan and you have to know where to start. I started my business, Equity By Design, in June of 2011 and was amazed at all the set up work that was and continues to be involved.
So what if you don’t know where to begin? You have a great idea on how to help people and you have a passion to bring your vision into the world, but you might be wondering what your next steps are.
The first thing to do is to start where you are. I know that might sound obvious, but let me explain what I mean. While there are very few things that I ever agreed with that came out of Defense Secretary Donald Rumsfeld’s mouth–I think that this might be the only one–he did convert into everyday language a complex philosophical truth when he famously said in 2002, “…there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know.”
So, here are a few first steps to building your mini-empire:
• Incorporate your business
It doesn’t matter what legal structure that takes–limited liability company, S-corp, C-corp, not-for-profit, limited liability partnership–just pick the one right for you and make it legal. This will not only protect your personal assets, but it will give you a more professional image with your clients and vendors. A GREAT resource for getting straight-talking legal information without all the jargon and “legalese” is Nolo Press. Check it out.
• Open a business checking account
After you get the paperwork back from your state, you’ll be able to apply for a Federal Employer Identification Number (EIN). With that in hand, you can then open a business checking account and apply for a corporate credit card. If you have employees, you’ll need to get a state ID number as well.
• Set up your financial systems
Please, please, please don’t skimp on this area. I know that when you’re just starting out, and more money is going out than coming in, you might think that you can put off the bookkeeping part. You might think that keeping track of your income and expenses on Excel spreadsheets is good enough and that keeping your receipts in a shoebox is just fine. Well, I’m here to tell you, it’s not. Eventually, you’re going to have to set up on QuickBooks (or some similar program). Sooner is better than later. It’ll actually cost you less to get set up in your first three months of business than it will to wait till the last minute before your tax returns are due. And you’ll be more relaxed to boot!
Hi Monique, I just came here for some advice on setting up my new business so it’s awesome to read this post. You mention Quicken – if I use it for my personal finances, do you recommend a separate “installation” for business? Or can one version handle both? Thanks!
hi audrey,
What a great question! I absolutely recommend a separate installation for your business in the form of QuickBooks. Quicken, as you know, is for personal finances; it’s not set up for business. That’s why QuickBooks was invented. By the way, QuickBooks can handle your personal finances. So it might be easier to have one program, QuickBooks, with two company files: one for your business, beyourowntravelhero.com, and one for your personal. That’s what I do. Makes life so much easier.
Before I spoke to you and read about your “Setup to StartUp” package, I had NO IDEA of all that was involved in setting up books, corps, etc! My business is taking care of babies, not my finances. I’m so excited to be working with you to get it all set up RIGHT!
Hi Devon,
Yup, there is a lot involved. We’ll get Mama’s Best Friend set up as an LLC, open you a business checking account, and set up your new business in QuickBooks in no time! And we’ll have fun along the way. Can’t wait!