You Have a Great Idea, Now What?
You’ve spent hours dreaming, researching and planning, and you are finally ready to take the leap! It can be a little overwhelming if you are starting from the ground up. Here are some tips for startups in Kentucky and Indiana, to help you build on a solid foundation.
Form your team of advisors
This is a very important step. You will avoid numerous pitfalls if you form connections with a reputable business attorney, a trusted CPA, a savvy banker, and a proactive insurance agent right from the start. These professionals will help you navigate safely through the many challenges that face a new business. Ask owners of established businesses, or perhaps retired business owners, to serve as your mentors, and listen to their advice.
Determine which entity type is best for you
Two of the most important questions to answer are: 1) how does the structure impact my personal liability for things that happen in the business; and 2) how does the structure affect the amount of tax I will have to pay? You can research this online at sites such as the IRS Small Business and Self-Employed Tax Center or SBA.gov, but consult with your attorney and tax advisor to make sure the proper paperwork is completed and filed.
Consider business incentive programs
Decide on a name and register your business
The legal name of a business is the name of the person or entity that owns the business. One may choose to do business under a fictitious name (assumed name, or DBA “doing business as” name). Be sure to check to see if the name is available, and if so, register it for your exclusive use with the Secretary of State (click for Kentucky or Indiana) and County Recorder or County Clerk.
Obtain necessary business licenses and permits
The first step is to obtain an employer identification number (EIN) from the IRS. The local, state and federal requirements to legally operate your business can vary depending on the type of business, business structure, business location, etc. Kentucky has a One Stop Business Portal that is very helpful. Indiana has a similar site.
Develop your business plan with financial projections
This is where you put your vision on paper. The process of developing the plan is as valuable as the plan itself, so even if it is contained in a notebook that only you will see, invest the time. If you need it to obtain financing, seek help from a professional. It will be well worth it.
Open a bank account and obtain needed funding
In addition to traditional small business loans, federal, state and local governments provide access to a variety of financing programs to help small businesses. Utilize this Loans and Grants Search Tool to get a list of programs for which you may qualify. Access Ventures is another great resource when it comes to access to capital – read about the new regional capital fund here.
Address insurance needs
Some types of coverage are required by law, others simply make good business sense. Liability, property, business interruption, key man, home office, automobile and umbrella insurance are forms of coverage you’ll want to discuss with your agent.
Hire the right people
Personal referrals are often the best choice, so put the word out about what you are seeking. There are also many online sites where you can post jobs or search for candidates, such as monster.com, careerbuilder.com, indeed.com, simplyhired.com, indianacareerconnect.com (free IN site), Kentucky Career Center (free KY site), LiveInLou.com and others. Whether you have one employee or many, as a new employer you are subject to federal, state and local tax withholding and/or filing requirements. Refer to IRS Pub. 15 Employer’s Tax Guide for federal obligations.
Choose a user-friendly accounting application
You want one that provides the current, anytime/anywhere information you need to run your business, integrates well with other technology, and makes it easy for you to collaborate real-time with your financial advisors. Some of my favorites are Quickbooks, Xero, Bill.com and Gusto (https://gusto.com/instant-demo) for payroll/HR.
Plan properly for tax time
While sites like the IRS Small Business and Self-Employed Tax Center and the Gig Economy Tax Center can provide helpful information, it is always best to consult a tax professional to ensure you are calculating and remitting quarterly estimated taxes properly and maximizing available business deductions.
Take advantage of local resources
Check out the Entrepreneurship section at thinkkentucky.com or the Entrepreneur’s Guide to Starting a Business in Indiana. Also, usa.gov/business.
In the Louisville/Southern Indiana area:
- Doing Business In Louisville guide from Louisville Forward
- StartupGrind Louisville
- UofL Forcht Center for Entrepreneurship
- Venture Connectors
- LEAP (Louisville Entrepreneurship Acceleration Partnership)
- Bunker Labs
- Sheltowee Business Network
- Co-working spaces such as Story Louisville, iHub, The Root, Yes Working, and others
Promote your business
Let people know who you are and what you do. Don’t underestimate the value of social platforms for connecting with your target audience and developing personal relationships. For more tips on how to maximize the time you spend online and at events, contact DMLO Marketing Director Delene Taylor.
Adapted from article published in Business First, March 2011
More information and resources
Much of business success can be attributed to attitude and perseverance, and forming the right relationships. For more information on any of the information discussed above, contact Delene Taylor.