Starting a new business can be an incredibly exciting time in anyone’s life, but the truth is that almost three quarters of all start-ups fail within the first three years, and a third of those begin to crumble within the first six months. If you want the best chance of bringing your ideas into fruition, and surviving the initial start-up period, then you’re going to need to have an in-depth knowledge of what needs to be done before you take the plunge. Following are just a few of the things that you will need to know, and do, when entering the wide world of business.
1. Apply For Your EIN Number
Sometimes the administrative tasks associated with starting your own businesses are the biggest hurdle that new business owners face. Things like applying for loans, budgeting, and opening new accounts can be time-consuming, but they’re also important if you want to make sure that things go smoothly. One important thing you should do is apply for an Employer Identification Number – something you may need when opening a company checking account. Your EIN will be a unique, nine-digit number that is used to identify you for future tax purposes.
2. Apply for State UC Accounts and State Withholding
If your company is more than just a one-man-band or if you are incorporated, then you’ll need to think of some additional items, such as state UC accounts and state withholding. State tax withholding is intended to facilitate tax collection – instead of collecting taxes from a huge number of employees, the government enhances the process by collecting from various employers as state withholding tax from the payroll check within state jurisdiction. Usually, state withholding tax is a deduction introduced into an employee’s income that is sent from the employer directly to the correct state tax authorities.
Similarly, the UC law requires employers to make contributions into a reserve called the UC Trust Fund – something which is used to pay funds to jobless individuals who are eligible according to the law. Employers must report covered wages and contributions on a quarterly basis.
3. Apply For State Sales Tax
If you sell a product or provide a service subject to sales tax, then you may be required to charge sales tax. To register as a sales tax vendor, and collect your sales tax permit, you will need to fill out the correct forms, such as the Nebraska Form 20. (http://www.revenue.nebraska.gov/) The certificate of authority that you receive will give you the legal right to collect tax on taxable sales, and accept or issue most sales tax exemption certificates. You must get a certificate authority if you collect state and local sales tax or sell tangible personal properties or provide taxable services.
4. Consult with an Insurance professional to set up insurance
Insurance is one of the most important things that you can access when starting a new business, as it helps to protect you from various unpredictable events. While there are numerous types of insurance to consider, it’s usually worth thinking about the coverage you will need to protect both your assets, and your employees’. For instance, take some time to look at the physical assets of your company, such as office equipment, computers, and laptops, as this will help you to come up with a potential figure for office contents cover. At the same time, if you have employees, you will need workers compensation insurance to protect you in the event that you are sued when a staff member is injured at work.
In addition you may want to consider getting professional liability insurance to protect you in the event that you are sued. It is important to meet with an insurance agent to determine what types of insurance you will need to protect you and your business.
5. Consult with Tax Professionals and Attorneys
Often, small businesses start as a sole proprietorship, then grow over time – acquiring debt, assets, and employees. The more your business grows, the more you will need to consider incorporation – a step that can provide certain advantages such as limited liability, tax advantages, and employee benefits. If you’re not sure what the right next step to take with your business, consulting with professional attorneys and a tax professional will help you to determine whether you should set up an LLC, partnership, or incorporate. What’s more, talking with professionals will help to ensure that you properly classify business assets, and the function of the corporation, as well as compliance with corporate laws and tax consequences.
6. Hire a Bookkeeper
Usually, people starting a new business would want to keep their costs low, but sometimes you need the help from the outside. Outsourcing your bookkeeping and payroll means that you can delegate crucial financial tasks to someone who has the experience and training to provide reliable results. Bookkeepers have vast knowledge that can be used to ensure that your records are kept up to date, accurate, and free from costly errors. What’s more, your bookkeeper can be a valuable resource in understanding areas that you’re unsure about – such as filing initial applications and on-going tax forms such as payroll and sales tax.