Steps to Start Your Business
- Step 1: Select your industry type
- Step 2: Write your business plan
- Step 3: Financing your startup
- Step 4: State licensing
- Step 5: Hire an Accountant & Attorney
- Step 6: Pick a location
- Step 7: Obtain an Employer Identification Number (EIN)
- Step 8: Choose a business entity type
- Step 9: Register your trade name
- Step 10: Apply for a business license
- Step 11: Get business insurance
- Step 12: Learn how to do business with the government
- Step 13: Workforce development
- Step 14: Marketing your business
- Step 15: Network
Select your industry type
The first step to begin the business process! Many businesses fail because the research and strategy necessary to start the business do not happen. It is important to select the right industry that meets your needs, not only because it is something you are interested in, but also because it is something that reflects your experience, management style, leadership, background, and specialty.
Write your business plan
A business plan (BP) is a live/real-time document and can be the very reason whether your business will succeed or fail. The BP consists of how, when, where, and what you need to do to successfully, start, and operate your business. Unfortunately, many start-ups skip this crucial step. Don’t make this mistake.
The BP is used to ensure that the assumptions made regarding your industry type are completely accurate. It is developed first for you: the entrepreneur. It may also be needed if you will secure leased retail or commercial space. It is also needed if you will acquire capital from a financial institution. The length of the business plan varies depending on the complexity of the business industry. The typical business plan ranges from ten to twenty pages.
Can you write the plan yourself? YES! Watch for our Business Plan Workshops on the calendar of upcoming events.
Mason SBCD counselors are available at the PW Economic Development office in Woodbridge to help review the elements of your business plan. Schedule an appointment.
Financing your startup
A new business can’t have too much capital. Your business plan will determine how much you’ll need to start and manage your business successfully. Include financing for unforeseen circumstances such as business continuity planning or other potential business emergencies.
Common Forms of Capital Sources for a Small Business Start-Up:
- Personal Savings
- Friends & Family
- Traditional Lending
- Commercial Lending
- SBA Guaranteed Lending
- Venture Capital
Shop around for a financial institution that lends to small businesses in your industry sector.
Before you set up an appointment with a lender, be sure you have answers to the following:
- Critical Question: What is the five-year outlook of the industry in which you are starting the new business?
- If you obtain a loan, how can the business repay the loan?
- Is cash flow greater than debt service?
- Can you repay the loan if the business fails and is collateral sufficient to repay the loan?
- Does the business have a system to collect earned revenue?
- How will the business control the inventory?
- How will the business pay its bills?
- Do you have officers and are they committed to the business?
- Does the business have a profitable operating history?
- Does the business match its sources and uses of funds?
- Are sales growing?
- How does the business control expense?
- Are profits increasing as a percentage of sales?
- Is there any discretionary cash flow?
- Who is your competition and what are their strengths and weaknesses?
Questions to Ask the Lender
Ask the bank to confirm the terms and conditions of the loan in writing, and carefully analyze them before you sign any agreement. These details should include:
- The amount you are borrowing
- The interest rate you will be charged
- Details of other charges the bank propose to make
- How and when you should make the repayments
- Any security required
- Any arrangement fee to cover the costs of setting up the facility and finalizing the security arrangements
- When the loan will be reviewed
- What sort of circumstances will trigger an early review or repayment; and
- What minimum information needs to be provided at a review.
It is also recommended to ask the following questions when you wish to borrow from your bank:
- How much in total will the loan cost me?
- Are there any penalties if I repay the loan early?
- How are my other loan packages affected?
- Could you transfer money between my accounts without asking me?
- Under what conditions would you be able to call in the loan?
- How long will it take to obtain this loan?
- Can I receive a grant for my business?
If you are a non-profit organization looking for start-up money, you may be able to obtain grants.
If you are opening a for-profit business, the likelihood of securing a grant is remote.
Obtain a list of current financial institutions with contact names of organizations participating in the SBA’s financial programs. You’ll also find the current ranking of lenders working with small businesses here.
The Virginia Department of Professional and Occupational Regulation (DPOR) regulates more than 30 occupations and professions through 19 boards composed of practitioners and citizens appointed by the Governor. DPOR licenses or certifies over 300,000 individuals and businesses ranging from architects and contractors to cosmetologists and professional wrestlers.
