Do you dream about starting your own business? As you let your mind wander toward fulfilling your entrepreneurial goals, exhilarating thoughts flood the imagination: Freedom from your job! More time for family, friends, and fun! More (much, much more) money!

Very quickly, however, those euphoric thoughts can come to a screeching halt! Why? You suddenly come to the realization that you have a bunch of hoops that you have to jump through to get your business legalized, certified, bonified, yadda, yadda, yadda. But before you do any of that stuff, your first priority in almost every case is to do the following:

GO MAKE SOME MONEY!

You can have all the paperwork, documents, and certifications you want. But the fact of the matter is this: if you aren’t making money, you don’t have a business!

Don’t misunderstand. Every business I have ever started or been associated with has been upfront and above-board with all the required agencies. But before you go filling out a bunch of applications, get you tail in high gear and get your business making money ASAP. When you get your business rolling, come back and consider this article for some tips on licensing, permits, and legal documents. So get back to fulfilling those dreams. Got it? Good.

Starting the Paper Trail: Have a Business Plan

One of the most important pieces of paperwork needed when starting a business is your business plan. Yet it’s one of the most neglected. Why start a business plan?

The benefits of a business plan are two-fold: 1) You have clearly defined business goals that keep you on track and keep you moving forward. And 2) If you ever have to go to tax court to defend yourself and your business, it could be the difference between winning and losing! For more information on writing a business plan, you definitely want to check out the article, Build a Business Plan or Bust! right here on Business Beetle.com.

Look Out! Federal Forms, State Forms, Legal Documents, Permits, and Licenses Galore!

My wife and I have operated a janitorial cleaning business for many years now. We have served three different states with this business (talk about putting a lot of miles on your vehicles!) The three states are Pennsylvania (PA), West Virginia (WV), and Ohio (OH). Filling out all the Federal and State forms for sales tax and withholding was enough to make your head swim!

Recently, we sold two of our West Virginia accounts. So my wife and I composed a checklist that would be helpful to the new buyer to get her business going. A copy of this checklist can be found below. Though this list is specific to West Virginia, it also will show you most of the requirements to do business in Pennsylvania and Ohio too. Additionally, this list will be helpful whether your business is in Florida, Texas, California, and just about any other state.

This list may not be complete, however. You may be starting a restaurant or catering business, a painting or landscaping business, a computer repair or photography business, maybe even a car wash or office cleaning business. Whatever the case, check with leaders in your prospective industry for insights as to additional requirements that you may not have thought of. Consult with the necessary federal, state, and city agencies for final thoughts and of course.  Get your accountant’s input too. And by all means, use the list below as a solid starting point.

____ Order QuickBooks Pro and QuickBooks Enhanced Payroll. Cheapest price is on eBay when you buy them as a two-pack. [Business Beetle Note: you may or may not want QuickBooks. I highly recommended it to the new owner because she was going to be doing payroll. Quickbooks keeps track of all the state and federal withholding taxes and makes it SOOO much easier for your filings. I highly recommend it to you too.]

____ Apply for a Federal Identification Number (EIN).
Apply online at: http://www.irs.gov/businesses/small/article/0,,id=102767,00.html

____ Sign up with all WV state agencies at the same time! You can sign up for a WV Business License, WV Unemployment, WV Withholding, WV Sales Tax, even Workers’ Compensation. The WV Department of Tax and Revenue uses a site called business4wv.com to make it easy to sign up with all these agencies simultaneously. [Business Beetle Note: Not every state may have this feature. However, if your state does make this arrangement available, take advantage of it! It's a NO-BRAINER.]

____ Register for online WV filings. You can pay all WV taxes online. (You will have to do all the registration above first and get a WV State ID#. You may need to allow a couple of days to sign up for online filing since a WV ID# (which you get when you register as described above) is required in the setup process.) Register here: https://mytaxes.wvtax.gov/WV_xwTapMgr.aspx

____ Sign up for the City License. (You will have to have your WV business license/certificate when you register for a City License. So you have to register with the State of WV first.)

____ Sign up for the City B & O Tax. [Business Beetle Note: Not every city has a B & O Tax (Business & Occupancy Tax.) Call your local City Building or County Courthouse to find out for sure.]

____ Sign up for City Employee Tax. [Business Beetle Note: Not every city has a City Employee Tax. Check with your City Building or County Courthouse to be sure.]

So, You’re Open for Business – Let’s Keep It That Way!

While running a business has its many wonderful benefits, it’s no fun to be put out of business or at least be severely fined because you didn’t have the necessary paperwork and filings in place. So don’t procrastinate, do your due diligence and get the paperwork done. You only have to fill out these preliminary forms once!

By the way, if you’re trying to start a business while on a shoe-string budget, check out this article for some helpful tips: What Is A Good Small Business To Start from Home or Online With Little Money In This Economy?

