There are several methods that can be used to evaluate the potential success of a venture. First, it is important to conduct market research and determine if there is a need or demand for the product or service. It is also important to consider the competition and how your business will differentiate itself from other offerings. Additionally, financial analysis should be conducted to ensure that the venture has enough capital to cover startup costs and sustain operations until profitability is achieved.

Our business library is an invaluable resource to support your research and decision-making process. With access to over 300 industries, we have detailed industry information, up-to-date trends, startup costs, and valuable tips, to help spark ideas or dive deeper into a particular business idea.

The thought of starting a business in New York can be an exciting experience. However, your next step is to create a business plan in place before taking the plunge. A well-crafted business plan will help you identify your goals, understand the market and competition, and develop strategies for success.

Many people only consider writing a business plan because the bank asks for one in order to get funding. While that’s a valid reason, more importantly, writing a business plan gets the ideas out of the entrepreneur’s head and helps create a roadmap for where they want the business to go. Just as most builders wouldn’t build a house without blueprints, an entrepreneur shouldn’t build a business without a business plan.

Related: How to write a business plan

The next step to starting a business in New York is selecting a business entity. A business entity (also called a business structure) refers to how a business is legally set up to operate, defining how it is organized, managed, and taxed. Each business entity has different implications such as personal liability, tax obligations, and overall operational flexibility. In New York, the four most common types of business entities are sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).

A sole proprietorship is the simplest form of business entity in which one person owns all assets and liabilities of the business. This type of entity offers easy setup and minimal paperwork but does not provide any liability protection for its owner.

A general partnership is similar to a sole proprietorship except that two or more people own it. Each partner has equal control over the management of the company and shares profits equally. However, like a sole proprietorship, each partner is liable for debts incurred by the partnership.

A corporation is a separate legal entity from its owners (called shareholders), offering limited liability protection. The pros of a corporation include separating the assets of the business and owners so their personal assets are protected, along with potential tax benefits. However, the cons include a more complex setup and higher costs, and double taxation—profits are taxed at the corporate level, and dividends are taxed again at the individual shareholder level.

Related: How to form a New York corporation

A Limited Liability Company (LLC) is a hybrid structure that combines the limited liability protection of a corporation with the ease of administration of a sole proprietorship or partnership. Pros include limited liability for members (owners) and flexibility in management. The cons involve more administrative requirements and has a more expensive setup and annual reporting cost compared to a sole proprietorship or general partnership.

Related: How to form a New York LLC

After setting up the entity, the next step is commonly registering the business. Keep in mind that requirements may vary depending on your business type and location, so it’s essential to verify your specific needs with the relevant state and local agencies. Here are some of the fundamental registrations to look out for.

Business Licenses: The state of New York doesn’t have a general business license. Your business may need licenses or permits from the city or county in which it operates. Examples include building permits, zoning permits, and signage permits. Contact your local government office or visit their website to identify any local requirements.

Employer Identification Number (EIN): An EIN is a unique identification number assigned by the IRS to your business for tax purposes. Corporations, LLCs, and partnerships typically require an EIN, as do sole proprietorships with employees. You can obtain an EIN for free by applying online at the IRS website.

Sales Tax Certificate of Authority: If your business sells taxable goods or services in New York, you’ll need to register for a Sales Tax Certificate of Authority. This can be done online through the New York State Department of Taxation and Finance’s website. After registering, you’ll be responsible for collecting and remitting sales tax to the state.

Business Name Registration: If you plan to operate your business under a name other than your legal name (for sole proprietorships and general partnerships) a DBA (Doing Business As) will need to be filed with the County Clerk’s office where the business will be located. The name must be unique, and a search will be done at the County Clerk’s office. Corporations and LLCs register a business name at the time of formation, however, they can register a DBA with the New York Department of State.

Professional Licensing: Some professions, such as cosmetologists, barbers, athletic trainers, and home inspectors, require occupational licensing in New York before offering their services. While this isn’t a license on the business, licensing is required in order to operate.

Related: What business licenses and permits are needed in New York?

Maintaining a clear distinction between your personal and business bank accounts is needed for several reasons:

Simplified financial management: Keeping separate personal and business banking accounts for your business and personal finances allows for more straightforward bookkeeping, making it easier to track income, expenses, and cash flow. This clear separation will enable you to monitor your business’s financial health and make informed decisions based on accurate data.

Tax compliance and deductions: Separating your accounts simplifies tax preparation and helps to stay compliant with federal, state, and local tax laws. By maintaining accurate records of your business income and expenses, you can take advantage of tax deductions and credits specific to your business, potentially reducing your tax liability.

Limited liability protection: For business entities like corporations and LLCs, separating personal and business finances is crucial to maintaining the limited liability protection provided by the entity structure. Mixing business and personal funds, known as “commingling,” can lead to the “piercing of the corporate veil,” potentially making the owners personally liable for the debts and obligations of the business.

Easier access to financing: Financial institutions typically require detailed financial records for your business when seeking loans or lines of credit. Maintaining separate accounts and having accurate financial documentation makes it easier to document the income and expenses of the business.

Obtaining the money needed to start a business is often at the top of the list from people starting a business. It’s important to understand that there are multiple paths to securing the necessary capital for your business, and I’ll go over the common ones.

The first option is using personal funds. This can be a great way to get started, as it requires no debt and you don’t have to worry about interest payments or other loan obligations. However, this option may not be feasible for larger businesses that require more capital than you have access to.

