A new year has arrived and we start the year with lots of motivation. We set personal improvement goals and resolutions, but some goals define our business ambitions. This time of year has many focused on opening a new business.
Starting a new business in Louisiana can be rewarding and successful. Louisiana has a robust small business base with diverse businesses and markets. The following provides key measures about Louisiana’s small businesses.
Louisiana Small Business Key Measures
- US News ranks Louisiana the 20th best state for affordability.
- Louisiana has the 4th lowest average unemployment insurance prices.
- 80.29% of Louisiana businesses survive their first year.
- Louisiana startups create 5.03 new jobs on average in their first year.
- 437,437 small businesses operate in Louisiana, 99.5% of total businesses in the state.
- 917,466 Louisiana residents are employed by small businesses, 53.2% of the state’s workforce.
- Louisiana’s leading small business employer is health care and social assistance. f
Sources: Tax Foundation, US News, Kauffman, Small Business Administration
9 steps to open a business in Louisiana
Develop Your Business Idea
Your entrepreneurial spirit is strong and it is driving you to start your own business. You will need a good idea for a business. What is it that you love doing or have passion for? Doing something you enjoy will ensure a high level of motivation. You will have to put in the time required to start a business.
A successful business will need to be different when compared to other existing businesses. What products or services will you provide? How are your products or services different from other in the market? What will compel Customers to come to you for their requirements? Having a solid grasp of these and other questions, provides a better chance at success.
Develop a business plan
Now that you have a defined idea, it is time to build your plan. Your business plan should detail the approach from starting your business to its ultimate success. Attracting investors, staff, and customers will need to be key elements of your plan.
A professional business plan should include the following:
- Executive summary – Overview of the business with key success factors
- Description of business – Explain the advantages of the business and the solutions it provides
- Market research – Detailed information about your target market and competitors
- Organization and staff – Describe the business and the key staff who will manage it
- Product or service description – Describe your products and/or services
- Marketing plan – Detail your strategy to establish your brand and attract customers
- Fundraising – Capital required and spending plan for the first 5 years
- Financial forecast – P&L and Balance Sheets describing the financial outlook for your business
Starting your business requires the capital to get it off the ground. Your business plan details the capital required and how you will source it. If you have the money to invest, you are ahead of the game. If not, finding a source for the required capital is your next step.
If you are not self funding your business venture, alternative sources must be identified.
Sources include :
- Small Business Administration loans
- Commercial bank loans
- Investment from friends and family
- Angel Investors
- Venture Capital
Regardless of the source of funding, having sufficient resources to start your business is critical. Most new small businesses fail due to a lack of required operating capital.
Choose form of business entity
The structure of your business defines how you will operate your business. The structure impacts taxes, compensation, legal liability and other critical factors. This is a step that requires detailed thought and planning.
Will you work as an individual, with a partner, or require a more complex structure? These are the key factors in choosing which path to take.
The following are three options to consider:
- Sole proprietorship – Running a business by yourself. You and your business are the same, with no separate legal entity
- Partnership – You working with one of more partners.
- Corporation – Complex legal structure that is a separate entity from the owner.
A wise choice would be to seek advice from both an attorney and a CPA. Getting advice from professionals would be beneficial when choosing your business structure. A excellent resource for your business is the LSBA Small Business Startup Kit.
Acquire state and Federal Tax Ids
Now it’s time to get your Federal Employer Identification Number (EIN). A unique identifier for your business that acts like a Social Security number. It is required to open bank accounts, process payroll, and most importantly, pay your taxes.
You will need to register your business at the Louisiana Department of Revenue.
Registering your business is another required step. This will vary depending on the type of legal structure you have chosen. Naming your business is part of this process. You will need to search with the Louisiana Secretary of State to ensure availability.
Completing all required steps in the Parish you will be based in is also required. You can speak with someone with your local Parish government to understand the steps required.
Open business banking accounts
Selecting a commercial bank to open accounts for your business is an important step. Identifying an organization that is easy to work with and offers the services you require. Having accounts to keep your business assets organized versus using your bank accounts is critical.
Protecting your business is an important element. Business insurance will cover you in case of property damage or legal action. With employees, you are required to have Workers Compensation and Unemployment Insurance.
There are many options when it comes to business insurance. Identifying an insurance agent will be beneficial in putting the best coverage in place.
Develop a digital marketing plan
Businesses today must have plan to market themselves. Having a compelling and informative web site is only the first step. Having a plan to attract visitors to your site is equally important. There are 1.7 billion web sites in 2021. This number is growing everyday.
The process to attract visitors to your site is called Search Engine Optimization (SEO). Working with a qualified digital marketing firm will help you achieve your business objectives. Working to convert visitors into customers is the primary purpose of any web site.
As you open your new business, having a CPA firm is foundational. The right firm will provide support and advisory services to help you succeed. No business owner should try to do everything for themselves. Focus on your business and let the experts provide you with assistance.
Small business owners need support from other small businesses as well. Seeking detailed and ongoing consulting support is always advantageous for your business or organization. For more information on our consulting services, please visit Taylor and Willis CPAs and Advisors | Consulting (twcpas.net).