Starting a business is an exciting time and you want to make sure you do everything correctly before opening your doors for business. You don’t necessarily need a college degree to start/run your own business, but you do want to make sure you start your business off right. This guide will help you with 8 important things you need when starting a home based business or turning your hobby into a business.
1. Business Name & Logo
Choosing your business name is very important. Do you use your personal name or choose a business name? Is the business name available on social media platforms? Is the URL available? I have a blog post that is dedicated to naming your business here. This article goes more in-depth on the subject. Once you have your business name, you can move forward with the rest of the list.
2. Fictitious Business Name Statement
Definition: A legal document showing the operating name of a company, as opposed to the legal name of the company. In the case of a corporation, a fictitious business name is any name other than the corporate name stated in its articles of incorporation.
Basically, if you want to operate a business under any other name than your personal name, you may need to file a fictitious business name statement. Check with your county and state to see if you need to file a fictitious Business Name Statement. Most counties do require them as this is a way to protect the consumer, so that they know who they are doing business with.
*Note* Most banks will require a fictitious business name statement to open a bank account up in any other name than your own personal name.
3. Business Phone
Do I really need a separate phone number for my business? I can just use my personal cell phone number, I don’t need another phone number. Will clients need to call you? Will you need a customer service phone number? Do you really want your customers having your personal phone number? What happens when customers call and get your personal voice mail message? (Hey, this is Joe, I am out having fun, maybe I will call you back and maybe I won’t. Have a good one!)
It is both professional and important to have a separate phone number for your business. You do not want strangers calling you at all hours because your personal number is listed on your website as a contact number for customer service or on your printed material. Once a customer has your personal number it will be a hard task to get them to stop using it. The last thing you want is to be at a family dinner and have your phone ringing non-stop due to a customer. It is best to have a separate phone number for your business with its own voice mailbox and outgoing message.
Check with your cell phone provider, many offer a second line that can be forwarded to your main phone number at a minimal charge. Another solutions is offered by GoDaddy® called SmartLine™. This service uses your current cellular signal to make and receive calls. Plus, you are able to send and receive text messages. Or maybe you prefer having a traditional landline. It is up to you, but I highly recommend investing in a separate business line.
*Note: Facebook will require a phone number that is established in the company name if you want to have your Facebook page verified. Check with Facebook for more information on this.
4. PO Box
To protect your privacy and home address from being made public, consider getting a PO Box from either the Post Office or a mailing store, like UPS. It may have not accrued to you that you would need to have an address other than your home address. Let me explain why:
Will you be mailing or shipping items out to customers? You will need to use a return address on shipping labels. What address will you give customers for returns? Do you really want customers to know your home address? Customers within your local area, may think it is ok to just stop by to purchase items or to talk to you regarding your services.
Registering for a URL? You will need to give your mailing address when registering that URL. Do you plan on having a mailing list to email customers with your newsletters, specials or coupons codes? When using mailing programs like Mailchimp, Constant Contact or any other mail list program it is the law that your physical mailing address be at the bottom of the email they send out to your customers. These programs will automatically place your address at the bottom and if you are using your home address, that is what is going to go out to the public. It is best to have a PO Box to use for your business, to protect your personal home address from the public, your customers and clients.
City/County business license
Check with your city or county to see if you need to have a business license. If you do need a business license; do they offer a home-based business license or if you are a crafter they may offer a crafter’s license at a fraction of the cost of a retail license.
State License – Resale Permit
Does your state require you to have a tax license? In California they are called a Resale Permit. Check with your state’s government website for more information.
Employer ID Number
The Employer Identification Number (EIN), is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to business entities operating in the United States for the purposes of identification. If you don’t want to give out your SS number then you can use a EIN. Go here for more information or to apply for an EIN.
As a sole proprietor business, it is not required to have a EIN, unless you have employees. The reason to apply for an EIN is to use your EIN instead of your social security number on documents. These are examples of places that you will need your SS number:
Opening a bank account,
Opening a Paypal® account
Opening an account with a credit card processing company like Square or Stripe
Opening an affiliate marketing account
This is one thing that small business owner’s usually do not have, and it is a must. Having an insurance policy can cover things such as; equipment, inventory, data loss, loss of income and theft to name a few. Not all insurance polices are the same and you will need to obtain quotes and compare the polices. Start with the insurance company which you have your home or renter’s policy with. Many times, you can add a small/home based business package to your existing insurance.
If you do craft/trade shows, make sure that you have insurance to cover your merchandise while at the show. Ask the insurance agent questions: Does this policy cover my merchandise while in transit to and from a craft show? While my merchandise is at a show? Is my tent/show booth insured if it is damaged at a show? Does this insurance cover me if my booth falls and hurts someone? Asking these questions may seem unnecessary but if you are a professional crafter, you want to be covered. The last thing you need is for your booth to fall on someone at a show and they are taken by ambulance to the emergency room, which you do not have insurance to cover.
Don’t assume that because your business is in your home that your equipment will be covered by your homeowner’s or renter’s insurance policy. If it is used for business purposes, they most likely will not be covered by those policies. Talk to your insurance agent regarding your current coverage and how to your business assets.
7. Bank Account
Open a separate bank account for your business. Having a separate checking account for your business is crucial for keeping your business records separate from your personal ones. It makes bookkeeping and tax preparation easier. Sales and monies earned from the business should only be deposited into your business account. Expenses for the business should be paid out of your business account also. You can obtain a debit card for the business account to make it easier to pay for items that are purchased for the business. Commingling business money with personal money is never a good idea. Start the business off from the beginning with it’s own bank account and your bookkeeping will be a breeze.
*Note*Depending on your business type: sole proprietor, partnership, corporation, LLC , the bank will require different legal documents to open the account.
8. Business Cards
With so much marketing done digitally now, you may be asking yourself, Why do I need a business card? You want to always be prepared to make a great first impression and you never know where you may meet your next client or customer. You may be at a friend’s dinner party and talking about your business to another guest and they ask for your business card. Will you be that person that has to write their information down on a cocktail napkin? That is not going to make a lasting impression.
Business cards make you look more professional and are great for showing off your brand. If you are planning on attending professional conventions, networking meetings or any professional setting where you could be meeting potential clients or colleagues, then you want people to remember you. There are many online places to order your custom business cards that will not break the bank.
Leave ordering your business cards to the last thing you do. It is exciting to order business cards and want to show them off to your family and friends but, wait to do this to the last step. Why? Because you may end up changing your mind on your business name, logo or brand colors. Other things may change to like the URL of your website, mailing address or phone number. It’s better to wait until you have everything in place and then order your business cards.
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