Do you dream of starting your own business? Maybe you already know what you want to do. At Cook Martin Poulson, P.C., we enjoy working with start-up businesses and seeing them thrive. It’s one of the most satisfying things that we get to do!
One of the biggest issues that entrepreneurs encounter when starting a business is not being sure which steps to take to get their business up and running. They often ask us:
How do I start a business? What do I need to do?
There are a lot of legal, bureaucratic, and accounting hurdles to clear. With that in mind, we’ve put together this guide to help you start your business the right way – and pave the way for your future success.
So, if you've been wondering how to start a business? We've got you covered. Read on and learn what you need to do when starting a business.
Every New Business Needs to Hire the Right Experts
You can start a business on your own, but the best way to be sure that you don’t miss any crucial steps in the process is to hire an certified public accountant and a lawyer. The accountant will help you with the financial aspects of forming your new business, and the lawyer will walk you through the paperwork and make sure that you’re in compliance with all relevant laws and regulations.
It may seem like paying an accountant and a lawyer is unnecessary, but we recommend it. Starting a new business doesn’t need to take long, but it’s worth spending a little money to get everything right.
Choose a Business Structure for Your New Company
The next step – one that must be completed before you move ahead with the paperwork – is choosing a business structure for your business. You have options, and each legal status comes with its own benefits and risks. You’ll need to decide whether your business will be:
- A sole proprietorship
- A partnership
- A limited liability company (LLC) (Which can be taxed as any of the other entity types with an election filed with the IRS)
- A corporation
- An S corporation
You can learn more about the tax ramifications of the business structures listed here on the IRS website, here. And, of course, you can also ask the accountants at Cook Martin Poulson, P.C..
What is the Name of Your New Business?
You may already have a name in mind for your business, but choosing its legal name requires a bit of research. If you are going to incorporate in Utah, for example, you must choose a name that is not in use by another business.
Keep in mind that your legal name may not be the same name you use to do business. Many large corporations have multiple trade names. The first step is to visit the Secretary of State’s website in the state where you wish to incorporate. You can find the Utah Secretary of State here, and the Idaho Secretary of State here. If you plan to incorporate in another state, simply Google “State name Secretary of State” and the official website should be one of the top results.
If you decide that you want to do business under a trade name, you’ll need to register that, too. Trade names are filed on the county level with the county recorder’s office.
File Your Corporate Name and Other Documentation with the State
The business name and trade name you choose won’t officially be yours until they are filed with the state or county, respectively. After you register your name, you’ll need to take care of other required paperwork. For example, depending on state requirements, you may need to file:
- Articles of Incorporation
- Corporate Minutes
- List of Corporate Officers
- Article of Organization (LLC)
- Operating Agreement (LLC)
Keep in mind that you will need to update your filing and pay a registration fee each year as well as keeping up-to-date on your state taxes. Failure to do so may result in your corporate status being suspended, something that can impact your ability to do business, and even result in fines.
Take Care of Taxes and Accounting Issues
One of the benefits of hiring a CPA to help you start your business is that they can assist you with some of the essential paperwork related to financial issues like federal and state taxes, payroll, and insurance. You should ask your accountant to:
- Obtain a Federal Employee Identification Number (EIN) for the business. Think of this as a Social Security Number for your company – you’ll use it when you file tax forms or pay employment taxes.
- If you are incorporated as an S-Corporation, your accountant will need to file an S-election with the IRS, as well.
- Register with the State to obtain any required payroll or sales accounts. Your state tax ID number should be issued by the Secretary of State when you submit your business filings.
- Apply for and obtain Workers Compensation Insurance. You can get Workers Comp through a State-sponsored fund or through a local independent insurance agent. It’s always a good idea to get several quotes before choosing a policy.
- Obtain any necessary City or County business licenses and permits.
A qualified CPA like the ones at Cook Martin Poulson, P.C. will know about the specific requirements, including insurance coverage limitations and licensing. We recommend that business owners educate themselves about all requirements. That’s the best way to ensure compliance as you start your business and in the years to come.
Open a Business Bank Account for Your Company
You will need a separate bank account for your business. Even if you choose to operate as a Sole Proprietor, we recommend keeping your business and personal finances separate. Some business owners think that it will be easier to have all their finances in one place, but there can be serious ramifications when it comes time to file your taxes.
You may choose to open your business account at the same bank where you have your personal account, but we recommend shopping around. Some banks offer business perks and you may want to take advantage of them. At Cook Martin Poulson, P.C., we are experienced at navigating the various offerings and finding the right one for you and your new company.
Choose an Accounting System
Another thing your CPA can help you do is set up a reliable accounting system for your business. Whether you choose to use QuickBooks, Xero, Sage, or another system, you’ll need something that’s easy to use and will allow you to do what you need to do, creating invoices, tracking inventory, journal entries, paying bills, and running financial reports.
If you’re not knowledgeable about accounting, your accountant can also help you set up a general ledger and teach you how to keep your accounts up to date. Or, if you prefer, you can retain an accountant or bookkeeper to handle your accounting for you. Professional services that provide relevant services occasionally throughout the year are an affordable way for small businesses to handle their accounting needs.
Choose a Payroll Provider
Some companies choose to handle their own payroll, but we strongly recommend that you choose a payroll provider to do that for you. The main reason is that payroll taxes can be confusing. If you make a mistake with an employee’s withholding, it can create IRS and state taxing agency issues for both you and your employees.
The accountants at Cook Martin Poulson, P.C. provide payroll services for clients but in some cases may recommend another reliable payroll provider to you if you have multi-state reporting requirements. Any provider you choose should be able to run your payroll on the schedule you choose and handle quarterly reporting to the IRS. You may want to look for a provider who can also track vacation time and paid time off.
Starting a new business is exciting – and it also requires you to take on the legal and financial responsibilities associated with running a business. Following the simple steps we have outlined here will ensure that you get off on the right foot and that your new business has everything it needs to succeed.
At Cook Martin Poulson, P.C. our experience getting new businesses up and running will help your new venture have a great start. Call us today at (801) 467-4450 or feel free to use this form and we will follow up soon. We look forward to working with you.
If you liked this post, you'll want to read our post entitled: 10 Financial Questions You Need to Answer Before Starting a New Business