Many people dream of starting their own small business, whether a storefront along a quiet main street, a digitally-focused offering in a busy office building or an online service for customers across the country. In fact, many have already taken the plunge. Businesses with fewer than 10 employees account for three-quarters of all businesses in the state.
If you’re thinking about jumping into the fray, know it isn’t always a simple process. Here are five things to consider.
1. What type of business structure?
A business can take many forms, whether it be a limited liability company (LLC), a corporation or one of the other possibilities. Which business structure you choose will depend on your plans for the future, but all come with different rules, regulations and paperwork.
Your choice will also determine what types of legal and tax liabilities both the business and you personally may have. Making the best choice right off the bat can be key for getting the business off the ground.
2. Consider financing
Businesses need money to get going, and that capital can come from many sources. If you’ve saved, maybe you have enough funds to launch without the need for outside help. Others will need to consider grants, small business loans or even an investment from a venture capitalist or private investor.
When enlisting outside help, fully understanding the terms of the deal is vital. For example, do you know exactly what you’re getting into by signing a personal guarantee? Or, do you understand the implications of selling a piece of your business in exchange for financing?
3. Licenses and permits
The U.S., the state of Massachusetts, and both the county and city in which your business is located likely all have different needs for new businesses. You’ll probably need to obtain a Federal Employer Identification Number and register with the Massachusetts Secretary of State. Locally, different licenses and permits may come into play.
You will need all of these in order to legally operate your business. Missing just one could result in complications and headaches down the road.
4. Employee and contractor needs
Thinking about hiring some help? You’ve got some paperwork to sort out.
Employees and contractors will each need the proper tax forms, and you’ll need a way to pay them deduct withholdings when appropriate. Many states also require businesses to report the hiring of a new employee or independent contractor within a certain timeframe. Even a small mistake can lead to a tangle of problems.
5. Think about how to protect the business
As a business grows, so does the potential for legal needs. It could be a tax issue that requires sorting out, maybe a cease-and-desist from a large company you don’t know how to respond to, or even an employee’s claim of a legal violation that you need to defend against.
Or maybe things have gone well and you’re ready to sell, or you want to know how to set up a franchise structure in order to keep growing. Many businesses choose to use an attorney in order to provide some long-term assistance when dealing with any of these circumstances, whenever they may crop up.
