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Ready to Start a New Business in Washington State? Know these 10 things

The start of a new year always lends itself to dreaming – of new heights to achieve personally, new places to travel, new financial goals to set, and so much more. No matter how 2018 went for you, 2019 is a completely new canvas, and you have an opportunity to paint your brightest and boldest colors.

So why not start up that business you’ve always dreamt of? If you’ve been dreaming of leaving your day job and diving into something new, perhaps 2019 is the year to take the plunge!

After many years of hard work gaining experience and knowledge it should be easy to start, shouldn’t it?  Not really…starting a new business is exciting, but the path is also fraught with many details – small and large – that can seem tedious at best and overwhelming at worst.

If you decide to move forward, you could be on your way to making your dreams become a reality, creating the life you want and doing the things you love. But where to start? Below we’ve provided a 10 critical steps and knowledge points to help you get going.

Note that this list is specifically focused on Seattle-area Construction companies, but in many industries and locales there are likely some equivalent actions you will need to take, no matter the type of business you are starting. Now is the time to turn that dreaming into action!!!

Choose a Business Structure – Sole Proprietor, Partnership, Corporation, or LLC? There are specific tax implications for each option. We suggest meeting with a CPA who can walk you through the pros and cons of each to help you decide which option is best for you.

Apply for an Employer Identification Number (EIN) with the IRS – This number will allow you to open bank accounts for the business, apply for state business licenses, pay employer taxes, and file tax returns.

Register your Business with the Secretary of State – This is necessary if your new business will be a partnership, corporation, or llc.

Apply for a Washington State Business License – This will allow you to conduct business in the state. This application is where you will specify if you plan on hiring employees. If so, once you file this application, the two entities that handle unemployment insurance (Employment Security Department) and workers compensation (WA L&I) will be notified automatically and you will be assigned account numbers from each entity. Also, if you know you will be doing business in specific cities, you have the option to add city license endorsements while filing this application. Not all cities offer their licenses through this service, so check beforehand to see if your city has a separate application.

Purchase Bond & Liability Insurance – WA L&I requires contractors to have a surety bond for either $12,000 (General Contractor) or $6,000 (Specialty Contractor). Liability insurance coverage can be a $50,000 property damage policy and $200,000 public liability policy OR a $250,000 combined single limit policy. You can find more information here.

Complete Contractor Registration – This allows you to work as a licensed contractor in the state. Take your completed registration application and proof of your bond & insurance to any L&I office to have it notarized and processed.

Apply for City Licenses & Permits– Many cities in WA require you have a city license to conduct business there. Access WA is a helpful site that links to each city’s web page directly.

City of Seattle – Seattle has specific labor laws that are different than the state laws. If you will have employees working in Seattle, here is where you can find information on their requirements.

Apply for Reseller Permit This allows you to purchase materials purchased for direct resale without paying sales tax.

B&O and Sales Tax – Understanding the requirements specific to your industry is critical to be sure you are charging your customers the correct sales tax rates. DOR has provided a guide for contractors to understand their requirements.

Thinking Through the ‘Why, How, and What’ of Starting a Small Business

At Joy Accounting, we LOVE working with small businesses. That may sound like an obvious point since the businesses we work with are typically fairly small. So why do we love the work we do with small businesses enough to capitalize and bold all letters of the word ‘LOVE‘? Among other reasons, it is because the business owners themselves are willing to step a bit into the unknown – with all the exciting and scary parts that implies – and we are able to share in that journey as a trusted adviser. With each new client we are humbled and thrilled to be a part of that process of getting a small business up and running.

Sometimes in the excitement to get work started, small business owners skip some critical steps. The typical owner is so overwhelmed by the tasks of today that they don’t spend a lot of time looking through the ‘big picture’ lens. Before they know it, small business owners can feel lost and harassed, even asking themselves why they took the leap in the first place.

In the initial phases of a small business, we’ve seen the most success when businesses spend time on the ‘why’, the ‘how’, and the ‘what’. Below are are a few critical steps; if you are thinking of starting a new business please don’t skip these! This is just a high level view, but each of these will require its own post sometime in the future.

Determine your vision (The ‘Why’)

Simon Sinek has been a pretty popular speaker and author in the past few years. His biggest theme is that all great leaders start with the ‘why’. If you don’t have a clear idea of why you started this journey then you are destined to fail. Small business ownership is not an easy path and you will need to lean on your ‘why’ in challenging times.

Where do you see yourself and your business in 5, 10, 15 years? Go on a weekend retreat and write down your vision for each point in time, and think about your ultimate vision of where you want to be and what you want to accomplish at the end.  Is your dream to sell your business and set sail in the Caribbean, ensuring that everyone in Africa has clean water, or something entirely different? Don’t be afraid to think about your day-to-day life. Do you want more time with family? Are you looking to avoid the commute? Do you want to be your own boss? Determine what is important to you, and ensure that your business will fulfill these things.

Once you’ve set some dreams and goals, work backwards from there to determine profit goals, employees needed to achieve that profit, and revenue goals.

Determine Internal Processes/Infrastructure (The ‘How’)

A lot of small business owners know what needs to be done but don’t take the required time to actually explain to others ‘how’ it needs to get done. It is critical to map out the processes that are in your brain (and often have been locked away there for many years). Bounce these processes off trusted advisers/friends and make sure they make sense. What worked 15 years ago may not work now! This is a critical step as you scale your business and train anyone that is associated with your business.

Getting the processes in place will also help determine the technology you need to move your business forward. What apps can help you achieve your vision and standardize your processes? You’ll need to do some research to determine what is a good fit and meets your needs. Do you need help with timekeeping and employee benefits? Or maybe you’d like an app to streamline your estimating process. Once you’ve figured out what collection of apps work well for your needs, you’ll need to implement them and train your employees on how to use them.

Determine Your Role as Owner (The ‘What’)

Of course, the first ‘what’ is what kind of business that you want to have. But assuming that you’ve made that decision, the next ‘what’ question is  ‘what role do you want to play in your business’? This is an important question that many business owners forget to ask themselves. All too often, owners fall into the trap of trying to do everything themselves, which is a one-way ticket to burnout. To avoid this, first determine what part of the business you’d like to manage yourself.

At this stage you’ll really want to hone in on how large you want your operation to be and what kinds of roles are needed to support the operation. And guess what – since you are the owner you get to decide what you end up doing! That is the beautiful and brilliant part of business ownership; don’t lose this opportunity to ensure that you operate in the space that will be maximally beneficial to your organization. It is a key topic to continually revisit as you grow so you ensure you are doing what you love and living the “why” of starting the business in the first place.

Bringing It All Together

Simon Sinek said “People don’t buy what you do; they buy why you do it. And what you do simply proves what you believe”. Of these three things, the ‘why’ is most important. If you don’t have a ‘why’, you need to go back to the drawing board. Once you’ve solidified your ‘why’, don’t skip the critical steps of ensuring you’ve thought about how you want to run your business and what you want to do from day to day in the business you are creating. And never forget that YOU ARE CREATING this business. Make sure that you don’t sacrifice any of these things things simply to accommodate what someone expects from you. This small business is your dream!