How to Successfully Open a Second Business Location

As you dive into expanding your company, you enter new, unfamiliar territory. Consider some of the following points on how to open a second business location.

Current business conditions

Figuring out how to open a second business location begins with your business’s financial situation at its current location. You should generate income on a regular basis. Your accounting records should indicate a healthy projected cash flow.

Opening a second location is a good idea when one location can’t handle the size of your company’s demand. If you frequently run out of inventory or have to turn away customers, it may be time to open a new location. To expand your market, you might want to open another location for your business in a separate city.

Second business location

How will opening a second location affect your small business? Here are some major factors to consider:


Before setting up a new location for your business, be sure there is a need for your products or services in the area. Conducting a market analysis for the new location allows you to examine the local demographics, target customers, and competition.

Does the new location offer opportunities for your business to grow? See how the new location will affect demand for your business.

For example, let’s say you own a bait shop next to a fishing pier and make steady sales. If you decide to open a second bait shop, you may not want to locate it ten miles inland. There is less demand for bait and you might not earn as much as you do at the original shop.


You will need funds to open the new location. Consider the additional costs of expanding your business, including rent, inventory, advertising, and payroll.

Do you have enough capital to open your second location? If not, you may want to create a business plan. Among the many benefits of a business plan for opening a second location, an organized plan gives you the opportunity to get outside funding from lenders.

Your business plan should include strategies for the new location’s market. Lenders want to see that you can run your current business. They also want to know that you have a detailed outline for the second location.


When it comes to recording your money, keep accounting records for each business location apart. Separate books help you monitor the health of both locations. You can see if either location is profitable or losing money. Depending on your business structure, you will also need separate records for tax purposes.

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Identification numbers

An important part of figuring out how to open a second business location is following IRS requirements. You do not need a new Employer Identification Number (EIN) for your new business location. But, if you are changing your business’s structure, you will need a new EIN for your entire business. For example, if you are a sole proprietor and you want to incorporate, you will need a new EIN.

Every state and some localities have different rules for adding business locations. Some states require you to register the new location separately from your current business. Other states allow you to use the same ID number for all locations. Check with your state and local business agencies for details about licenses, permits, and tax registrations.

Payroll and partners

Expanding your business can be rewarding, but you can’t do it alone. With multiple locations, you need someone to help you operate. You will need to choose a person to manage one of the locations. If you are considering forming a partnership, this would be a good time to do so.

You may also need to add employees. If you currently have employees, you might want to move some to the new location. Current employees understand your company. Getting your new location up and running could be easier with employees who already know how your business operates. Current employees can also train new hires.

How to open a second business location

For your new business location, you should create a thorough plan for opening and operating. Pay attention to patterns in your current business, the new location’s market, and commerce laws before opening a second business location.

When you double business locations you double your accounting records. Patriot’s small business accounting software is simple and can be used from any location. We also offer free setup and support. Try it for free today.

This article is updated from its original publication date of March 8, 2016.

This is not intended as legal advice; for more information, please click here.

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