How important is it to have a business plan in place? Well, imagine that you have been operating a part-time photography business and after only a year, you get audited by the Internal Revenue Service (IRS.)  After reviewing your records, they determine that your business is not a business at all. In fact, it is really just a hobby!

How devastating! This means that the camera you bought, the miles that you drove to your photo shoots, and a host of other items cannot be deducted as business expenses that contribute to a business loss. On top of that, the income you earned is just ordinary income that must be taxed at your highest applicable income tax rate. Could such a travesty of justice be avoided? Yes, and one of the key strategies is writing up a business plan.

A few years back, I was reading the book “Lower Your Taxes – Big Time!” by Sandy Botkin. Sandy is a CPA and former attorney and trainer for the Internal Revenue Service. Having worked on the inside, he learned that one of the IRS’s favorite weapons is to find a way to classify your enterprise as a hobby instead of a business. He says that one of the key factors in avoiding such a tragedy would be to have your business plan in place.

5 Steps to Writing a Business Plan

What’s the purpose of a business plan? Quite simply, it is this: It shows that you entered into the endeavor with the objective of turning a profit. How can you prove this? Be sure to include the following ingredients in your business plan:

1) Projected estimate income
2) Projected estimated expenses
3) Projected estimated profits
4) A solid basis for the projections
5) Dates spanning 5 to 10 years by which you plan to reach these projections

By mapping out your business plan with the above criteria, what are you hoping to accomplish? The goal is to prove that when you started this business, you weren’t messing around. You weren’t starting a hobby to kill time and entertain yourself. No.  You started a genuine business with the purpose of providing you with a solid part time or full time income.

What Does a Business Plan Look Like Anyway?

When a dear friend told me she was starting a photography business, I was worried that it could be the kind of business the IRS might look at and declare: “THIS IS NO BUSINESS! THIS IS A HOBBY!!” So, I told her she just had to have a business plan. So she wrote one up.  She gave me a copy to check out.  Take a look at the first draft that she came up with below. Compare it with the five elements listed above and see how it measures up:

Photography Business Plan 

1.  Learn to use Photoshop
2.  Organize business on Quickbooks
     a.Employee-Hire my Husband (setting up Qbks, taking pics with second camera)
     b.Expenses-trips, miles, photo-ops, equipment, software
3.  Get my own website
4.  Put my best pictures on istockphoto.com
5.  Purchase:
     a.Camera
     b.NIK software
     c.Tripod

So, what conclusions did you come to? Did I hear you right? Did you say that NONE of the 5 elements are included in this photograpy business plan? That is the correct answer. If the IRS saw this business plan, they might feel that it was just thrown together just before the audit. How can we make this Business Plan better?

First of all, the above plan is a great outline for a business plan.  All we really need to do is flesh it out.  Here are some questions my friend should ask herself about her business.  They are numbered 1 through 5 based on the “5 Steps to Writing a Business Plan” subheading above.

1.  INCOME:  What kind of income do I expect to be making with my business in a year, in 5 years, in 10 years?

2.  EXPENSES:  How much does it cost to buy Photoshop software, QuickBooks accounting software, a Nikon camera, a tripod, to set up a website, and to acquire other associated expenses?  If I were to hire my husband to help out, what would his wages be 1 year, 5 years, and 10 years from now be?

3.  PROFIT:  What will my profit be this year?  Will there be a loss?  At what point do I expect my business to achieve a profit?  How about in 5 years and 10 years?

4.  BASIS:  What will my marketing plan be?  Will I be handing out flyers, business cards, participating in home show displays, networking with friends, relatives, business acquaintances, etc.?

5. DATES:  Do I have projected dates associated with each of the above four items that show I am serious about this business?

You may wonder though, “What if I am way off on the dates?  What if I don’t achieve the income or profit I projected?”  No problem!  All you have to do is revisit your business plan each year and update it.  According to Sandy Botkin, some businesses have been dead wrong about their profit projections and have had losses year after year before turning a profit.  But each year those business update their business plans, refine their goals, and adjust their profit projections until they get it right.

Free Templates for Your Own Business

So maybe your business isn’t photography, maybe you want to open up a restaurant, start a non profit organization, or open a cleaning business. If you are looking for FREE business plan templates that relate to your particular business, you can find quite a few simply by doing a Google search. I recently did this myself and found a lot of freebies. Most sites will require you to enter your email address, subscribe to their newsletter, or become a member. It’s helpful to know that you can expect a trade off when you search for a free business plan template.

Another option is to use a customized template. The links below will take you to some websites that offer business plans taylored to different businesses. There is a small cost associated with these custom templates, but it’s worth getting it done by someone else if you think you will put it off. As I locate more industry specific business plan sites like these, I will post links to them here.  So check back periodically.  Click on the links below for some sample templates to help you format your own business plan.

Restaurant Business Plan – Click Here!

Have a different business? Click Here!

