7 commonly overlooked steps when starting a small business

7 commonly overlooked steps when starting a small business

There’s a moment every new business owner knows well, the mix of excitement and uncertainty that hits once you decide to go for it. You have the idea, the energy and maybe even your first few customers. Then come the practical questions: Should I register as an LLC or S Corp? How do I pay myself? What happens when I hire someone?

Starting a business often feels like wearing many hats at once: sales, HR, customer service, manager, owner and more. ADP explains how the difference between a company that hits the ground running and one that struggles usually comes down to understanding where the early risks are and how to manage them to avoid issues down the road.

1. Don’t skip the setup.

You don’t need to be a lawyer to start a business, but you do need structure. The first step is choosing your legal setup. The decision between an LLC, S corporation or sole proprietorship affects your taxes, liability and how potential investors may view your business later.

Once you register, apply for an Employer Identification Number (EIN) from the IRS and open a dedicated business bank account. Keeping personal and business finances separate helps protect you legally and simplifies recordkeeping.

New entrepreneurs sometimes skip these steps to get started faster. However, establishing clear systems early can help prevent costly cleanups later and keep you better organized as you grow.

2. Hire with intention.

When the workload becomes too heavy to handle alone, it might be time to bring in your first hires. Proceed with caution and intention. These people coming in on the ground floor will shape your company’s culture and future growth, so take time to define what you need.

Write detailed job descriptions that include responsibilities, skills, qualifications and compensation. Use multiple channels like online boards, referrals and local networks to find candidates. When bringing your first employees on, make sure all tax and employment forms are completed correctly, and set clear expectations for performance and communication.

While it might be difficult to compete with more established employers on salary, candidates also value transparency, flexibility and genuine opportunity for growth. Know your strengths as a business and let candidates know them during the interviewing process.

3. Think about a process for pay.

Setting up payroll early is smart. It keeps taxes accurate, allows you to pay your first hires and yourself when the time is right, simplifies and speeds up future hiring and helps ensure compliance from the start.

Payroll also connects to a growing compliance consideration: pay transparency laws. In many states and cities, employers must include pay ranges in job postings or disclose them during hiring. These laws are meant to promote fairness and consistency, but they vary widely.

As you think about pay:

• Anticipate the first few roles you’ll need to fill.
• Research competitive pay rates for those roles.
• Review pay transparency rules in your state and municipality.
• Document how you determine pay for each role.
• Communicate salary information consistently during hiring.

Having a roadmap prepared for when you’ll likely need to bring people on, what those first roles might be and the cost they’ll incur can help you plan for growth over that first year. Establishing clear pay practices from the very start not only reduces compliance risk but also helps build trust with employees.

4. Watch for compliance changes.

From tax deadlines to payroll filings and labor regulations, the rules around compliance evolve constantly. Missing even one can create unnecessary risk.

Schedule regular reviews of your payroll, tax and HR processes. Mark filing dates in advance and stay updated on new laws, especially if you operate in multiple states. If you’re unsure, consulting with an accountant or HR professional can save you time and penalties down the road.

Think of compliance as regular maintenance. It helps keep the business running smoothly and protects what you’re building.

5. Document your policies.

Transparency and communication matter in every size of business. Be clear on your expectations. Don’t assume employees “should just know,” especially if you’re still establishing processes as the company grows. People come to you with varied work experience and expertise. Explain what you want, what the company’s goals are and how they can contribute to growth.

Beyond transparent communication, it’s important to formalize your policies. Establishing an employee handbook from the outset can help you set clear expectations with your employees. From a compliance perspective, some states require an employee handbook when you reach a certain number of employees. Regardless, it’s a best practice for all businesses to have when onboarding employees.

6. Think like an employee.

You don’t need a large HR department to think like an employee; establishing yourself as an attractive employer is about clear communication and follow-through. People tend to stay with companies where they feel respected, listened to, and informed. For a small business, that can make all the difference.

While you might not be able to offer a comprehensive slate of benefits to start, think about the unique offerings you can extend, whether that’s flexible scheduling and remote work options or discounts and employee perks. Think about your onboarding process too, and the type of culture you offer, as they can make a big impact on how your employees feel about their work.

7. Plan for the unexpected.

Even the most well-prepared entrepreneur can’t predict every challenge. Build a financial cushion, maintain insurance coverage and seek out mentors or advisors who can offer perspective when you hit a roadblock.

Success is the result of deliberate choices that reduce risk, strengthen compliance and create stability. The more you prepare now, the better positioned you’ll be when opportunities appear.

This story was produced by ADP and reviewed and distributed by Stacker.