How to Start a Small Business
Updated on December 02, 2019
Updated July 26, 2019
Starting a small business can be a time of both excitement and uncertainty. As a new or prospective small business owner, you may have questions about planning, finances, and costs like small business health insurance.
Here are 5 steps on how start a small business the right way.
1. Start with research
Once you have an idea for your business, you should gain insight into how your product or service will fit into the current market. Key questions to consider during the research and data-gathering stage include:
- What does the local and regional market landscape look like for your industry?
- Who will your customers or clients be? How would you target and appeal to their needs?
- What is the competition? And how would you differentiate your business?
- How would technology, weather, and seasons impact or influence your small business?
By taking the time to carefully and realistically evaluate the advantages and disadvantages of your business idea, as well as thinking about external opportunities and challenges, you can set yourself on the right path toward starting your small business.
2. Move forward with a business plan
After conducting your initial research, you need to create a business plan that will structure your work as you establish your small business.
- What is your unique value proposition? What do you bring to the table that others don’t?
- What is your mission and purpose? What are your guiding principles?
- How will you become profitable? What are your quarterly business goals?
- How will you market and promote your business? How will you demonstrate credibility?
- What are your short-term objectives? What is your long-term strategy?
3. Determine finances and organization
Next, you should review the financial, administrative, and logistical considerations of managing your business.
- Will your business need additional capital or financing from a loan or outside investment?
- Will your business be a corporation, limited liability company (LLC), sole proprietorship, or partnership? What are the related tax implications? What permits and licenses are needed?
- What accounting systems and processes will you use? Will you need to manage inventory?
- Where will your business be located? What is the property lease? Will you need to invest in materials or equipment?
4. Hire employees and build a team
Depending on your business, you may or may not need to hire employees. If you do, here are some relevant questions to consider.
- How many employees will your small business have?
- What roles and positions need to be filled?
- How many will be full-time or part-time employees?
- Will they be compensated hourly or with salaries?
- Will you use independent contractors?
- Do you need outside legal or accounting advisors?
5. Deciding on a small business health insurance plan
Thinking about health insurance benefits is an important part of starting a small business. First, you should determine whether or not you are required to offer group health plan coverage.
As per the Affordable Care Act (ACA) employer mandate:
- Businesses with less than 50 full-time or full-time equivalent employees are not required to provide group health insurance, although they can choose to offer coverage and may qualify for a tax credit to help with cost sharing.
- Businesses with over 50 full-time employees are required to provide group health insurance and pay at least 60 percent of premiums in their cost sharing solution. Note that the employee contribution toward premiums may not be over 9.86 percent of their household income.
How to save money by qualifying for a small business health insurance plan
You may qualify for small business/group health insurance if:
- You are a small business owner with at least one full-time employee other than yourself
- You qualify as a business within your state as per your state regulations
Enrolling your business in a group health insurance plan could help save some money for everyone involved. Monthly premiums are typically less per person through a group plan than through an individual or family plan, because risks are spread out across group insurance members.
Small business owner contributions and cost sharing
As a small business owner, it is vital to understand health insurance contributions. Although small business health insurance coverage is sponsored by the employer, both the employer and employees pay for monthly premiums. Also, in most states, there is usually a requirement for employers to cover at least 50 percent of the monthly premium for employees.
Learn more about affordable small business health insurance cost sharing solutions here.
Choosing a small business health insurance plan
If you and your employees decide to go with a group health insurance plan, you have many different choices depending on your needs, budget, and preferences.
- For instance, do you want to pay more for your insurance up front and less when sick, or vice versa? What medical benefits do you and your employees find most important?
- Once you decide on what direction you want to go with your group insurance coverage, you can search for plans online through a health insurance marketplace website, and compare plans based on premium and deductible costs.
- You can find out about the most popular different plan types for small business health insurance, such as HMOs, PPOs, POS plans, EPOs, and HSAs, before you shop for health insurance.
You can also read our small business preparation checklist to help guide you through the process of getting small business health insurance.
Whether you are a new or experienced entrepreneur, there are many factors to consider during the process of starting a small business. If you choose to offer group coverage to your employees, eHealth can help you find the ideal health insurance plan for your business.
This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.