Owning a small business, being the boss, making all the decisions are dreams come true for any Phoenix entrepreneur. Many people day dream about opening a business. Others make those dreams come true by following the path to business ownership.
Most businesses are started because of the driving passion and ambition of the owner. Before letting the passion take over, there are three major components of business ownership that every potential entrepreneur needs to consider before hanging an open sign on the door.
Researching and developing a business plan, determining finances and taxes, and looking at the legal side of owning a business are vital to long-term success to any size or type of business.
1. Researching and Developing a Business Plan
The business plan is important to setting many of the procedures, techniques, and operations of a business. All business plans should include the following:
- Market research to determine the need for the product, pricing structures, and delivery methods
- Realizing the Strengths, Weaknesses, Opportunities, and Risks (called a SWOT analysis)
- A marketing plan for how are the products/services are going to be promoted
- A growth plan showing what the next 3, 5, or 10 years look like
- Personnel needs at startup and as growth occurs
- Specifics of an office or brick and mortar store front that includes size, location, rents and furnishing, etc.
- Projected first year sales, expenses, and profit margins?
- Financing, investments, taxes, and other money matters
- Legal factors such as naming, type of business (corporation, Limited Liability Corporation, Partnership), and licensing needed
2. Financing and Taxes
After researching and developing a business plan, the next step is to detail the financing and taxes section. The following list is a starting point for determining all the money details.
- Detail all financing matters such as investors, loans, and credit cards
- Projection of cash flow details such as how customers will be billed and what billing terms will be given to customers such as net due in 15 or 30 days
- Projected monthly profits
- Projected monthly expenses
- Tax payment schedules
- Payroll particulars such as how often to pay employees, benefits offered, and who processes payroll
- Accounting practices for the office including computer software to help manage and monitor cash in and cash out
- Weekly, Monthly and/or Yearly Tax preparation and filings
3. Legal, Business Forms and Insurance
There are many decisions business owners have to make from the moment he or she decides to go into business for themselves until the day the business is sold, closed, or as it grows. The list below contains the legal aspects of opening a business.
- Selecting a business name that is unique and legal
- Determining business structure such as sole proprietorship, Limited Liability Company, Cooperative, Corporation, Partnership, or S Corporation. Each type has its benefits and downfalls. It helps to consult an attorney to determine the best structure for a particular type of business.
- What types of insurance is needed for the business such as renter’s insurance, employee insurance, health or life insurance, consumer protection insurance, etc.
- How to file patents or copyrights
- Obtaining any all of the necessary licensing
Keep the Passion Alive
Many business owners tend to get put off by some of these details (especially the accounting and tax tasks) and would rather ignore them than to address them. Most of the details listed above are one time decisions while others have to be continually updated like the business plan.
Laying the ground work before starting the business is always the best way to approach these items. There will be time for the business owner to pursue their passions of making or providing the products and services that will always remain the foundation of any business.
We wish you much success, and if you are looking for tax advice or business accounting help from an experienced CPA in Arizona, please reach out to our Mesa office.