How to Start a Business in Alabama
The Small Business Administration reports that nearly 400,000 small businesses employ over 770,000 people in Alabama. What’s more, small businesses make up 99.4% of all businesses in the state!
If you want to start a business in Alabama, it’s safe to say that you are in good company. With so many successful entrepreneurs already leading the way, you can certainly carve out your spot in the market.
Keep reading to see what steps you need to take before you can open your doors and start contributing to the Alabama economy.
7 steps to start a business in Alabama
Whether you open a seafood restaurant in Mobile or a clothing store in Birmingham, you will need to check each of these items off your list before collecting a single penny.
1. Take an honest assessment of yourself
As a small business owner, you will need to wear many hats throughout the day. From managing people to adding up numbers, there are plenty of tasks for you to do. If you don’t want to invest the time and money needed to grow your business, you may want to consider other options.
If you have the drive to succeed, then it’s time to find a business idea that aligns with your personality and abilities. However, you also need to think about competition and market demand.
At the end of the day, you want to have a rough idea of the business you will form, how much it will cost to start, and if you have the means to make it viable.
2. Put together a business plan
Whether you are opening a food cart or a large office, you need a formal business plan. This document is vital for estimating expenses, analyzing competition, and forecasting growth.
You will need to include these parts in your business plan:
- Summary: Introduce your business, list yourself and any cofounders, and explain what you want to accomplish.
- Competition and market: Identify any competitors in your area and list their pros and cons. State how your business can outperform these competitors in some regard. Also, analyze your market to ensure you will have enough customers to keep you solvent. Be sure to look at age, income, interests, and spending habits.
- Strategy: Explain how you plan to sell your products and services. This section should be quite detailed, including sales techniques, pricing, and hiring needs.
- Income and debt: Detail your initial costs and state where you will get the funding from. Estimate how much revenue you will collect over one, five, and ten years. With this, you can then outline your expected debt repayment plan.
3. Register your business with the government
When you form a business, it will automatically create a sole proprietorship. This title simply means you will claim that business on your personal income tax return. While this is fine for some small businesses, you may need to create a separate entity to protect yourself.
These entities can take on their own debt, assets, credit, and more. By separating yourself and your business, you can keep your personal assets safe from lawsuits or debt collectors.
The typical business entities to consider forming include:
- Limited liability company
- Corporation
- Partnership
Keep in mind that you can form these entities yourself without hiring a company. That said, many services exist that will help you with paperwork, filing fees, registered agents, and more. For a small price, this help can be very useful.
For more information, you can visit the Alabama Secretary of State Business Service page. Here, you can get all the documents you need, file paperwork, and register your business name.
Once you register with the state government, you should request an Employer Identification Number from the IRS. Similar to a social security number, your EIN is crucial for filing taxes and processing employee payroll.
4. Get your business licenses
Alabama requires businesses to obtain the right permits before serving customers. These certifications and licenses help the state ensure you are complying with the law and not engaging in unsafe behaviors.
For example, any business that serves alcohol will need to register with the state so the government can ensure you are not selling to minors.
Alabama has a long list of certifications and licenses, but some common items include:
If you need help with this step, you can contact the Alabama Department of Revenue or the local chamber of commerce.
5. Open a business bank account
Since your business is a separate entity, it should have a separate bank account. Opening a business account will make financial management easier since you won’t have to worry about mixing your personal and business funds by mistake. Likewise, it will make your business more professional when writing checks or sharing bank details.
Your local bank or credit union should be able to start a business checking account with you for low or no cost. In some cases, you might qualify for a welcome bonus of a few hundred dollars.
6. Take out loans/find investors
With your bank account ready, it’s time to acquire funding. Keep in mind that starting a business can be expensive, with startup costs ranging anywhere from one hundred to a few hundred thousand dollars.
Unless you have the cash in your personal savings, you will either need to borrow it or bring in additional owners/investors.
Consider these resources for funding your business:
- Small business loans
- Grants
- Friends and family
- Private investors
- Partners and cofounders
7. Get ready to open
With your business legal and your finances in order, it’s time to plan your opening. Now is the time to take care of all the little details to truly make your business your own.
This step will vary depending on your business model, but most people will need to:
- Lease a commercial location
- Purchase inventory and equipment
- Hire employees
- Create social media accounts and a website
- Develop a marketing plan
- Plan a grand opening
Get your business started with Epos Now
Technology plays a major role in our economy. Without the right devices, your business can miss out on sales, lose customers, and even fail to stay profitable.
Whether you start a restaurant, store, or barbershop, you will need a point of sale system to handle daily tasks. At the very least, your POS will be useful for taking credit, debit, and cash payments.
However, these devices are capable of much more!
A modern POS will help with:
- Taking stock and tracking inventory
- Creating reports and dashboards
- Accepting online orders
- Integrating with third-party programs like Mailchimp and Quickbooks
Order your POS today. Speak with Epos Now to find the right solution for your business.