A Few Final Tips for a Great Business Plan

Please bear in mind that while I do have experience in business, I am not a CPA or an IRS tax attorney. The information in this article may not be complete for your business. So be sure to get with a CPA, attorney, or at least an expert in your field for further information on how to compile a solid business plan that lines up nicely for your particular business.

Additionally, if you would like to check out some other resources about writing a Business Plan, I would definitely recommend that you pick up the book “Business Plan for Dummies.” You’ll find that the book doesn’t get bogged down in a bunch of unnecessary details. It’s designed with the dummy, er, uh the beginner in mind!

What about business plan software? Keep in mind that writing a business plan IS NOT rocket science. The simple suggestions listed in this article can help you brainstorm tons of data with which you can compile a hefty business plan. But if you must make it brain-dead easy, start shopping for software. Just remember that sometimes software can make it too easy to construct a business plan and may not allow for the creativity and uniqueness that comes from making your own. Additionally, if you are looking to utilize a lending agency or venture capitalist, you don’t want your business plan to look canned! It should exude originality and heart.

In conclusion, the ultimate goal is to have a wildly successful business. But don’t forget to put it on paper while you’re at it! Take the time to sit down and write your business plan. You only have to do it once!

By the way, if you’re right in the midst of trying to come up with what kind of business to start, check out the following article here at Business Beetle: What Is A Good Small Business To Start from Home or Online With Little Money In This Economy?

Back in 1983, my dad had been laid off, downsized, bruised, battered, and hung out to dry by countless coal mines and factories. It was a dark time in the United States and in the Ohio Valley in which he was raising his four boys (one of which is yours truly.) The country was enduring one of the most difficult recessions since the stock market crash of the 1930′s.

My dad was sick and tired of the pain and suffering that went along with working for “the man.” He had been let down too many times and he had a family to feed. So he took the bull by the horns, so to speak, and decided to start his own business. The first question he had to answer was . . .

What Is a Good Business to Start in this Economy? A Service Business!

Of all the business models out there, my father chose to start a carpet cleaning company, which of course is a service business. Why did he choose the service business route?

There are many service businesses that can be started with little money. Other business models (often retail-oriented businesses) may require a lot of cash up front in order to purchase inventory, equipment, and other necessary items. If you don’t have the cash, you might need to get a loan from a friend, a bank, or another lending agency. And let’s be realistic – who is going to give you a loan if you have been laid off, don’t have steady income, or have no previous success in starting a business.

Choose Your Business Now!

So then, what is a good small business to start? Begin by taking a good look at your current skills, experiences, and knowledge.

Are you an excellent cook? How about a catering business?

Do you have a passion for cleaning? Why not start a cleaning business?

Are you handy around the house? Could you start a handyman, plumbing, or remodeling business?

Do you play a musical instrument? Start giving lessons.

Do you have any specialized equipment or supplies at your disposal that could be used to earn an income?

Start Your Business Today – By Doing Some Freebies

Since 1983, our family carpet cleaning business has grown quite a bit. But we have stuck to the basics! One strategy that has always worked and continues to work for us is doing a free demonstration.

For new customers that may be hesitant about using our service, we offer 100 square feet of cleaning for free. There is no obligation. The customer doesn’t have to buy anything else. No bait and switch, just clean carpet! Can you see how this strategy will work for you in your new business?

If you want to start a catering business, for example, tell a friend that you will cook all the food for an upcoming party. Have them supply the food, and you work your magic!

If you want to start a handyman business, use the tools you have on hand to do repairs for friends and family. Have them supply the necessary materials, and you take care of the rest.

Important:  Start accumulating the positive comments of these valuable people and formulate them into a list of referrals and testionials that you can share with prospective customers. You have countless friends, old and young alike, who would love to see you succeed in your new business.  Let them share their positive feedback and give them your business cards to share with others.

If You Think You Can Handle It, Chase Your Referral Sources

This is an advanced technique, but if you can master it, your business will grow and grow and grow!

Ask yourself, “What professionals are in a position to send me some referrals?” For example, when my father started his carpet cleaning business, he networked with designers, carpet dealers, and others who could potentially refer there own customers to him.

Now apply this principle to your own business. Take the testimonials of your friends, a business card, and a box of donuts and go to your prospective referral sources and offer them a free sample of your service (like you did for your friends.)

You may or may not get referrals on your first visit. Just put these professionals on a route sheet and visit them periodically. Your goal is to get them to know you, trust you, and eventually refer you!

The Recap:

Seriously consider starting a service business. Utilize your current assets, skills, and interests to give yourself a foothold. Perform some free services for friends. Accumulate testimonials to share with new customers. Take the testimonials and some free services to prospective referral sources.

So don’t let the economy, a recession, layoffs, downsizings, or any other life disasters stand in the way of the financial freedom that can come from starting your own business. Take charge and start your new business today!