Many entrepreneurs consider owning a business in New York City to be their American dream. Sadly, not all of them get to enjoy the dream for long as their establishments never last. They are forced out because of large debts and frustrations. In reality, something must have gone wrong to make their businesses collapse prematurely.
According to the Small Business Administration (SBA), only 1 out of 5 businesses survive the first 5 years. SBA argues that issues like finance misappropriation, poor choice of business line and lack of better management skills are some of the main reasons for premature business failures.
The truth is that NYC is a leading finance center and major economy player in the world. Thus, if you play your cards right, there’s potential to start and grow your business. Here’s a comprehensive guide that focuses on the former:
Step 1 – Business Identity
Before you can start planning for your business, you must define your business structure. The structure is your identity and so you have to decide on it carefully. Options to consider include:
- Sole proprietorship – This means you are the only owner and principal decision-maker of the business.
- Partnership – This requires you to collaborate with at least one person and get enjoy equal rights and obligations.
- LLC (Limited Liability Company) – An LLC is a separate entity that runs a business without directors.
- Corporation – Unlike an LLC, a corporation has structures for directors and shareholders who are influential in the management of the business.
Step 2 – Business Plan
Once your business identity is established, the next step is to create a business plan. Here are some of the things to consider in your business plan:
Business financing – You have to know how much money you need to start the business and how you can raise it. You may have to consider loans and community incentives in addition to your savings.
Marketing – You need to define ways for reaching your target audience. Both digital and offline marketing is recommended.
Product development – The idea of starting a business is to fulfill a market niche that you have identified. So, your business plan should identify the problems you are going to solve and convince the consumers that you have the solutions.
Step 3 – Business Registration
You can’t start a business in NYC without registering it. Like any other city, there are specific requirements you need to meet. For a start, you need a business name that is unique and one that identifies with what you do.
If your business is a limited partnership, an LLC or a corporation, the registration is done at the New York State office. If it’s either a sole proprietorship or general partnership, then the registration is done at the county clerk’s office.
The fee for registering businesses depends on the business structure. An LLC, for example, may cost $270-$1,325 to register.
Step 4 – Tax Registrations
You must be tax compliant before starting a business in NYC. Essentially, you need to register for the EIN (Employer’s Identification Number), sometimes referred to as the Federal Tax ID Number. But if your business is a sole proprietorship, the EIN may not be necessary as it can be substituted by your social security number.
You also need to sign up for the Sales Tax Vendor’s Certificate. The certificate is obtained from the NYS Taxation and Finance Department. You need this certificate to legally sell goods or services in New York City.
Step 5 – Legal Structure
Every startup needs a lawyer or a legal firm they can consult. The experts should be responsible for the legal matters of your business. They can provide you with the necessary legal counsel on taxation, business registration, investments, and property purchases.
The expert can also facilitate formal sign-ups, especially for partnerships and LLC. And as you continue with your business operations, you can always consult the legal expert whenever necessary.
Step 6 – Business Location and Supplies
Unless you are planning to run your business from home, you need to find a good location for it. The location has to be strategic to attract customers. You also need to consider factors like reduced notice, security, electricity, parking, and popular attractions. After finding a space to rent or lease, you need to furnish it with the necessary supplies. They include furniture, office décor, water dispensers, etc.
Step 7 – Business Licensing
Other than registering your business, you need to obtain all the necessary licenses and permits before you can start selling. They vary from business to business and so you should confirm what you need. For example, a food business requires you to obtain a health permit in addition to building permits.
Step 8 – Staffing
You can’t work alone in a business. You need people to help you. Thus, you should hire them before you can open the business. Upon hiring your staff, you are legally obliged to report them to the NYC Tax Department.
Step 9 – Insurance Registration
Insurance is generally important for business because it offers protection against possible risks. It’s not just the business assets that need insurance protection but also the workers. While small businesses need to take up general liability insurance, professional consulting businesses need to purchase professional liability insurance. Also, all employees need to be covered by the Workers Comp Program.
Step 10 – Financial Accounts and Accounting System
You need to set separate financial accounts for your business. This allows you to separate individual assets from business assets. It also makes business accounting easier as every expense and purchase can be accounted for.
You may also need to procure credit cards for your business depending on how may financial accounts you decide to open. And when this is said and done, you need to set up an accounting structure. This may mean hiring a certified accountant or employing accounting software if you can’t afford to hire an accountant.
Step 11 – Marketing and Opening
Lastly, you need to market your business before opening. You can use social media, your website, posters, banners, business cards, and any other channel that you think will work for you. You can always refer to your business plan to see what brand awareness method you should use.
By following the above steps, you can start a business in NYC. After that, the growth and success of your business depend on the individual effort you put. This means better management of finances and workforce and healthy relationships with suppliers and customers.