10 Requirements to Start a Business

  1. A business plan is imperative.  As a Certified Public Accountant, I am often approached by potential clients asking me to write a business plan for them.  I explain that I can help but certainly cannot do it alone.  A business plan would be a guide to help map out how you will start and run your business successfully.  This would include the management experience of the owner, sales and expense projections and business strategy.
  2. Get training and assistance from the many sources available.  Courses are offered at community colleges, local economic development organizations and the Small Business Administration .  This could include a single session or a series of classes designed to help you succeed.
  3. Plan for the financing of your business.  Some sources could include loans from family and friends and your own personal savings.  Some people are under the false assumption that the government provides financing for those starting a business.  Entrepreneurs should be prepared to assume some of the risk with their own finances.
  4. Determine the proper structure of your business.  You should consider sole proprietorship, corporation, S corporation, partnership or Limited Liability Company (LLC).  Taxes and liability should be part of the decision.
  5. Register a business name (“Doing Business As”) is one type.  Usually the business name has to be registered with the county clerk in the county where the business is located.
  6. Get a tax identification number (EIN).  This is typically obtained online from the Internal Revenue Service.  It is a requirement before a business can establish a bank account.
  7. Register for state and local taxes.  In many cases an application for state taxes (sales and payroll) will automatically register a business for any local taxes.  It is important to remember that after a business registers for state and local taxes, forms must be filed even if there is no activity or zero balance.  Not doing so may result in a penalty.
  8. Obtain permits and business licenses that might be required.  Such information can usually be obtained from the town hall or county clerk’s office where the business is located.
  9. Understand the responsibilities of having employees.  This includes the payment of payroll, payroll taxes and maintaining proper employee records, as well as the steps needed to hire employees.
  10. Obtain the necessary insurance to limit any liabilities/losses.  This includes property, liability, worker’s compensation and disability insurance.  Workers’ compensation and disability are required if you have employees.

Protect Your Business From Fraud

The risk of fraud is greatest in this period of a downturn in the economy when the financial pressure on a business increases.  The current state of the anti-fraud program  must be evaluated to minimize the duration and potential loss.  You should evaluate the current state of the anti-fraud program and the preventive measures as well as the detective measures that are implemented.

According to a report to the National Association of Certified Fraud Examiners, companies lose an average of 7 percent of revenues through fraud.  This is hard to measure when you consider the intangible such as brand name, loss of reputation and a deteriorating employee morale.  Despite the many efforts a company takes to detect fraud, over 60 percent are identified by accident or by a tip.  It is extremely difficult to identify the fraudster since more incidents are committed by longer term employees with no history of committing such acts in the past.