Starting a Business in 2022
Are you going for it in 2022 and planning to start a new business? If yes, now is the time to turn your idea and/or expertise into a reality, a viable and sustainable business. In doing so, you will be in good company. According to the U.S. Census, in 2021, individuals, like you formed 4.3 million new businesses. Technology, technological innovation, as well as business trends, continue to make it possible for small businesses to start, thrive, and succeed.
As we live through the COVID-19 pandemic, increased innovation and technology have allowed businesses to have vast possibilities and opportunities. New businesses will be able to use these technologies to collaborate seamlessly with clients regardless of location, which levels the playing field. So, no limits or arbitrary boundaries. In fact, both new and existing businesses must continue to embrace virtualization, collaborative, and project management technology to be sustainable to meet potential clients where they are.
When you begin to implement your business plan here are a few items that should be on your checklist:
Strategic Plan/Vision – Create the roadmap to and for your business – It is important that you give birth to your company with a plan. It doesn’t have to be a multipage, complicated document, but it at a minimum, be a simple guide that outlines your venture’s goals, objectives, and business vision. A good place to start is a one-page plan. This will allow you to document your audience, potential clients, and competition. Figure 1 illustrates the key items that should be included:
Selecting your business entity type (Incorporating or forming an LLC) – Although some smaller businesses typically begin as sole proprietors, more often business owners start by incorporating or forming Limited Liability Companies (LLCs). There are many reasons why this is important, but one of the biggest is to afford your business liability protection by separating the business from the business owner’s personal assets. In contrast, a sole proprietor would be held responsible for any debts or litigation brought against the business, their personal assets at risk. As part of your due diligence exercises, which should be conducted, is the determination of which type of entity to form. The questions you should ask are:
- What type of management structure is best for my company: Formal or Flexible?
- What are the annual compliance documents?
- What is the best taxation for my business scenario: Double Taxation or Pass-Through Taxation?
- Growth and Funding: Which entity is best for raising capital?
The most common type of formal business structures include:
Limited Liability Company (LLC) – An LLC is a less formal type of business entity that merges limited liability protection and pass-through taxation. This structure is a common choice for small business owners. While taxes can be passed through, the business owner can elect to be taxed as a sole proprietor, partnership, and in some cases, a corporation, thus, separating business assets from the owner’s personal assets.
Corporation – A corporation provides personal asset protection and is the most formal type of business structure, separating the owner’s personal assets from that of the business. In some cases, corporations can be taxed twice federally but can elect to be taxed as an S-Corp. An S-Corp is an election filed with the IRS in which the shareholders’ profits are passed through to their individual tax returns.
Capturing 2022 Business Trends – There is a promising economic forecast for 2022. According to U.S. Census Bureau statistics on business formations, experts predict that 17 million businesses will be launched in 2022. Hopefully, you will be able to say that you created your own journey to success in the post-pandemic world while maintaining or adopting virtual solutions and technology that are front and center in the pandemic. Businesses, both new and old, will tap into expanded opportunities and reach new and existing customers through technology.