The second option is conventional bank loans. These are typically the most common type of financing for small businesses, as they offer competitive rates and terms. However, banks typically require a personal investment of between 15% and 25%, collateral, and a strong credit score in order to qualify for a loan.

The third option is SBA loan guarantees. The Small Business Administration (SBA) offers loan guarantees of up to 85% of the loan amount, which can help reduce the risk associated with borrowing from a bank or other lender. Additionally, SBA loans often come with lower interest rates and longer repayment terms than traditional bank loans.

The fourth option is microloan programs. These are smaller loans designed specifically for startups and small businesses that need quick access to capital but don’t qualify for traditional bank loans due to their size or lack of collateral. In New York, there are several microloan programs available, such as those offered by Pursuit (formerly the New York Business Development Corporation) and the Excelsior Growth Fund. These programs provide loans with lower interest rates and more flexible terms than conventional bank loans.

Finally, investors can also be an option if you’re looking for large amounts of capital quickly and don’t want to take on debt or give up equity in your business. Investors can provide both cash investments and mentorship that can help your business grow faster than it would without their support.

But, what about small business grants? Unfortunately, while you may see information for free money to start a business, it’s rare for startups. Here is some more information about small business grants to learn more, but if you come across someone requiring money for this information, it’s usually a scam.

Related: Understanding the different types of business funding

Hiring employees is complex and confusing, even more so for a first-time small business owner, as there are multiple agencies to register with and labor laws to understand.

To ensure a smooth process, you should first outline the job responsibilities and qualifications necessary for the position, as this will help you effectively communicate the role to potential candidates. Next, research the legal requirements of hiring in New York. Employers are responsible for reporting new hires, verifying employees are eligible to work in the U.S., income tax withholding, unemployment insurance, unemployment taxes, and payroll withholding taxes, including Social Security and Medicare.

Once you have a clear understanding of your responsibilities, create a compelling job listing to attract qualified applicants. Consider posting the listing on popular job boards, social media platforms, and local community centers. Additionally, networking within your industry and leveraging referrals can also lead to finding the right candidate.

As you screen and interview candidates, be mindful of non-discrimination laws, and implement a structured, consistent process to evaluate each applicant. When you’ve identified the right candidate, prepare a competitive compensation package, including salary, benefits, and potential growth opportunities. Finally, create a supportive onboarding process to help your new employee acclimate to your business quickly, as this will lay the groundwork for a successful long-term relationship. Remember, investing time and effort into hiring the right employee will not only help your business thrive but also contribute to a positive company culture.

Related: Steps to hiring your first employee in New York

Insurance plays a critical role in protecting small businesses from unexpected financial losses, legal disputes, and other potential risks. As a small business owner in New York, understanding the types of insurance policies available and their importance is essential to safeguarding your investment and ensuring business continuity. Every business will have different needs, but here is an overview of the key insurance policies to consider.

General Liability Insurance: This policy protects your business from claims arising from third-party bodily injuries, property damage, and personal or advertising injuries. It is crucial for small business owners in New York to have general liability insurance, as it helps cover legal costs, settlements, and medical expenses in case of a lawsuit.

Property Insurance: If your business owns or leases a physical location, property insurance is essential to protect your business assets, such as buildings, equipment, inventory, and furnishings. This policy covers losses resulting from events like fires, theft, vandalism, and certain weather-related damages.

Workers’ Compensation Insurance: In New York, all employers are required to carry workers’ compensation insurance, which covers medical expenses and lost wages for employees who suffer work-related injuries or illnesses. This policy also protects employers from potential lawsuits filed by injured workers.

Commercial Auto Insurance: If your business owns or uses vehicles for work purposes, commercial auto insurance is necessary to cover property damage, bodily injury, and liability claims that may arise from accidents involving company-owned or leased vehicles.

Professional Liability Insurance: Also known as errors and omissions (E&O) insurance, professional liability insurance is crucial for businesses that provide services or professional advice. This policy covers claims arising from errors, negligence, or omissions in the services provided by your business, protecting you from costly legal disputes, too, as personal home and vehicle policies may not cover a business-related loss.

Related: Types of insurance your business may need

Setting up an accounting system for your business is one of the most important things you can do for your company to ensure long-term success. By recording, organizing, and maintaining financial transactions and records, you will be able to better make informed decisions, track expenses, measure profitability, and ensure compliance with tax laws.

To maintain a well-organized bookkeeping system, it is essential to manage various types of records, including:

Sales receipts: These records detail all of your business’s income-generating transactions. Properly recording sales receipts helps you track revenue, monitor inventory levels, and calculate sales tax.

Accounts payable: This refers to the amounts your business owes to suppliers or vendors. Maintaining accurate accounts payable records ensures timely payments, avoiding penalties, and maintaining good relationships with vendors.

Accounts receivable: These records show money owed to your business by clients or customers. Tracking accounts receivable allows you to manage cash flow effectively and take appropriate action when payments are overdue.

Expense records: To monitor your business expenses, keep accurate records of all costs, such as rent, utilities, salaries, and supplies. This information is crucial for budgeting, evaluating profitability, and identifying potential cost-saving opportunities.

Bank statements: Regularly reconciling your bank statements with your bookkeeping records helps identify discrepancies, prevent fraud, and maintain accurate cash flow information.

Organizing financial records can be done in a variety of ways. One option is to use accounting software such as QuickBooks or Xero which can help streamline the bookkeeping process. Another option is to establish a paper filing system where all financial documents are stored in an orderly manner. Finally, businesses may choose to outsource their bookkeeping needs by hiring an accountant or bookkeeper who can manage the process on their behalf.

Related: Setting up accounting for a business