How to Open a Small Business

Here are 10 easy steps to help you get your small business started!

Step 1 - Write a basic business plan. Answer these questions:

What will you sell?
Who will buy what you sell?
Why would they buy from you?
When will you sell your product or service?
How do you find those people?

Step 2 - Decide on what your business name will be.

If you have chosen to not use your last name in your business name you must file with the state and list your fictitious name in the legal notices of a newspaper in the county in which your business will be based. You can find information on the Pennsylvania website.

Step 3 - Create a filing and record keeping system.

In addition to records of your personal expenditures, every expense you incur, in which your small business had some part of, should be documented.

Your filing system can contain these categories: Marketing, Advertising, Operations, Taxes, Legal, Sales.

*Taxes - documents in regard to taxes

*Legal - documents such as permits, licenses, your EIN number

*Advertising - documents regarding the actual advertisements you do and their expense

*Sales - documents regarding the activities you do and the expenses you incur in order to make the actual sale such as training, classes, and education materials. Additionally, what this step means to you is that you must carefully and accurately record any income you make from your small business. You will need that information so your accountant can properly complete your tax return.

*Marketing - documents regarding the activities you do and the expenses you incur in order to draw in customers - such as a website

*Operations - documents regarding the activities you do and the expenses you incur in order to prepare your products - such as materials to build it

Step 4 - Apply for an Employer Identification Number

Do this even if you will not be hiring anyone. It is very easy to do online. The website can be found at: http://www.irs.gov/businesses/small/article/0,,id=102767,00.html

Step 5 - Apply for a sales tax identification number

You will go through this step only if you are not going to form a sole proprietorship. You can generally do this online through your state's website. Note that my students form sole proprietorships. That website can be found at: paopen4business.state.pa.us/paofb/site/default.asp

Step 6 - Apply for an operating or occupancy permit through the municipality, if it is required.

Do this through the municipality building in the area in which you plan to base your small business.

Step 7 - Open a checking account at your bank under your business name.

The IRS loves to see you keep your small business income separate from your personal income from a job. This will not affect your ability to take tax deductions.You will need your EIN number and drivers license to open that account.

Step 8 - Work with a counselor who can work with your through any questions.

Save yourself time and expense by working with someone who has gone through this before. This should be someone that can point out additional opportunities to take tax deductions and walk you through things like marketing, advertising, and operations when you are ready to start selling. Additionally, if you ever need to hire someone, either an employee or contractor, don't settle for anything less than excellent performance. Receiving less than excellent performance from paid labor will kill your small business.

Step 9 - Look for deductions.

Remember, for our purposes, the point of starting a small business is to get your federal tax back at refund time! Question every penny you spend. Ask yourself - does this / can this expenditure have a business purpose? Can it be tax deductible?

Step 10 - Start selling!

Go make some money!