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    Tips for Starting a Small Business

     Tips for Starting a Small Business

    The Small Business Administration (SBA) defines a small business as any privately owned enterprise with 500 or fewer employees. Since the government recognizes that small businesses are the backbone of America’s economy, they’ve created several loan and grant programs to assist entrepreneurs and small business owners alike to help them get started, maintain their operations, or expand when needed. Here are some tips to help you start a small business from scratch

    What Is a Sole Proprietorship?

    You need to register your business as a sole proprietorship with your state. All businesses must have some sort of registration, but most small businesses operate as sole proprietorships because they are much easier to form and require fewer documents. A sole proprietorship does not have shareholders, only owners; it has no legal distinction between owner and business assets, so if anything happens to your business you can lose all of your assets personally. For many small-business owners, these risks aren’t worth taking—and if you ever plan on raising outside funding or growing large enough to hire employees, they definitely won’t be worth it. Forming a partnership or corporation will allow you to insulate yourself from personal liability while minimizing taxes by keeping profits separate from personal income.

    What Is a Partnership?

    The SBA defines small businesses as those that are independently owned and operated and have fewer than 500 employees. In addition, they must be at least 51 percent owned by U.S. citizens, permanent residents, or domestic corporations (known as U.S. business entities). Partnerships fall into a unique category in which two or more individuals own an interest in the business and contribute money, labor or property to it. A partnership is generally not subject to federal income tax but passes taxable income through to its partners for their individual income tax returns according to each partner's share of ownership in the firm.

    How to Register Your Business Name

    Before you launch your business, one of your first tasks is going to be registering your business name. This can be done in two ways—either by filing an assumed name certificate with your local county clerk or by submitting articles of incorporation. Both documents serve to establish that you own and operate under a particular name, but there are key differences between them. The first step in choosing which method works best for you is to figure out what kind of legal entity you're going to start as—corporation or partnership? Either way, it's important to register both before launching (or announcing) your small business so that other people don't have grounds to accuse you of infringing on their intellectual property.

    SBA Loans & Other Funding Options

    The Small Business Administration is one of several government-backed agencies which offer loans, grants, and other types of funding to small businesses. Depending on your circumstances, you may be eligible for an SBA loan or another type of funding. Be sure to explore all options before starting your business - there are plenty out there! To learn more about your options, see our SBA Loan Guide or read on below

    Get Affordable Health Insurance

    If you're starting a small business on your own, chances are you won't have access to affordable health insurance. Small businesses can apply for group plans through healthcare.gov—not only will these plans be more affordable than buying an individual plan, but if you qualify, they can also help offset some of your other expenses and costs associated with starting your business. With group plans, however, come certain limitations: Group plans require that everyone in your company receives coverage—and everyone has to stay covered until you pay off all of your loans from healthcare.gov (this is called maintaining eligibility). If someone leaves or drops out of your company's health plan mid-year?

    Create Multiple Streams of Income and Take Home Profit Now

    The number one reason small businesses fail is that their owners don’t create multiple income streams and/or take home profit right away. If you want to build a solid business foundation and increase your chances of success, you must do both of these things. You can’t wait until you have sales before you set aside money to pay yourself. Set aside an amount equal to your living expenses and save it so that if your business doesn’t succeed—you can still survive on what you put aside. If it does succeed, put more money into building other income streams so that by year three or four, in addition to taking home profit each month—you could also be putting away half your net income or more in savings or investments.

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