Congratulations, you have decided to start a business in the beautiful state of Illinois! That was the first step an entrepreneur has to make on their exciting entrepreneurial journey.
So, what should you do now that you have picked the location and the business environment? Well, now comes the more difficult part where you need to think about different aspects that can make or break your business.
There are five key things that you need to consider before you actually start earning money with your business. We will dissect each one of those processes so that you have a more convenient first phase on your way to business success. Take a look.
Choose your business’s legal structure
Keep in mind that your business’s legal structure plays an important role in your business journey. Each legal structure has its own characteristics that may come to you as benefits or shortcomings.
Let’s take a look at the most common legal structures for a small business:
- Sole proprietorship. This is an unincorporated business with a single owner that pays personal income tax on earned profits. Sole proprietorships are easy to start and dissolve since the government’s involvement is minimal. That is one of the reasons why it is very popular with small business owners and contractors.
- Partnership. A formal agreement between at least two parties to operate a business and enjoy the profits that are earned. All partners share liabilities and profits equally. However, there are instances when agreements stipulate different liabilities and profits.
- Limited liability company (LLC). A limited liability company (LLC) is a business structure where the owners are not personally liable for the company’s debts or liabilities. LLCs are entities that combine the characteristics of a corporation with those of a partnership or a sole proprietorship.
- Corporation. This legal entity is separate and distinct from its owners. That is the reason why corporations have most of the rights and responsibilities that individuals have (they can enter contracts, lend and borrow money, sue and be sued, hire employees, own assets, and pay taxes).
It is worth noting that there are special versions of some of these structures, but it’s even more important for you to consider which legal entity would suit your type of business best. In the beginning, you want the best tax, financing, and financial benefits for you and your company.
Think about insuring your business from the very start
Now is a good time to think about various options regarding insurance for Illinois small businesses. This insurance will cover physical injuries, property damage, work-related auto accidents, and other things.
Since your business is at the very beginning, you should look for small business insurance plans. Many people will tell you that you should not think about this right now, but keep in mind that there are various benefits that come with insurance plans during this business phase.
First of all, keep in mind that your new insurance plan covers your business in terms of liability. Businesses are easy targets in scenarios of on-site accidents. If someone gets injured at your place of business and you don’t have any kind of liability insurance, your business will end up with huge debts for medical expenses.
On top of that, there are many other expenses that come from additional damages the court sees fit to grant the injured party.
The second most important benefit is that you will be insured in case of theft. Small business insurance will cover you for the cost of equipment or goods that have been stolen. So if you have a warehouse and some goods are stolen (in case of a break-in), your insurance will cover the damages.
Register your business
Once you pick your name and get the papers ready for company registration, it is time to find the right government office. In this case, you need to file a DBA in Illinois. All companies in Illinois need to register alternative trade names. They can do it by filing for a DBA if the business wants to operate under a name that is different than the one it had when it was started.
Do the following before filing:
- Prepare and gather all of the forms from the county to register your DBA. Every county has its own specific filing requirements, but most accept online filing.
- Check the availability of your business name by calling the County Recorder or visiting the website.
- File the forms and keep in mind that various counties require the form to be notarized and published.
Conduct market research for your niche in Illinois
It is very important to have an in-depth and exact understanding of your niche since that might be the deciding factor when it comes to the potential success (or failure) of your new business in Illinois.
A good way to identify your rivals and target market is to conduct market research. Some of the ways to do it include holding a focus group, conducting a survey, conducting search engine optimization (SEO) research, and using existing research such as customer reviews.
The aim, in this case, is to develop an understanding of who your business will market to and how it stands out from its rivals. This kind of research will help your business strategy, which will increase your chances of success.
Set up an accounting system for your business
Lastly, setting up your accounting and record-keeping system is of huge importance once you learn all about the taxes you need to pay for your new company. That is why you should either hire an accountant to do this for you or buy a good accounting software solution that will make bookkeeping easy for you.
Keep in mind that company documents usually need to be kept for 3 years and they include a list of all owners and addresses, copies of all formation documents, financial statements, annual reports, as well as amendments or changes to the company.
The tips you have just read about in this article are the most important things to keep in mind once you decide to start a small business in Illinois.
You will also have to take care of some simpler processes such as opening a business bank account, picking a business location (if you need a brick-and-mortar presence), and thinking about your first marketing efforts.
Make sure that you have these essentials prepared so that you can then reap maximum rewards in the business environment of the Land of Lincoln!