By Nancy J. Wolf
The growth and formation of small businesses is crucial for the future of the United States economy. Small businesses help to provide jobs, products and services, and build local communities. In addition to this, operating and maintaining a small business is a rewarding experience for the owner and their employees.
While there are a variety of types of small business including accounting firms, car repair garages, online retail, restaurants and boutiques, they all provide a unique and important service to their customers. If starting a small business seems like the right decision for your future, there is no time like the present. Here are a three key factors to consider in your decision making process.
Deciding Whether to Form a Corporation or LLC
When starting a business, it is important to evaluate whether to form a Corporation or LLC. Often times, forming a Corporation is best for larger businesses which may require a number of employees. Corporations are formal business entities with well established laws that require annual record keeping. Corporations provide limited liability protection to officers and shareholders, offer a large number of tax advantages, and the ability to raise capital through the sale of shares of stock.
On the other hand, an LLC, or Limited Liability Company, is an excellent choice for small business owners because it offers more flexibility and ease of operation with less paperwork than a corporation, while shielding members from personal liability and affording an array of tax options.
Many business owners look to the State of Delaware when forming their Corporation or LLC due to the favorable tax environment and convenience of formation. When forming an LLC in the State of Delaware, it is important for small business owners to keep the following information in mind:
- Select a company name that is not currently in use. This needs to be checked for availability prior to making a final decision.
- Prepare a Delaware Certificate of Formation, and paying any filing fees to the Delaware Division of Corporations.
- Prepare an IRS Form SS-4, which is the application for an Employer Identification Number (also known as the Federal Tax ID Number).
Having a Business Plan
After forming your business, it is important to have a plan in order to set organizational goals that will grow the business and generate revenue. The business plan will help to define the company, outline the types of products or services that will be offered and provide insight as to how these products and services will be marketed.
As a small business owner, it is important to be able to answer these questions when forming your business so the right employees and resources can be put in place to achieve success.
Creating a Marketing Strategy
Having a detailed marketing strategy is a critical element of any business plan because it generates customers and grows the business. There are a variety of ways to market a small business including traditional methods such as print and television advertisements, along with digital and social media marketing.
When first starting a small business, it is important to allocate funds that can be used for implementing a proper marketing strategy which will help to grow the company and stand apart from the competition.
What was the most important step you took when starting your small business?