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I love the entrepreneurial spirit. The courage and foresight necessary to take an idea, mold it into a plan, and then work diligently to breathe life into it are what built the United States. Some successful startups stay as “mom and pop” operations, while others grow to fantastic proportions. I look back at the start of my freelance accounting practice nearly twenty years ago as a pivot point in my career and wealth building.

Working with entrepreneurs over the years has taught me that the very strengths that allowed them to build their business can also be to their detriment when it comes to actually running their business. Their creativity and “big picture” mindset allowed them to see things that, quite frankly, my more analytical mind often misses. But this can also lead them to overlook the small details that can create big problems down the road.

Small Business Startup To-Do List

No matter the size of the small business you operate or hope to operate one day, here are a few key things that I think every entrepreneur needs to address. Most, if not all, of these, can be handled by you, but often they are overlooked until a problem arises.

1. Name Your Business

Take the time to determine the name of your business before you begin operations. You’ll need it for many of the steps below, so get it done early so you don’t have to re-do any other steps because you’ve changed the business name.

If appropriate, check to make sure your business isn’t trademarked. Also, check with the Secretary of State’s office in your state to make sure the name is available. A simple Google search for “<your state> Secretary of State” should lead you to a searchable, online database.

2. Write Your Mission Statement

It sounds odd for an analytical CPA like myself to talk about “mission statements,” but taking a few minutes at the beginning of your company’s life to define what it is there to do is a great investment of time.

Often small businesses start with a hobby or idea, but exactly what the business will do (or won’t do) isn’t well defined. You don’t need to hire a slick marketing firm or spend untold hours getting every comma absolutely correct. The point is to decide – in advance – the who, what, when, and WHY you’re starting your endeavor. It can help keep you from getting sidetracked later!

3. Get an EIN – Even if You’re Unincorporated

Often a small business simply operates as a “sole-proprietor.” In other words, they are not an incorporated business, but simply an extension of the owner. The activity of the company will be reported on your personal tax return to the IRS and your state (and possibly local) governments. This is perfectly fine for many businesses. I do recommend, however, that you get an Employer Identification Number (EIN) from the IRS, even if you will not have employees.

Why do I recommend it? Under current law, any customers paying you (as a sole proprietor or an LLC owner) over $600 in a calendar year are required to report to the IRS the total of the payments (on Form 1099-MISC). On this form your customers will need to include an identifying number for you so the IRS can match it to your tax return. If you don’t have an EIN, they would use your Social Security Number.

In this time of vast identity theft problems, why would you want to distribute your name, address, and SOCIAL SECURITY NUMBER to your customers? An EIN will avoid this obvious problem.

4. Open a Business Bank Account

Once you have your EIN you can easily open a bank account in the name of the company. I am a big advocate of keeping your personal activity personal and your business activity separate.

First, it makes keeping track of the business’s profitability much easier (see below). You don’t miss legitimate business tax deductions because it was lost among your personal transactions.

Second, if you do set up a corporation or an LLC, it preserves the personal protection provided when they were established. What’s the point in setting them up to protect your personal assets only to co-mingle your funds and lose that exact protection?

Third, it helps prevent you from accidentally overdrawing – or under-drawing – funds to be used for personal purposes. If your personal funds are mixed in with the business, how much of the balance is “yours” and how much is for the business to use to take care of its bills?

5. Get the Appropriate Business Licenses From Your Local Government

Be sure to check with your local government to determine any business license requirements. This is determined by locality, so there is no way to describe what, if any, license your particular business would need.

In my home county, I don’t need a business license unless I run a funeral home or are a fortune teller (interesting combination – I guess the fortune teller can tell you when you’ll need to funeral home!). Just down the street, within the same county, is an incorporated town that does require a business license for virtually all companies located there.

The point is to make sure you stay in good standing with the federal, state and LOCAL regulators.  A simple phone call or Internet search is usually all that’s needed.

6. Keep Good Records

With the low cost and easy availability of many record keeping options, there is no reason to not do this right. It doesn’t have to cost a lot of money and will, in fact, save you money. Few things are more time consuming for a CPA (that you are probably paying by the hour) than having to work through a big box of receipts handed to them at the end of the year.

Whether you purchase inexpensive accounting software like Quickbooks or use a simple spreadsheet – or even use a hand written columnar pad (if there’s not too much activity) – please take the time to address this issue at the very beginning. The small cost and time spent upfront will save you money in the long run.

Also, there is no way to accurately determine the profitability (or loss!) of your business if you don’t keep good records. Build a habit of keeping your records constantly up-to-date! That’s what successful businesses do, so you should too.

7. Make Estimated Tax Payments (If Necessary)

A common mistake small business owners can easily make is not segregating funds for their tax liability, or they fail to send in the payments in a timely manner. The IRS and many states require estimated tax payments to be made throughout the year. These rules vary by state and by each taxpayer’s individual situation.

Keep in mind that in addition to traditional income tax, self-employment tax (currently 15.3%) is generally due on the profits (not gross revenue typically) of sole proprietorships and LLCs. I often see clients setting aside 35% to 45% of their profits to use for estimated tax payments. Penalties and interest charges can be steep if you fail to make these payments in a timely manner, so be sure to learn the specific requirements for your situation.

👋 Please note: Taxes are a complicated topic and well beyond the scope of this post. Everyone’s tax situation is different. Please educate yourself, or engage a competent professional, about your specific situation before making any tax-related decisions.

8. Adequately Insure Your Small Business

Finally, make sure you’ve adequately insured your business operations and your assets. All insurance is essentially a risk transfer product. You are moving the risk of loss to an insurance company in exchange for a premium payment. The risk of any losses that you cannot afford to pay yourself should be assigned to an insurance company via a policy.

Also, some states and localities require some forms of insurance (for example, workers’ compensation insurance if you hire employees). Talk with an insurance agent familiar with the rules in your area to make sure you’re adequately covered.

After an accident and potential loss has been incurred is the wrong time to find out you’re not properly covered!


Don’t let these issues discourage you from starting the small business you’re dreaming of, nor should you panic if you’ve already started your business but not addressed these issues. Simply take a moment to get them resolved now so you can focus on growing your dream, not dealing with administrative problems!