If you believe your industry sector is regulated by the state, visit DPOR’s Website. You’ll be able to download the appropriate forms and register for certification courses.
Hire an Accountant & Attorney
It is important to hire an accountant and an attorney to start your business off right and save you from troubles in the future. These two professions will cost some overhead, but both are worthwhile investments for your new business. Consider them as partners in your success.
Tip: hire an attorney and accountant who practice in your specific industry or business field: this isn’t the time to hire a friend. Do your homework and find the help that will align with your industry.
Pick a location
The location of your business is extremely crucial to the success of your business.
If you are planning to start a business in your home you must fill out a home employment permit through the Prince William County Planning and Zoning Office. There is no additional cost associated with acquiring a home occupancy permit.
Note: If you reside in an apartment building, check with your leasing agent to ensure there are no restrictions on operating a business out of your rental home.
Commercial Real Estate
If you need to lease space in Prince William County, we recommend that you speak with Prince William County Economic Development, hire a broker and start six months to one year in advance. Before you speak with a broker, make sure you know how much space you need and the amount you can afford per square foot. This is where the business plan comes in handy!
BEFORE PURCHASING A BUILDING OR SIGNING A LEASE check in with the Small Business Project Management Team. You will be assigned a project manager to assist you with the process and help you gather information on the current status of the site, building, and tenant space to determine the impact of the existing conditions on the process of opening your business. Contact the Small Business Project Management Team through Development Services for more information.
As a small business owner, you will need to familiarize yourself with the Americans with Disabilities Act (ADA). There are certain federal requirements in the build-out and maintenance of both commercial and retail locations.
Please review the small business publication on the ADA website to ensure that your business complies with ADA requirements.
All businesses in Prince William County are required by law to recycle materials it generates. Prince William County Code requires all businesses and non-residential properties located in Prince William County to annually report their recycling activities to the Department of Public Works by February 15 for the previous calendar year.
The report takes 10-15 minutes and should be completed by the person who is most familiar with trash and recycling collection for the property or business. Home-based businesses and businesses located within the incorporated towns of Dumfries, Haymarket, Occoquan, or Quantico are not required to file this report. For additional information contact: Prince William Public Works
Obtain an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is also known as a federal tax identification number and is used to identify a business entity. Generally, businesses need an EIN. You may apply for an EIN in various ways, and now you may also apply online. If you apply for an EIN online or by phone the entire process will take approximately one week. If you apply by mail, the process may take four to five weeks.
For more information visit the Internal Revenue Service to see if you should apply and how.
Choose a business entity type
In the United States there are 6 major types of business entities to form a business:
Sole Proprietorship: The vast majority of small businesses begin as sole proprietorships. The firm is owned by one person and usually, the individual is who has day-to-day responsibility for running the business. Sole proprietors own all the assets of the business and the profits generated by it. They also assume complete responsibility for any of its liabilities or debts. In the eyes of the law and the public, you are one and the same with the business.
Partnership: In a partnership, two or more people share ownership of a single business. Like proprietorships, the law does not distinguish between the business and its owners. The partners should have a legal agreement that sets forth how decisions will be made, profits will be shared, disputes will be resolved, how future partners will be admitted to the partnership, how partners can be bought out, or what steps will be taken to dissolve the partnership when needed. It is difficult to think about breaking the business apart when in the start-up phase, but many partnerships split up during a crisis, and unless there is a defined process, there will be even greater problems.
General Partnership: Partners divide responsibility for management and liability, as well as the shares of profit or loss according to their internal agreement. Equal shares are assumed unless there is a written agreement that states differently.
Limited Liability Partnership: “Limited” means that most of the partners have limited liability (to the extent of their investment) as well as limited input regarding management decisions, which generally encourages investors for short term projects, or for investing in capital assets. This form of ownership is not often used for operating retail or service businesses. Forming a limited partnership is more complex and formal than that of a general partnership.
Limited Liability Company: The LLC is a relatively new type of hybrid business structure that is now permissible in most states. It is designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. LLC’s must not have more than two of the four characteristics that define corporations: Limited liability to the extent of assets; continuity of life; centralization of management; and free transferability of ownership interests.
