6 Steps to Run Your Small Business Like a Big Business

By Allie Johnson
The Hartford Small Biz Ahead | Originally published April 20, 2018
Updated: September 28, 2022

One reason some small businesses fail is that new entrepreneurs can get so excited about the creative side of the enterprise that they neglect some of the basics of setting up and running a business.

If you started your small business basically by the seat of your pants, it’s time to make it official. Here are six steps any serious business owner should take:

1. Get Business Insurance

It’s essential to obtain business insurance to protect your small business from risks, including property damage, theft, and liability. Business insurance Helps protects your property — from your building to your computers and office furniture — from storms, fires, and other disasters that can damage your business. Business insurance also helps cover you if you get sued — for example, if a customer trips and falls while visiting your shop.

Your coverage also should include lost income insurance, which reimburses you if your business has to shut down temporarily due to a fire, storm, or other covered situation. Being properly covered also could prevent you from losing out on new business, says David Waring, co-founder of FitSmallBusiness.com. “If your small business does business with larger corporations, they will often request proof of insurance,” he says.

2. Open a Business Bank Account

Opening a business checking account can help you keep your business funds separate from your personal money. It’s also essential to get a small business credit card or to keep a separate personal card just for business use, Waring says.

Failing to keep business and personal funds separate “creates a nightmare at tax time,” Waring says, noting that you’ll have to spend hours combing through your personal bank statements to try to pick out business expenses and income.

A clean separation of business funds also can save time, headaches, and financial costs if you ever face an IRS audit. And, if you have a money-making enterprise that some people treat as a hobby — for example, jewelry making or photography — establishing a separate bank account can show the IRS you mean business.

3. Request a Tax ID Number

If you’re a sole proprietor, the IRS might not require you to have an Employer Identification Number (EIN), also known as a federal tax ID number. In fact, some sole proprietors use their own Social Security numbers on business forms for years. But getting an EIN takes seconds and can instantly up your professionalism.

Procuring an EIN from the IRS also helps to protect you from business identity theft by shielding your personal SSN from too many prying eyes. While a thief could steal your EIN, they could not use it to harm your personal credit.

4. Implement the Right Business Structure

It’s important to get advice from multiple sources and, if you have any question about the correct structure, seek counsel from an attorney who understands your type of business.

The structure you choose will affect the type of taxes you pay…[MORE]

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To read the entire article by Allie Johnson at The Hartford Small Biz Ahead website , visit: 6 Steps to Run Your Small Business Like a Big Business