Small firms are the backbone of the American economy. In fact, the United States Small Business Administration (SBA), Office of Advocacy reports in their 2003 “Small Business Profile” that half of America’s non-farm economic commerce was generated by small businesses.
The March 12, 2009 “A Special Report on Entrepreneurship, The United States of America” article printed in The Economist, says that between the years 1996 and 2004, each month over half a million small businesses were created in the United States.
Early Steps Involved in Starting a Small Business
Business owners tend to be creative people who have a strong entrepreneurial spirit. They are leaders who are willing to take necessary and wise risks to chart their own course in the business world.
People who want to start their own company, an organization that might be as small as one to five people, should contact the Internal Revenue Service (IRS) through their official website and file an Employer Identification Number (EIN). During the filing, business owners will have to identify the type of business they are operating.
For example, they will have to specify whether the company is a sole proprietorship, a partnership or a corporation. Sole proprietorships are owned by one person. Partnerships are generally owned by 2 to 20 people and corporations can be owned by as many as 50 people.
A key difference between the organization types is that a sole proprietor’s assets and debts are combined with those of the business. On the other hand the individual assets and debts of partnership and corporation owners are kept separate from those of the business.
Register With State and Local Agencies
Next entrepreneurs will have to register their small business with state and local tax agencies so they can collect and file reports like sales and use taxes. After the legal paperwork is completed including filing for building permits, licenses and insurance, advertising and marketing their products and services is paramount for the success of the small business.
Distributing press releases through companies like PRWeb, PR Buzz, E-Releases, Business Wire and PR News Wire, is a proven way to create a buzz around business products and services. Keep press releases to one to two pages and write them so that they read like newspaper articles.
Contests, local celebrity appearances and community events are other ways to grow a small business. Each time an entrepreneur donates to a nonprofit or sponsors a community or national nonprofit event, they can do media interviews to let the public know about the positive work they are doing. Over time they can become viewed as a strong community supporter which, in turn, can find them receiving more business support from area residents.
Importance of Accurate Record Keeping for Small Businesses
It is important that small business owners keep accurate records of all assets and debts. This includes sales receipts, marketing costs and revolving debt like utilities, telephone and contractor invoices. Company owners will have to access these records to file their annual income tax.
Typically, in addition to an IRS Form 1040, a Schedule C is the only form that needs to be completed by sole proprietors. Partnerships and corporations may need to file additional tariffs such as federal income withholding taxes, Federal Unemployment Tax Act (FUTA) taxes or 1099s.
The rewards of owning a small business can be lasting. One’s work hours might increase, particularly during the company’s early years. However, people who go into a line of business that marries with their deepest passions might find that operating a company brings them a tremendous amount of personal enjoyment.
To start a small business, entrepreneurs should file an EIN with the IRS. They should also register with their state of municipal tax agency so that they can collect and report local taxes. Company owners can use press releases, contests, local celebrity appearances and community events to advertise their business products and services. It is important that entrepreneurs keep accurate employee, contractor and sales and expense records as these records will be used to file annual federal and state taxes.
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