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  • Writer's pictureJeremy Springer

Resources for Starting a New Business

Whether you are opening up a show on your town's Main Street or you are jumping into the board room of a new startup, knowing what it takes to open a business is important as it is more than just an amazing product or a superior service. We'll cover some basics here and provide links to a few other Helpful Information posts so your new business starts off on the right foot.

Here are several things you should have in place before you file to start your business. While some businesses may not need everything listed below, it is important to know about many of the plans, summaries, and agreements; you may want to incorporate some things and not others as you begin your journey.

PRO TIP: Unless you are starting a business with lots of borrowed funding, your plans, agreements, and documents do not have to be lengthy or overly complicated. You can write in simple, easy-to-understand language.

Business Plan

A business plan is a written document created to detail all aspects of a business on a comprehensive level. Many banks and investors require a written business plan before

lending to, or investing in, a business.

Executive Summary

The executive summary is an overview of the entire plan. It should be written when all other sections of a business plan are complete and should be less than one page in length. The executive summary should include enough detail to allow a user to read the summary and gain a basic understanding of the business.

Mission, Vision, and Description

Mission. The mission statement should be less than 30 words and describe why a business exists, as well as its fundamental purpose at present.

Vision. The vision statement defines the intended future state of an organization. It sets a high, long-term goal which is used to guide decisions of management and ownership.

Description. The description section defines goals and objectives, business philosophy, target market, industry, and the legal entity under which the business will operate.

Products and Services

Provide a detailed description of the products and services the business will offer. Include pricing, unique features, and the required level of quality. Create an appendix for any photos, technical specifications, drawings, or brochures.

Marketing Plan

The marketing plan is developed by conducting (or having conducted) market research to define the clientele of a business and how to best market products and services.

Sales forecast. The sales forecast is the final element in a marketing plan. It forecasts over a 12-month period the quantities of each product or service expected to be sold. It is the base from which the financial plan will develop.

Operational Plan

The operational plan details the day-to-day operations of a business. Items discussed in an operational plan should include issues such as location, licensing, personnel, inventory, suppliers, credit policies, and managing payables.

Management and Organization

Key employees. A key employee is a person or persons who will manage the business on a daily basis. Include in the list the key employees’ talent, experience, and distinctive competencies brought to the business. Incorporate job descriptions of key employees, as well as resumes of the owners and key employees if using a business plan to seek financing.

Management continuation plan. Management continuation planning involves determining how a business will continue should one or more of the key employees be lost or become unable to fulfill his or her duties. The plan should specify the exact procedures for transferring duties when required, including arrangements with vendors, banks, employees, and owners.

Personal Financial Statement

A personal financial statement (PFS) is a balance sheet for each owner on an individual basis. It includes values and detail of all assets owned, as well as amounts and terms for

all debt obligations. PRO TIP: This need is often overlooked for start-ups that are wanting to borrow funds or seek financing options. It is very important to have this ready.

Business Agreements

  • Incorporation agreements.

  • Partnership agreements.

  • LLC agreements. Consult an attorney to ensure compliance with state laws when forming a business entity.

The following issues should be addressed in an agreement to form a business entity.

  • Name and address of business.

  • Names and addresses of owners.

  • Description of business purpose. Products, services, market.

  • Contributions to capital. Loans to the business, repayment guarantees.

  • Special allocations for partnerships.

  • Number and duties of employees.

  • Responsibilities of owners.

    • Administrative duties

    • Services to be performed: Hours dedicated to business, time off, length of commitment, wages/guaranteed payments, contributions to retirement funds, other payments.

  • Divisions of responsibility.

    • Authority to: Hire and fire employees, train employees, make loans, purchase inventory and supplies, enter into contracts, incur business debt.

    • Books and records: Responsibility for bookkeeping, accounting, and tax compliance, location of books and records, fiscal or calendar year, accounting method, tax elections, responsibility for legal compliance.

  • Payment of expenses not covered by business operations. Stop-loss agreements, percentage contributions in case of shortfall, expenses to be paid personally by owners, provisions for additional capital contributions.

  • Draws. Scheduled draws, limits on draws, restrictions on draws.

  • Amendment provisions. Circumstances, authority, procedures.

  • Rights of owner withdrawal or transfer of interest. Ability to withdraw, requirements for sale of interest, rights of first refusal, ability to sell to outside party, advance notice of retirement, methods of evaluating owner’s share.

  • Death of an owner. Buy/sell agreements, succession plan, rights and authority of relatives, location of each owner’s will, right to divide interest of owner.

  • Decisions / disagreements. Situations that will require a vote, majority or unanimous vote requirements, arbitration agreement.

  • Amending the agreement. Situations where amendment is mandatory, situations where amendment is a choice, vote required for amendment.

Financial Plan

Capitalization. Capitalization is the source of cash used for start-up costs, including professional consulting, asset acquisition, and buying or leasing business property. Information about any debt or equity financing should be included in this section.

Forecasting cash flow. For new businesses, cash flow, more than profit, is the best indicator of whether a business will survive. It determines whether a business will be able to pay its expenses and debts as they come due. A business plan should contain a statement of projected cash flow for the first 12 months of the business. Lenders or investors may require customized reports indicating cash flow and profit projections.

Tax Plan

It is important while you are setting up your business to consider how you want your business to be taxed. There are IRS defaults for some business structure types, but you can request or elect a more advantageous structure. We have a whole Helpful Info post about it here -- The FAQ on Business Entity Types.

Starting a Business Checklist

✓ Done. Skip any item which does not apply to the business.

  1. __ Develop a business concept

  2. __ Select and retain accountants and attorneys

  3. __ Select a business entity

  4. __ Determine ownership structure

  5. __ Complete a business plan

  6. __ Obtain initial start-up capital

  7. __ File for organization with state

  8. __ Hold first board of directors meeting

  9. __ Apply for a federal employer identification number (EIN) by submitting Form SS-4 (You can submit online at

  10. __ Apply for S corporation status by filing Form 2553, if desired/needed

  11. __ Develop website and technology plan, including cybersecurity

  12. __ Establish accounting procedures and choose accounting software or hire outside bookkeeping service

  13. __ Input all transactions from the beginning of business development into accounting software

  14. __ Apply for business financing and solicit investors

  15. __ Open business bank accounts

  16. __ Apply for required permits or licenses

  17. __ Select an insurance agent

  18. __ Purchase insurance

  19. __ Select a commercial real estate agent

  20. __ Locate and obtain office or production space

  21. __ Acquire furniture and equipment

  22. __ Complete any needed build-out of space

  23. __ Select a payroll processing company

  24. __ Select an employee benefits company

  25. __ Hire staff and complete training

  26. __ Commence marketing

  27. __ Order initial inventory and begin production

  28. __ Conduct a grand opening


Legal Disclaimer: This post contains general information for taxpayers and should not be relied upon as the only source of authority. Taxpayers should seek professional tax advice for more information. This information was current at time of posting; we are not responsible for updating this or any blog post/article for subsequent changes in the law or its interpretation.

Certain content on this page is copyright © 2024 Tax Materials, Inc. All Rights Reserved for applicable content. Used with permission.

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