Corporation: A corporation, chartered by the state in which it is headquartered, is considered by law to be a unique entity, separate and apart from those who own it. A corporation can be taxed; it can be sued; it can enter into contractual agreements. The owners of a corporation are its shareholders. The corporation has a life of its own and does not dissolve when ownership changes.
To register and organize your business in the Commonwealth of Virginia, visit Virginia State Corporation Commission.
Register your trade name
Your trade name is what makes your business “uniquely” you. A “Fictitious Trade Name” is required to be filed when a business is operating under an assumed name.
There are three types of Fictitious Trade Name applications:
If a company is incorporated in Virginia and is doing business in Prince William County under a fictitious name, the Company must register the fictitious trade names with the County. The Commissioner of Revenue issues your trade name. Apply for a trade name.
Apply for a business license
The business license is the way you pay for your local taxes.
- Apply here for your Prince William County Business License
Business and Professional Occupational Tax (BPOL)
Commercial businesses and individuals engaging in home occupations or self-employment who expect their business gross receipts or purchases in the case of wholesale merchants, to exceed $500,000 for the license year must file and obtain a business license from the Prince William County Finance Department. For businesses that do not anticipate gross receipts, or purchases in the case of wholesale merchants, to exceed $500,000 for the license year, no payment is required. However, these businesses must still file a business license application.
For businesses who expect to exceed the $500,000 threshold:
- New businesses must apply for a license and pay the license fee (or BPOL tax) within 30 days from the date of beginning business.
- Businesses issued a license for the preceding year must apply for a license and pay the license tax by the due date.
- Persons starting a home-based business need to apply for a business license and pay the business license tax if they expect gross receipts to be more than $500,000 per year.
For a list of all Prince William County tax rates please visit the Prince William County Government website.
Get business insurance
In addition to the attorney and accountant, your business will need an insurance professional in the start-up process. Insurance is important to your business and equally important to your other business relationships. Here’s one example: If you choose to lease office space, the landlord will typically require that you furnish a certificate of insurance or be listed as an additional insured on the policy as assurance your business will not vanish overnight in the event a loss occurs.
Types of Business Insurance:
- Business property insurance (buildings, loss of income, earthquake, and flood)
- Liability insurance (personal and advertising injury, fire legal liability, products and completed operations, medical expense or medical payments, and general liability for your premises)
- Worker’s compensation insurance (See information below)
- Other insurance coverage (auto coverage for company vehicles and health insurance)
- Excess liability coverage
- Employment practices liability coverage
- Life insurance
- Workers’ Compensation
Any employer who has three or more regular employees is required to provide workers’ compensation insurance coverage at no cost to the employees. The employer may either purchase the insurance through a private insurance company or apply to the Workers’ Compensation Commission to be a self-insurer.
Learn how to do business with the government
Many small business owners want to offer their goods and services to the local, state, and the federal government.
Prince William County Government is a Central Purchasing Agency. You can find out about bidding on work with the County on this County website.
The Commonwealth of Virginia, as well as many local jurisdictions in Virginia, use the state’s purchasing engine. The Commonwealth spends approximately $8 billion a year in the purchase of goods and services. There is a fee to participate in this service.
The Small Business Administration offers an excellent Web site to help create your business development strategy.
The Procurement Technical Assistance Program (PTAP) will work with you to answer bids for free. They are a part of the Mason Enterprise Center and the Defense Logistics Agency. Click here for more information on this free program.
If you would like to find other current Federal opportunities visit: fedbizopps.gov
The Workforce Services division of the Virginia Department of Business Assistance provides customized recruiting and training services to companies that are creating new jobs or experiencing technological change. With strong support from the Governor and the General Assembly, Workforce Services’ programs are completely state-funded.
If you are hiring employees, you will need to pay the state an unemployment tax. Need more information on this step? Reach out to the Virginia Employment Commission at 5520 Cherokee Avenue, Suite 100, Alexandria, VA (703) 813-1300.
Marketing your business
Often an entrepreneur’s focus is on the first thirteen steps of the business checklist and neglect to develop a marketing plan. It is critical to your success that you have a strategy to market your business to your targeted audience.
Web sites which give an overview on marketing initiatives: SBA Web site
There are numerous opportunities to promote your small business to potential clients, the business community, and more through networking opportunities.
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