It is not like you can just jump up and start selling something and say that you are in business for yourself. There are some requirements that need to be put in place if you want to start your business. These include; having some finances, depending on the size of the business the amount of finance will vary, a viable business model and some legalities in place.
Deciding on the type of ownership
Once you have a viable business plan in place, you need to decide how you will manage the business. You need to decide if the business is going to be a sole proprietorship, partnership, corporation, Limited Liability Company, society or a co-operative.
The main difference between a limited liability company and that of a proprietary is that in a proprietorship the onus of loss rests on the owner, who is singly responsible for the failure or success of the business. A limited liability company has no single owner and if the business runs into a loss the partners or investors cannot sell the shareholder’s assets to recover their investment. The liability is “limited” that is why it is called a limited liability company.
Create a financial plan
One of the most vital parts to a business is the financial plan; what is the outgoing cash flow to wholesalers, investments, employee wage, etc, and what is the incoming cash flow from sales and credit funding from investors/banks which accounts for the overall revenue.
The most common method of getting the initial funding is through loans in business, often from banks or other privately registered financial organisations. It is also fairly common to receive financial backup through angel investors who then essentially own a certain percentage to your company’s stock. A business unsecured loan is less common as it generally requires a higher interest rate, though they are lower in risk than secured loans. Whatever you plan is, you should have it looked over by an attorney to ensure there are now flaws in the plan which may be used against you.
Choose a trade name and register it with your business
You will need to come up with a name for your business, register it and provide these documents, along with your taxation documents to open a bank account for your business.
Choosing a name is not as easy as naming your first born. You will have to submit your trade name for approval, which is a lengthy process. A business name must not imply that it is representing the government of a state of country; it must also never rhyme with, sound similar to or even look like the trade name of any other existing business in the area. You can imagine how long it takes to verify this. However, in some instances it is as easy as walking in and out of the registration office with a legal representative.
However, if you are offering a professional service and are not operating under any trade name, you do not need to register yourself.
Do you need a license?
Some states require you to obtain a license to operate a business, even a professional service. This is especially true if you are operating from your home or a municipality area. You should either hire the services of a professional to help you register and get the required licenses, or you should do your own research and talk to the authorities in the concerned municipalities and do your own registrations and licensing.
If you are offering professional services such as legal or medical among other technical services you should get insurance. Many professionals get sued and are stripped of everything they own. Another great idea along with getting insurance is to have all property purchased on your spouses’ name. This will prevent any loss in case a court orders recovery of dues by auctioning your property.
With these safeguards in place you are ready to set out and make money from your venture.