As per the Small Business Administration reports 2019, 30.7 million small businesses have been set up in the United States. When you research the reasons for this many numbers, you will realize that there are no limits on who can become the entrepreneur. Setting up the business won't require any college degree, godfather, and a bunch of money.
To set up the business, you need to have the potential to plan and execute an excellent idea in the marketplace that is unknown by now. This is a remarkable career that offers flexibility to grow, working towards financial independence, and investing in yourself. Doesn't it sound good?
This career is not as simple as it seemed. Not every small business is positioned for success. To be more precise, approximately two-thirds of the businesses have faced failure in the early-stage. When you decide to take the plunge to become an entrepreneur and set up the United States business, you need to make sure that you are following all the necessary steps.
Keep on reading this comprehensive guide for setting up the business in the US. Always remember to take one step at a time; it will become easy for you to be on the way to become a successful small business owner.
Do Market Research
If you are thinking of starting a new business in the US, there are maximum chances that you are already packed with a business idea. So, now this is the high time to balance it with the reality check. It would help if you started researching your business's validation and success rate before you go any further.
The idea should be a problem solver and hold the potential to fulfill the requirements and demands the market is looking for. You can use an array of options to identify the requirements of your product in the market. Let's say, through a focus group, trail methods, and research work. When you start exploring your business, prepare some question with you:
- How is the competition?
- Is there any other product similar to your business idea in the market?
- Who are the buyers of the product?
- How can you survive in the fierce competition?
- Do you have any other marketplace to scale up the business?
Make your Business plan
Always remember that your business plan is the foundation of your business. It is like a roadmap that will help you visualize the structure, how, methods to run the business, and seek growth in the business world. So, it is a must-have for all new businesses. It is a way to think through the elements of the company.
This will help you to plan for the funding or bring new partners abroad. Investors will only say yes to your startup, when they strongly believe that your business ideas have some potential to change the world. Therefore, this business plan will also help you to convince investors or any business partner.
Prepare for Your Finances
Starting a new business in the US doesn't require a lot of money; it will involve some initial investments and cover all the expenses before gaining profit. Before starting the business, you should prepare a spreadsheet that estimates the one-time costs for setting up the business.
You will definitely be going to spend some money buying equipment, leasing or renting a property, obtaining licenses and permits, gathering legal fees, insurance, branding, market research, inventory, trademarking, utilities, production, supplies, travel expenses, employee salaries, your own salary, and much more. All these expenses will come under the initial investment block that you need to gather. However, there are several ways to get your business funded, such as:
- Crowdfunding
- Financing
- Small business loans
- Angel investors
- Small business grants
You can also choose to bootstrap your business by investing as little capital as necessary to start your business. So, the main goal here is to create a business plan and work through the options for setting up the capital you need to get your business off the ground.
Choose Business Location
You will need to register your business, get the licenses, and permits in the place where you want to incorporate your business, before thinking about registering and obtaining any permits or paying taxes. You have to decide where you want to set up the business in the US. You have to look for the target marketplace, personal preferences, and business partners. Moreover, it would help if you also considered the benefits, government agencies' restrictions, and costs.
Select a Business Structure
Before setting up the US business, you need to select your business structure as per the requirements and needs of your plan. Here is the business structure in the US that you can opt:
- A sole proprietorship
- Partnership
- Limited liability company (LLC)
- Corporation
Remember that the selected business entity will definitely impact your business idea, name filing the taxes, and adding liabilities and assets. Depending on the complexity and requirement of the business, you can choose any business structure.
Register Your Business Name
It's not at all an easy task to choose the perfect business name. The selected business should reflect the brand and hold the potential to capture the customer's spirit and attention. And you have to ensure that you choose the unique business name; it should not be used by someone else.
Ensure that you think through all the potential implications as you explore your business name, and select the right business name. Your job is not finished yet. After selecting a name for your business, you will need to check whether other companies trademark it or not. If no, then you will need to register it.
If you're thinking of setting up a sole proprietor, you have to register your business name with either the state or country. However, to register the business name for Corporations, LLCs, or limited partnerships, you need to complete the paperwork and file it accordingly. What's more, ensure that you have to register your domain name once you have selected your business name.
Obtain Licenses and Permits
The next step you need to follow to set up the US business is getting licenses and permits for your business. Always remember that when you start a business, paperwork will become an integral part of it.
And for operating the small business, you would need to have a variety of small business licenses and permits depending on the business type and where you are thinking of locating it. Research what licenses and permits you should apply for your business during the startup process.
Get a federal tax ID number
To start a business in the US, you would also need to apply for the federal tax number. The federal tax number is your Employer Identification Number (EIN). You would require this pin to hire employees, open the bank account, pay federal taxes, and get the business's permits and license.
When you have registered your business in your preferred location with the best-fit business structure, you have to apply for an EIN from IRS website. It is free to apply, so you should do it. Here are some of the cases where your business requires you to have a federal tax ID.
- Working with certain types of organization
- Filing tax returns for employment, excise, or alcohol, tobacco, and firearms
- Pays employees
- Withholds taxes on income, other than wages, paid to a non-resident alien
- Operates as a corporation of partnership
Your nine-digit federal tax ID becomes available immediately upon verification.
Start Promoting Your Small Business
Once you are done with the requirements to set up the business, you need to start looking for the best ways to attract clients and customers. You have to start writing a market plan for your business. Therefore, start exploring more small business ideas for your startup as possible to decide how to promote your business effectively.
Final Thoughts
This article is all about preparing you to set up a business in the US. Follow all the necessary steps and abide by the rules and regulations, to set up a business in the marketplace hassle-free. Don't forget, success doesn't happen overnight. You have to create a plan that consistently works to grow your business and increase your success chances.