How To Start A Business In New Hampshire
Starting a business in New Hampshire is an attractive option for entrepreneurs looking to take advantage of the state’s business-friendly climate and low tax burden. With 99% of businesses in the state being small, it’s clear that there are plenty of opportunities for growth and revenue.
New Hampshire also has many resources and organizations dedicated to helping entrepreneurs succeed. These include incubators, accelerators, and other programs designed to provide mentorship and guidance on how best to launch a successful venture. With all these benefits combined, it’s no wonder why so many people are choosing New Hampshire as the perfect place for their new business.
New Hampshire Small Business Stats
- There are 138,199 small businesses in New Hampshire, which is 99% of all businesses in the state. (2022 SBA Small Business Profile)
- 49.7% of New Hampshire employees work for small businesses, which is more than the national average. (Statistics of US Businesses)
- Exports by small New Hampshire companies reached $1.7 billion. (2022 SBA Small Business Profile)
- Even though CNBC ranked New Hampshire as the 35th best state for business, education ranked #6, and business friendliness was #8.
- Forbes ranked New Hampshire as the 14th best state to start a business.
Steps To Start A Business In New Hampshire
With a focus on practical, actionable steps, our checklist provides the insights necessary to navigate the essential stages of starting a business in New Hampshire.
Step 1: Choose a Business Idea
With so many potential business ideas, deciding which one is right for you can be difficult. Fortunately, there are some basic steps you can take to evaluate the feasibility of any venture and narrow down your choices.
The first step in evaluating a business idea is to conduct market research. This involves researching the current market conditions and trends and identifying potential customer segments and their needs. You should also consider the competition and what makes your business unique compared to the competition. Additionally, it’s important to assess the potential profitability of a venture by considering factors such as pricing, cost of production or services, and expected sales volume.
Our Business Library can help spark an idea for a new business or research your business idea further. Our library contains detailed industry information, trends, costs to start, tips, and lots more.
Step 2: Write a Business Plan
Once a solid business idea is in place, it’s time to start working on the business plan. A business plan will help you identify the resources needed to get your business off the ground and outline the strategies you need to succeed. It will also provide potential investors and lenders with an understanding of your goals and objectives, so they can make informed decisions about whether or not to invest in your company.
A good business plan should include information about your target market, competitive advantage, financial projections, and a marketing strategy. It should also include an analysis of any potential risks associated with starting a business in New Hampshire. Having this information at hand will help you make informed decisions about how to move forward.
Creating a business plan your first time can seem like a big task, but we have a guide on writing a business plan to help you get started.
Step 3: Select a Business Entity
The next step to starting a business in New Hampshire is selecting a business entity, which is how a business is legally organized to operate. It is important to choose the right type of entity for your business as it will determine how it is taxed and the legal liabilities of its owners. In New Hampshire, there are four common types of business entities: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).
A sole proprietorship is a business owned by one person. This type of entity has the simplest structure and requires minimal paperwork (if any) to get started. The owner has complete control over the business but also carries all financial risks and liabilities associated with it. Pros include ease of formation and complete control over the business. Cons involve unlimited personal liability and potentially more difficulty in raising capital.
In a general partnership, two or more people share ownership in a business. Like a sole proprietorship, the partners are personally responsible for the business’s debts and liabilities. Pros include shared responsibility, pooled resources, and simplicity in formation. Cons consist of unlimited personal liability, potential disputes among partners, and challenges in raising capital.
A corporation is a legal entity that is separate from its owners (referred to as shareholders). It can make a profit, be taxed, and can be held legally responsible for its actions. It offers limited liability protection, meaning shareholders are not personally responsible for the business’s debts and liabilities. Pros include limited liability, easier access to capital, and potential tax advantages. Cons involve complex formation, double taxation (profits taxed at the corporate level and again at the shareholder level), and extensive record-keeping and reporting requirements.
The Limited Liability Company (LLC) combines elements of both sole proprietorships/partnerships and corporations for its owners (referred to as members). Pros include limited liability, easier administration compared to the corporation, and tax flexibility. Cons consist of more complexity in formation compared to sole proprietorships and general partnerships, plus state filing and renewal fees.
Related: How to form a New Hampshire LLC
Forming a corporation or LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
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Step 4: Register the Business
Permits and licenses vary depending on the type of business and the specific requirements of the municipality where the business is located. However, the overall process for obtaining necessary permits and licenses is generally straightforward, here are some common ones to consider:
State Business Registration – All businesses operating in the state will need to register with the Secretary of State. In addition, businesses are subject to the Business Profits Tax, a tax based on annual income, or the Business Enterprise Tax, which is based on total compensation paid out, including dividends and interest.
Employer Identification Number: An Employer Identification Number (EIN) is a unique identifier assigned to businesses by the Internal Revenue Service (IRS). General partnerships, corporation, multi-member LLCs, or any business with employees is required to get one.
Business Licenses: There isn’t a state of New Hampshire business license; however, some cities and towns require businesses to obtain local permits before operating within their jurisdiction.
Business Name Registration: Sole proprietorships and partnerships operating under a business name, versus the owner(s) full first and last name, will need to file a Registration of Trade Name, also known as a DBA or Doing Business As with the Secretary of State. Corporations and LLCs can obtain an additional Trade Name, though a name is registered when forming the entity.
Professional Licensing: Some professions or occupations, such as accountants, barbers, body artists, hunting & fishing guides, and manicurists, require licensing in New Hampshire. While this isn’t a license on the business, licensing is required in order to operate.
Zoning: Before starting to operate a business (even if it’s home-based), be sure to check local zoning regulations to ensure the business can legally operate out of its location.
Step 5: Open a Business Bank Account
Keeping your business and personal finances in separate bank accounts is important.
