Besides Payroll, What Do New Businesses Need?
When you’re starting a small business, there’s a seemingly never-ending list of things you need to take care of before you make your first sale or hire your first employee. Payroll is one of the first things new business owners tend to tackle, but it is far from the only item requiring your attention in the early stages.
The list below outlines many of the tools and systems necessary for your business to operate efficiently and in accordance with state and federal laws:
- Bank account: You’ll need a separate bank account for your business. A business bank account allows you keep your business and personal expenses and income separate, provides credibility to customers and creditors and is helpful for tax and audit purposes. It’s important to do research on multiple banks to find one that will work well for your needs.
- Entity structure: When you start your business, you’ll need to decide on which entity structure—or form of business entity—to establish. This determines the type of income tax return you’ll file, and it can also affect your general operations. There are numerous entity structures including sole proprietorship, general partnership, corporation, S corporation and limited liability company (LLC).
- Tax IDs: You will need to have a tax ID to represent your business, also known as an employer ID number (EIN). The IRS uses EINs to identify businesses for tax purposes, similar to how it uses Social Security numbers to identify individuals. Your business will likely need an EIN if you have multiple employees, are taxed as a corporation or partnership or are applying for a business bank account.
- Sales tax permit: Any individual or business that sells tangible personal property must have a sales tax permit before collecting sales tax from customers. The requirements for obtaining a sales tax permit differ in each state.
- Accounting system: An accounting system is used to manage all the financial activities of your business. These systems are typically computer-based and will track income, expenses and accounts payable. Most systems also generate detailed reports to aid you in financial decision making.
- Business insurance: Insurance can help protect your small business against costly and time-consuming claims and lawsuits. One of the most common types of insurance for small businesses is general liability, which covers physical damage to property or injury to others. Professional liability insurance covers your business’s services and can protect you from claims of negligence.
- Workers’ compensation: This is another form of insurance that helps business owners pay lost wages and provide medical benefits to employees who sustain work-related injuries or illnesses. Employers are typically required by state law to purchase workers’ compensation insurance.
- Website: In today’s digital world, having a website is a crucial part of a company’s daily operations. Design and host a website that provides customers with an overview of your business, the services you offer and how they can contact you.
- Social media accounts: Social media accounts provide business owners with a variety of channels to interact with their customers, answer questions and gather feedback. Identify which social media accounts house the majority of your target customers and use them to build an online presence.
Depending on the type of business you are starting, there may be more specific things you’ll need to take care of before your company is operational—in addition to those outlined above. This list provides a great starting point as you launch your venture.