Planning a business can be exciting particularly if you’re bent on setting up one that you know has great chances of success. Sometimes, one has this gut feeling that a business idea will become a hit and gain you profits moving forward.
But before anything else, researching about legal requirements is a must for any aspiring entrepreneur. Take the time to learn about the documents required in your specific location, stressed San Diego criminal lawyer Samantha Greene from Sevens Legal.
Starting small is the best way to go. California is a great place to start a small business due to its high population and mix of young and old residents.
The very first thing you need to decide on when planning for a small business is the type of structure you want. Will it be a sole proprietorship, partnership or limited liability company? This is the first step to making your business legal.
A sole proprietorship is ideal if you have no assets, your business will not be a source of liability and you foresee an income of not more than $50,000 a year. A partnership is recommended for couples or if you want to partner with a friend. This requires an agreement that states your relationship, objectives and financial commitment.
Any business should start with a plan. For this reason, you need to come up with your business plan that should contain information on your finances, management, marketing and goals for the first few years.
It’s a normal procedure in the state to require business owners to present their plan to investors, other business professionals and potential partners. You can get help from the U.S. Small Business Administration (SBA) website.
State License and Permit
Every business needs to secure a license or permit in order to operate legally. This will depend on the type of business you are setting up and its location.
The U.S. Small Business Administration website can help you determine which license or permit to obtain using their Permit Me tool.
Grants and Funding
While you may have ready personal funds to start a business, it may help as well to get financing. You can apply for a loan through banks or via the California Small Business Loan Guarantee Program.
You may need to consider other financing options notably once your business grows and you want to expand. Make sure, though, to choose payment terms that you can afford.
Getting a business insurance is also necessary. Although this may not be needed at the start, you will have to secure one as your business grows and face additional risks.
If you run a home-based business, a property insurance can protect your assets, equipment, furniture and fixtures. You will have to purchase additional riders, though, to your home insurance if you want to protect your business from financial losses or you can get another policy. Take note also that a property insurance may already be included in a general liability insurance so just check with your broker first before getting one.
Businesses involved in distributing and retailing products need to secure a product insurance. This will cover financial losses in case of injuries caused by defective products.