National Entrepreneurship Month: How to Start a Business

How many of us have been interested in starting our own business, but were too nervous about tackling the task? First, you have to come up with a business idea that no one has thought of before. Then comes the set up and actual formation of your business. Not only are there items that can make your business easier to function and run, but there are so many options and technology out there to choose from. Once everything for your business has been set up and you are on your way to making a profit, you have to somehow figure out how to file and pay taxes and plan for your next year. During this planning process, you may discover that your business idea has grown and now need to close the original business to open a brand new one, and this is why many people do not go through with starting their own business. Lucky for you, all of these topics will be covered in our four-article series of How to Start a Business for National Entrepreneurship Month.

Small businesses make up more than 99% of all businesses in the United States. According to this information from the White House, a record 5.4 million new businesses were started in 2021, over 20 percent more than any year on record. While the SBA defines a small business as one which has less than 500 employees, the majority of small businesses have zero employees. Every business that has ever been started; even global businesses such as Apple, Microsoft, and Coca-Cola, were once a small business. All it takes is a unique idea and the drive to make it real. The Small Business Administration has a 10-step guide on starting your own business and below are a few key pieces that provide even more information.

Items Needed to Start a Business

There are multiple business structures available to choose from for the type of business that you want. The most common are Sole Proprietorships (one person is the owner), Limited Liability Company (LLC), and Partnerships (more than one owner). Others include Corporations and S Corporations.

Creativity comes into play when choosing a business name and can sometimes be difficult. One of the options to know about is doing business as (dba) which is known as a fictitious name. This is a name that is used other than the proper name of the entity. Anytime the name does not identify the owners of the business, it should be registered using a fictitious name, such as John Smith doing business as Smith Roofing.

Registering your business is important and done by filling out the PA100 which provides a business license. This form is used by for-profit and nonprofit businesses to register and electronically file for certain tax obligations. This form may look scary at first, but you only have to fill out the parts that pertain to your business based on the license you are using. There are many other forms that may need to be filled out when registering a business and are found at the following link, business registration forms.

Sales and use tax is something that most probably have never heard of. Will your business be selling taxable goods or services to Pennsylvania residents, and are buyers required to pay sale tax on those purchases? This link gives you advice on how to register, file returns, due dates, and more.

An Employer Identification Number (EIN) is a unique identification that is assigned to a business entity so it can easily be identified by the IRS. It’s mainly used for the purpose of reporting taxes since it is sometimes referred to as a Federal Tax Identification Number.

Establishing a business bank account provides protection, professionalism, preparedness, and purchasing power. To open a business account, you will need your EIN, business formation documents, ownership agreements, and business license.

While starting a business can seem like an overwhelming, and daunting task there are many resources out there. It is recommended to reach out for Legal and Accounting Guidance when in the planning phase. This will provide you with the most accurate information and allow for easier transition and completion.

McKonly & Asbury has an Entrepreneurial Support & Client Accounting Segment specifically geared to help a prospective business owner navigate the requirements needed to follow their dreams and become their own boss. Our team has experience assisting new business owners with all their accounting needs going forward, from monthly close to yearly tax return preparation and more. This can be a more helpful resource than Googling “How to Start a Business” and changing your mind because it is too much for one person to figure out on their own.

If you would like to talk to one of our professionals in our Entrepreneurial Support & Client Accounting Segment on this topic or any other business-related topic, please do not hesitate to contact us.

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