10 Things You Should Know About Business Formation17 Sep 2018, by Business Law in
Written by Timothy Czekaj
Any business owner will tell you that getting things off the ground is no easy feat. Not only do you have to handle logistics, such as securing funds and deciding on a location, you also need to make sure you have the fortitude to endure setbacks. Hidden startup costs, ineffective marketing, and having to redesign your business model can take a toll on your sanity. Consulting Perry County lawyers who are well-versed in business formation can put you ahead of the competition.
If you are facing any business-related difficulties, call Czekaj Law, LLC at (717) 275-9770 now. We will work tirelessly to make sure your business has the best possible chance of success. Contact us today to schedule a free consultation.
What You Need to Know About Forming a Business
These are 10 things that you should know about business formation:
1. Many New Businesses Fail
It is a common rumor half of all new businesses fail within one year, but according to the Small Business Administration (SBA), this is not true. The SBA claims that two-thirds of businesses with employees survive at least two years, and about half last at least five years. This pattern is consistent across various industries, such as food service, hotels, construction, and retail trade.
Businesses fail for any number of reasons, including not conducting market research before opening, not creating a business plan, and not having the funds to maintain operating costs.
2. A Business Plan is Key
If you are opening a business, you’ll have to make many important decisions beforehand. You need to determine where your business will be located, how many employees you will need, how you will make a profit, and much more. This is why it is essential to draw up a business plan that outlines every aspect of the company you are hoping to establish.
3. Your Credit Score is Important
If you do not have a substantial amount of money available, and if you are unable to convince investors to back you, you will need to apply for a loan to cover the cost of establishing your business. Unfortunately, your credit history can determine whether you will receive a loan. You may find it difficult to secure funding if you have a credit score of 650 or less.
4. The Location You Choose Can Make or Break Your Business
Deciding on the location of your establishment is arguably the most important decision you will make as a business owner. According to the SBA, there are many factors to consider when choosing where to open your business. For example, many companies are established in areas with high foot traffic. This makes things like parking, neighborhood reputation, area safety, and competition all factors to consider.
5. Consider Different Business Structures
There are many business models, but the most common are sole proprietorship, limited liability company (LLC), general partnership, and corporation. The model that is best suited for your needs depends on the business you are trying to open. Our experienced business attorney will discuss your situation and help you determine the best business model for your new business.
6. You Need to Have Federal and State Tax IDs
If you open a business, one of the first things you must do is establish a federal employer identification number (EIN). This credential is necessary for opening bank accounts in your company’s name, and for paying taxes to the state and federal government.
7. Your Business Should Have a Bank Account
When operating a business, it is essential that you keep your personal expenses separate from your business expenses. Per SBA advice, you should open a company bank account as soon as your business starts spending or accepting money. One of the advantages of having a business bank account is being able to grant access to employees for daily banking tasks.
8. No One Can Do It Alone
As a prospective business owner, you are likely not prepared to handle every conceivable business situation. If you are opening a restaurant, you may know how to deliver good customer service and how to run a kitchen, but you may not know which licenses and permits you will need. A business lawyer can make sure you have everything checked off your list before your grand opening.
9. Business Insurance Can Keep You from Going Under
A new business is fragile. It can be destroyed at any moment by a lawsuit, theft, an accident, or another disaster. Having business insurance can protect you against these unexpected costs. If you obtain general liability insurance for your business, you will remain protected against financial loss caused by bodily injury, property damage, and medical expenses.
10. You Will Need Self-Motivation
When you are your own boss, there is no one looking over your shoulder to make sure that work is getting done. As a business owner, you need to have the discipline to force yourself to stay on task. You will have a lot of freedom, but you do not want to use it the wrong way.
Call a Business Attorney at Our Firm for Help
Starting a business can be daunting, and you may not know where to begin. Perhaps you have developed an excellent product, but you are unsure of how to deliver it. A business attorney at Czekaj Law, LLC will help you develop a plan to get your company up and running. To schedule a free, initial case evaluation, contact us today at (717) 275-9770 .