Small Business Checklist
It is important that before embarking on a small business venture, you understand the things you must do, the documents you must have, and the issues you must consider. If you do, this will help streamline your business and maximize its potential. If you do not, you may later face a waste of time, resources, and energy.
While these steps are not exhaustive, this small business checklist provides a helpful blueprint to understanding the steps of getting a small business up and running, as well as compliant with federal, state, and local legal obligations:
Step #1: Research and Plan Your Business. Before moving forward with your business, do your research. Make sure there is a market for what you are selling, and that you understand the difficulties your particular type of business might face. Find out how much capital you need to start and run your business for the next six months or so. Draft a general business plan.
Step #2: Seek Assistance. Do not be shy about seeking a mentor, someone who has successfully run the gauntlet of what you are hoping to achieve. Attend networking events and join LinkedIn, a valuable resource for connecting professionals. You should continue to do this during the duration of your business. You will never know everything (no one does), and it is important to always keep that in mind.
Step #3: Acquire Funding. It takes money to make money. After you ascertain how much capital you require, seek sources: small business loans from the government, family members, banks, etc.
Step #4: Choose a Business Location. “Location” refers to both a physical and online location. In addition to choosing a physical address for your business, many businesses today flourish by having a strong online presence. Some business owners choose to design their own websites by buying a domain name and using a website template, while other business owners hire website developers to create a professional site.
Step #5: Determine the Legal Structure of Your Business. Before choosing whether to form a sole proprietorship, partnership, limited liability company, or corporation, consult with an attorney so you know what the differences are among these structures and the advantages and disadvantages offered by each.
Step #6: Obtain Your Certificate of Formation from the State. When you register your company with the state, it will issue you a Certificate of Formation. For corporations, the fees are determined based on the amount of stock. Obtaining the Certificate of Formation for an LLC or corporation is important because with it, the individual owners of the LLC or corporation have limited liability and creditors generally will not be able to seize personal assets.
Step #7: Draft Corporate Documents. While this is not mandatory in Virginia, it is a good idea to have an attorney draft the corporate documents governing the management and operation of your business. For a corporation, these documents are By-laws and a Shareholders’ Agreement. For an LLC, the document is an Operating Agreement. If you do not do this, the rules of your state will apply by default.
Step #8: Register for State and Local Taxes. Research the state and local taxes that apply to your business and register for them. If you do not, you may face penalties. Mark your calendar so you have a general idea of when the taxes will become due on an annual basis.
Step #9: Register for any Applicable Licenses and Permits. You will need to obtain a Certificate of Occupancy or Home Occupant Permit from the county in which your business is located. You must also obtain a business license. Check your county’s website for specific requirements.
Step #10: Obtain Insurance. You may need professional or business insurance for your company or corporation. Also, if you rent office space, you may be required to obtain insurance for the premises.
Step #11: Get a Federal Tax Identification Number (FEIN). While this is not necessary for a sole proprietorship or a one-member LLC, if you plan to have employees you will need to obtain a FEIN from the federal government.
Step #12: Register with Duns & Bradstreet (Optional). This is only mandatory if your business wants to pursue federal government contracts, as a Duns & Bradstreet, or D&B, number is necessary in order to register in sam.gov (the database of federal government contractors). If you register in D&B, know that basic information about your business may be more readily available online. You will be assigned a nine-digit unique identifying number.
Step #13: Register in Sam.gov (Optional). In order to compete for federal government contracts, your business must be registered in SAM. To do this, you must first register in D&B, and your information inputted into Sam.gov must match up with D&B. Be prepared to spend several hours in completing this application, as it asks for detailed information to include your EIN number, bank account information, NAICS codes. You will also make numerous representations and certifications. At this time, you can also self-certify as falling into socioeconomic categories (such as small business, or woman-owned small business).
Step #14: Make Sure You have the Required Legal Documents. If you plan on performing subcontracts, hire an attorney to review the subcontracts you enter to make sure you are protected. Similarly, obtain advice before entering any other contracts, as when it comes to legal documents, the devil is in the details and it is the overlooked details that can harm small business owners. If you plan to hire employees or consultants, make sure your attorney drafts those agreements and looks at your employee handbook to make sure it is compliant with applicable state and federal law.
