Business Start-Up Checklist

Business Start-Up Checklist

This checklist walks you through the basics of forming a new business, and helps you avoid some common pitfalls.

Entity Formation.  Your attorney can help you determine the best choice for your circumstances and type of business.

Please note that if you wish to incorporate, you must stay current with annual registration and tax filings.  If you typically have trouble meeting filing deadlines, forming a corporation is not a good choice for you.

Tax Election. If forming an LLC, you must decide how the LLC will be taxed.  To be taxed as S-Corp or C-Corp, you must file IRS form 8832 Entity Classification Election.  Otherwise, your choices are Sole Proprietor (Schedule C) or Partnership.  Don’t forget to prepare for required tax reporting for your business by keeping good records and budgeting for accounting fees.

City business license (if inside the city limits).

EIN. This number identifies your business for payroll taxes and income taxes.  To apply for an EIN, use IRS form SS4. 

State tax registration.  You can register your business on-line at the Missouri Department of Revenue web site.

Paying wages.  It is very important to get professional advice before paying employees or contract laborers.  You can easily end up owing massive payroll penalties and back taxes to the IRS or state.  Civil Penalties can also be assessed for failure to make proper payroll deposits.  These civil penalties can be assessed individually against anyone responsible for the company payroll.

We recommend that all employers get some level of professional assistance with payroll.

We also strongly recommend that you review the IRS rules for determining whether a worker should be classified as an employee or contractor.

Insurance.  Talk to your insurance agent about:

BOP

Professional Liability

Workers Compensation

Business Interruption (partnerships/multiple owners)

Estimated Taxes — avoid tears at tax time!  Income taxes and Self-Employment tax catch many new business owners unaware their first year.  Planning ahead can help you avoid unpleasant news when your tax return is prepared.

For a sole proprietorship or partnership, we recommend setting aside 30% of your profit for taxes.

You may be required to make quarterly estimated tax payments.  Check with your accountant if you are not sure.   If quarterly payments are not required, it is still advisable to set aside a portion of profits for any taxes that will come due when your return is filed.

Record Keeping. If you only use bookkeeping records for tax return preparation, you are missing out on a vital tool for business success.  You wouldn’t drive your car with your eyes closed.  Don’t try to run your business without timely and accurate financial information.

You should be able to review your business profit/loss statements and balance sheets at least quarterly.   Bookkeeping software, such as QuickBooks, will provide these and other useful reports, but ONLY with accurate data entry. Your accountant should be able to help you interpret the reports if needed.

We find that business owners typically under-estimate the importance of keeping good financial records, and the skill it takes to do so.  Having your bookkeeping done or reviewed by a skilled professional will assure you have access to relevant and useful information.

Financing A start-up business can be a ravenous, cash-eating beast.  It may take several years before the business generates a steady profit.   Plan ahead by estimating your cash flow needs. Do you need a line of credit for seasonal declines in sales? Do you need a business loan or investors? Can you live on savings until the business starts to make a profit?

Written Business Plan. Identifying your purpose, your mission, and your target market can provide clarity that guides your every day management decisions.  Most of us can’t be all things to all people.  A business plan helps you focus on your particular strengths and goals, and will help you serve your target market more effectively.

HR Considerations:

Employment contracts

Bonding

Non-compete or non-disclosure agreements

Job Descriptions

Employee Handbook

Benefits

Employee leasing or temp services

Disaster Preparedness

Data back-up

Power back-up

Security, passwords etc.

Off-site storage / safe-deposit

Alternate location with access to computers/data