Most importantly, separating your personal and business funds can help you keep track of your business expenses and income more easily. Having a separate business bank account lets you easily track your business expenses and revenue, which will help you with accounting and tax purposes.
Separating business and personal funds is especially important for corporations and LLCs as this step helps protect the owner’s personal assets in case of legal or financial issues that may arise with the business.
Step 6: Find Financing
small businesses in New Hampshire have access to various funding options, including personal funds, conventional bank loans, SBA loan guarantees, microloan programs, and investors. Each funding option has its own advantages and disadvantages, and it is important for businesses to carefully consider their options before making a decision.
Conventional bank loans are a common option for financing a business. These loans usually require collateral, good credit scores, and a personal investment of between (typically between 15% and 25% of the total startup costs), so they may not be accessible to everyone.
The Small Business Administration (SBA) provides loan guarantees to help small businesses secure conventional bank loans from lenders at more favorable terms than they would otherwise receive. The SBA also offers microloan programs that provide small amounts of money to start or expand a business.
Microloan Programs: This funding option provides small businesses with short-term loans ranging from $500 to $50,000. Microloan programs are offered by non-profit organizations such as the Granite State Development Corp’s GSDC Micro Loan fund. The interest rates for microloans are typically higher than traditional loans, but the lending criteria are usually more flexible than the bank.
Investors are another potential source of funding for businesses in New Hampshire. Investors can provide capital in exchange for equity in the company or other financial returns on their investment.
Step 7: Hire Employees
As a small business owner, it can be easy to get overwhelmed by the prospect of hiring your first employee, as there are several laws and regulations to know and agencies to register with before getting started.
First, understand the labor laws and regulations that apply to your business. This includes understanding federal, state, and local labor laws and applicable taxes or insurance requirements. It’s important to ensure you comply with all applicable laws before you begin the hiring process.
Step 8: Obtain Business Insurance
As a small business owner in New Hampshire, it is important to understand the importance of having adequate insurance coverage. Insurance can help protect your business from financial losses due to unexpected events such as accidents, natural disasters, and lawsuits.
Several types of insurance policies should be considered, and while this doesn’t cover every type of insurance your business may need, I’ll cover the most common types.
Most businesses use general liability insurance, which covers common third-party risks such as property damage, bodily injury, and personal or advertising injury claims. It also protects against claims arising from negligence or errors made by employees or contractors working on behalf of the business.
Another type of insurance that many businesses need is workers’ compensation insurance. This type of policy provides benefits to employees who are injured while performing their job duties and helps cover medical expenses and lost wages due to an accident or illness related to their job. In New Hampshire, all employers with employees must purchase workers’ compensation insurance coverage.
Business owners may also want to consider purchasing commercial auto insurance if they own vehicles used for business purposes. This type of policy covers damages caused by an accident involving a vehicle owned by the business and can help protect against financial losses due to theft or vandalism. Personal policies don’t often protect a vehicle owner if the vehicle is damaged while being used for business purposes.
Finally, businesses should consider purchasing property insurance which covers physical assets such as buildings, equipment, furniture, inventory, and other items owned by the company in case they are damaged or destroyed due to fire, windstorms, or other causes not covered under general liability policies.
Overall, having adequate insurance coverage is essential for any small business owner in New Hampshire as it can help protect them from financial losses due to unexpected events that could otherwise put their business at risk. By understanding the different types of policies available and selecting those that best fit their needs, small business owners can ensure they have the protection they need if something goes wrong.
Step 9: Set up an Accounting System
Bookkeeping is an essential aspect of running a successful small business, as it is not only used to prepare taxes but also helps track financial transactions and monitor the health of the company.
When it comes to bookkeeping, several types of records need to be maintained, such as sales receipts, accounts payable and receivable, bank statements, payroll records, invoices, and other important financial documents. It’s important to keep these records organized to have an accurate picture of the financial health of your business.
Related: Setting up accounting for a business
This material is property of StartingYourBusiness.com
Common questions when starting a business in New Hampshire
Is New Hampshire a good state to start a business?
There are many factors that go into whether a state is good for starting a business. A few factors that we think New Hampshire has includes:
Regulations: New Hampshire is known for its business-friendly regulations. The state has minimal red tape and a streamlined process for registering and operating a business. This can make it easier for entrepreneurs to set up and grow their businesses without dealing with as many bureaucratic hurdles.
Economic Stability: New Hampshire has a stable and diverse economy, with a strong emphasis on the manufacturing, healthcare, and technology sectors. The state has a low unemployment rate and a relatively high GDP per capita, which indicates a robust economic environment suitable for small businesses.
Available Workforce: New Hampshire has a well-educated workforce, with a high percentage of residents having at least a bachelor’s degree. This can be advantageous for businesses that require skilled labor.
Taxes, Permits, and Licenses: New Hampshire has no sales tax, which can be a significant advantage for businesses selling products or services. Additionally, the state has no income tax on wages, making it attractive for employees. However, there is a business profits tax and a business enterprise tax, which businesses should consider when assessing their potential tax burden.
Demographics and Consumer Behaviors: The state has a relatively high median household income and a low poverty rate, which indicates that consumers may have more disposable income to spend on goods and services.
What are the steps to starting an LLC in New Hampshire?
There are three main steps to starting an LLC in New Hampshire. These include:
1. Making sure the LLC name is available
2. Appointing a Registered Agent
3. Filing the Certificate of Organization
There are a few more details to learn about, so be sure to check out how to start an LLC in New Hampshire.
How much does it cost to start an LLC in New Hampshire?
The cost to start an LLC in New Hampshire is $100 to file the Articles of Organization with the New Hampshire Department of State.
What licenses do I need to start a business in New Hampshire?
The state doesn’t require a general business license, however, there are potentially several different licenses and permits a business will need to obtain before starting.