Finally biting the bullet and launching your own small business? Your first thought: Let’s do this! Your second thought: Oh boy.
But setting up a small business doesn’t have to be daunting. Follow these tips, and you’ll be jumping over the logistical and legal hurdles in no time — freeing up precious bandwidth to worry about the fun stuff like, you know, making a killing and growing your company.
Here are the essentials on how to set up a small business, from 401(k)s and payroll to managing legal fine print and building your company’s Web site. With advice on setting up a small business from small-biz wunderkinds and practical tools to help grow your small business, roll your sleeves up and dive in.
1. Register your small business name
You’ve already got your business plan and initial budget all lined up and raring to go, right? Before you hit “publish” on your Web site or open your brick-and-mortar storefront, be sure to consider whether to trademark your company’s name and logo. The United States Patent and Trademark Office walks you through the process here.
You’ll also want to register your business, so you’re legally set up to conduct dealings.
Sites like LegalZoom and NOLO can help you form a Limited Liability Company (LLC). You can also refer to those sites for information about forming a corporation.
This is also the time to make sure you have all your compliance ducks in a row. “In New York, that means obtaining workers’ compensation, disability, and paid family leave insurance as well as registering as an employer for an unemployment registration number,” said Melanie Hopkins, founder of Finance Friend, a consultancy focused on helping entrepreneurs start and grow their companies.
There may be occupation-specific licenses that are needed, as well, depending on the business to be conducted.
2. Set up accounting books for your small business
If you’re not a CPA and find yourself wondering how to set up payroll for a small business, you’re going to want to sign up for an online accountancy platform. “All of the big three online accountancy tools — QuickBooks, Xero (via partner Gusto), and FreshBooks — include payroll functionality,” said Robin Waite, founder of Fearless Business and bestselling author of “Online Business Startup” (Rethink Press).
Thinking of setting up a 401(k) for your small business? “Once the accounts are set up in payroll, 401(k)s are straightforward,” said Waite. “Think of it as: Total wage cost = net pay + taxes withheld + employee 401(k) contribution withheld.”
Worth noting: Some experts advise holding off on offering employees 401(k) plans to start, because they’re costly and involve a lot of regulations. Instead, you may also want to look into a Simplified Employee Pension IRA, or SEP-IRA or solo 401(k). (You can read about the pros and cons at Investopedia here.)
Needless to say, there’s a lot of math, paperwork, rules, tax deadlines and human resources laws, so outsourcing these potential headaches to a trusted accountant or payroll processor is advisable.
Hopkins is a big fan of Gusto, an all-in-one payroll and benefits platform. “They offer self-onboarding, have great customer service and are a great value for the price,” she said.
3. Take care of the legal fine print
Regardless of the type of business you’re starting, like death and taxes, you can count on one more thing in this world: Paperwork. Lots and lots of paperwork.
So here’s some information on how to legally set up a small business: For straightforward paperwork like employee and freelancer agreements and supplier or customer agreements, LegalZoom, RocketLawyer and NOLO may be cost-effective starting points, although tweaking by a lawyer may be needed.
But for more complicated matters like tax filings, lease agreements and organizational documents (such as charters, agreements among owners), it is advisable to work with an attorney and likely an accountant, too. Their expertise and familiarity with state laws will be well worth it.
“While expensive, the costs of not protecting yourself properly can be significantly more,” said Waite, who concedes that if you are on a shoestring budget, then an online service such as LegalZoom is a great resource for helping you at least register your business and get started.
Robert Patin, managing partner of Patin & Associates and author of “The Agency Blueprint: The Business System That Leads to Success,” echoes Waite’s cautionary words.
“With a monthly online service, you will get boilerplate language, which is better than not having a contract but doesn’t compare to the advice and protection that legal counsel can provide,” he said. “The item that you have to think about here is, you do not know what you do not know. Find someone who does.”
4. Build a killer Web site
There’s no best way to set up a small business Web site; that will depend on the nature of your company. But there are some simple guidelines every small business owner can take when starting out.
For newcomers to the small business scene, Squarespace is considered the best Web site builder on the market with award-winning templates, Web site traffic analytics and many other offerings. In addition to having eCommerce functionality, Squarespace also plays nicely with Google My Business. “A Google My Business account is essential if you are a brick-and-mortar business looking to be found in local searches, like ‘florist near me,’ ” said Waite. “Don’t forget to get 10 reviews on your GMB listing as quickly as possible and link it up to your new Web site.”
Other popular alternatives to Squarespace include Wix, GoDaddy and Weebly, as well as Shopify, specifically for building an eCommerce site.
If you need something extremely customized or a Web site with advanced features, hire a Web design agency. Ask friends or colleagues for their recommendations or poll your LinkedIn connections for a referral.
Waite advises you should keep the following questions in mind when hiring a Web designer: How many reviews and testimonials do they have? Is their portfolio extensive? Have they worked with businesses similar to yours? How long have they been around? Do they only build Web sites or are they commercially focused on getting you results (i.e., they strive for helping you hit benchmarks like getting 10 new leads or a certain number of new customers a month)?
To save money — but still have the advantages of a real-life human building your Web site from scratch, check freelance marketplaces like Fiverr and Upwork.
5. Set up card payments for your customers
For those contemplating how to set up card payments for a small business, keep it simple. “The biggest thing to remember, especially when dealing with eCommerce, is that handling payments introduces a lot of liability to your business. This is one area where you should definitely not reinvent the wheel,” said Phil Strazzulla CEO and founder of Select Software Reviews.
Strazzulla, like other experts, urges small business owners to use established services like Stripe, Square or PayPal.
“These companies have transparent redirects you can add to your site, so that you will never have to actually handle any sensitive material, shielding you from risk,” he said.
6. Find your dream premises
Especially now, more businesses than ever are run completely remotely, but obviously, if you’re opening a shop, restaurant or if you need factory space to manufacture your product, you’re going to need a physical location.
”For those who need office or retail space, evaluate how much location and square footage mean to your business and spend wisely. And don’t forget to negotiate on your lease agreements,” said Hopkins.
Aren’t you happy you splurged for that lawyer?