Starting a small business can seem like a stressful and overwhelming process. After all, the startup phase is one of the most critical and risky phases in the life cycle of a business. The process can be especially daunting if you have no prior business experience and are not entirely sure where to start.
To help New Jersey residents navigate the small business startup process, we have outlined the steps involved in setting up a New Jersey business. The sections below cover everything from idea conception to marketing.
How to Start a Small Business in New Jersey
Regardless of the type of business you plan on starting, be sure to have an action plan in place. Outlining every step of the process will help give structure and direction to your project and prevent you from tripping over small details during such a crucial phase. The following sections will break down how to start a business in the state of New Jersey.
Choose a Small Business Idea
Naturally, the first step of the process is choosing a small business idea that suits you. As a prospective small business owner, you need to take several variables into consideration when deciding on an idea for your business — local competition, personal interests, skills, and revenue targets are all factors that should be carefully weighed before choosing an idea and setting up your own business.
If you don't have an original concept in mind, you can always choose from any of the evergreen business ideas that have always yielded consistent revenue. Here are some examples that are worth considering:
- Pet-grooming business
- Grocery shop
- Furniture store
- Bed and breakfast
- Footwear shop
- Diner
Write a Business Plan
Once you have settled on an idea, the next step is writing a business plan that highlights all the key components of your business. A good business plan consists of the following elements:
- Executive summary: This is a brief description where you succinctly inform the reader of your company's mission statement, products, finances, and growth plans.
- Market analysis: This part of the business plan should outline the dominant trends in the industry and provide an in-depth look at the competition.
- Organization and management: This is where you describe your structure, business resources, and the people who will be tasked with running and managing the business.
- Products and services: In this section, make sure to clearly describe the products you are selling or the services you are offering.
- Marketing strategy: Describe how you plan on acquiring and retaining customers.
- Financial projections: Give the reader a projected financial outlook for the next five years and include forecasted cash flow, income statements, and balance sheets.
Secure Funding
After drafting your business plan, your focus should shift to securing financing for your project. This is integral to helping you cover the startup costs and getting the business up and running in a timely manner. Some common financing options include:
- Small business grants
- Small business loans
- Crowdfunding
- Bootstrapping
- Friends/family financing
Form a Business Entity
Next, choose a business name and select a legal entity. Your main options are a corporation, limited liability company (LLC), sole proprietorship, and general partnership. While each option has its own set of benefits and drawbacks, LLCs are particularly suited to the needs of small business owners.
Besides the fact that it is easy to set up and operate, your LLC will offer you liability protection in the event of a lawsuit filed against your business. Moreover, an LLC is also beneficial for tax purposes, and more specifically for pass-through taxation. This is an IRS ruling that allows businesses to record earnings and losses on their personal income tax returns.
Business registration in New Jersey requires that you file a New Business Entity Registration with the New Jersey Division of Revenue and Enterprise Services. This is subject to a $125 filing fee.
Get an Employer Identification Number (EIN)
An EIN is a nine-digit tax identification number issued by the IRS. Any entity planning on doing business in New Jersey is required to get one. This number serves as a sort of Social Security number for your business and is used for various tax obligations, namely payroll taxes.
The process of getting an employer identification number is fairly simple. In fact, you can retrieve the number on the IRS website just a few moments after requesting it.
Open a Business Bank Account
Forming a legal entity is not the only thing you have to do to protect your assets from liability and ensure efficient financial management — opening a business bank account is just as important.
A business bank account plays a pivotal role in separating your personal and business finances. Keeping the two separate allows for easier tracking of income and expenses and allows for a simpler tax filing process.
Keep in mind that you should also consider getting a business credit card. This can help you build good credit down the line and gives you access to more financing options at competitive rates.
Get a Business License and Apply for the Necessary Permits
The licenses and permits that you need to get in order to operate your business will vary depending on the type of business you are starting. With that being said, there are some common registrations that most New Jersey businesses need:
- Business license: This is a standard business registration for any state business intending to operate in New Jersey. This is done by filing Form NJ-REG.
- Sales tax certificate: If you are selling products or services, you will have to register with the New Jersey Department of the Treasury and obtain a sales tax certificate.
- Professional licensing: Certain businesses require additional occupational licenses that are specific to the service being offered. To learn more about these licenses, check out New Jersey's Licensing and Certification Guide.
Hire Employees
Now that you have taken care of all the legal and administrative tasks, it is time to start hiring the employees that will help you run your business. Thanks to the multitude of job portals that are available to business owners these days, finding qualified employees is not as challenging as it used to be.
Compliance with New Jersey regulations is another thing you should keep in mind when hiring employees. Report any new hires to the state of New Jersey and make sure to register with the IRS to ensure proper employee taxation.
Market and Promote Your Business
Customer acquisition is critical during the early stages of your business. In fact, building a strong customer base early on is the key to achieving sustainable growth.
There are several marketing channels that allow you to get your products and services in front of protective customers. First, explore the various online options that are available to you. Promote your business on local New Jersey Facebook groups, use the targeting features of Instagram and Facebook to advertise to a local audience, and launch PPC campaigns to drive immediate traffic to your website. You can also leverage press releases to gain some publicity and promote your brand at little to no cost.
As far as offline marketing approaches are concerned, trade shows can be a great way to get in front of your target audience. Attend local trade shows and conventions in your area and promote your business directly to consumers.
Let Skynova Help You Manage Your Business Finances
Efficient management of business finances is one of the key factors in the long-term success of a small business. To make sure you are getting started on the right foot, use Skynova's Accounting Software to ensure accurate bookkeeping and accounting from the start of your business. As an all-in-one solution, Skynova's software streamlines all financial management tasks and allows you to track your income and expenses on a single platform.
Notice to the Reader
The content within this article is meant to be used as general guidelines and may not apply to your specific situation. Always consult with a business advisor to ensure that you are getting the necessary professional guidance.