What To Expect Your First Year Of Business

All businesses are unique.  There is not one average experience of starting a business.  Every business faces its own individual successes and challenges in its first year.  All businesses in the United States, however, must go through the same process of being established.

The Process of Establishing a Business

The first thing to do is choose an entity type for your business.  For example, is it a corporation, LLC, or sole proprietorship?  Your entity type will be important when it comes to tax filing for a business.  The tax form for LLC is different from the tax form for corporations.

Enter your entity type on your EIN form.  You can fill out the form online, and the IRS will send a confirmation by physical letter within a month.  After that, your business is legally established.  Then you can open a business bank account and apply for business insurance.

Rome Wasn’t Built in a Day

It is important not to get discouraged in your first year in a business.  Do not be alarmed if your expenses are greater than the income of your business.  Most businesses have a net loss in their first year; only the luckiest ones become profitable that soon.  You can minimize your losses by not purchasing more assets than you absolutely need in the first year.  You can always grow your business gradually in the coming years.

Many small business owners are surprised by how much of a learning curve business taxes involve.  The quarterly and annual forms are more detailed than individual tax forms.  Even if you usually file your own tax return, you may need a professional accountant to help with your business taxes.

The first year of operating a new small business can be both exciting and challenging.  Starting small will make your first year of business informative and manageable.