Are you thinking about opening a seasonal business? Operating for only part of the year can be challenging. Prepare for the highs and lows of your first season by understanding how to start a seasonal business now.
How to start a seasonal business
Starting a seasonal business is similar to a year-round startup. But, you will face some unique challenges as you get up and running. For more guidance about how to start a seasonal business smoothly, here are five steps you can follow.
Step 1: Choose a business structure
Different business structures require different methods for keeping records and paying taxes. Depending on which structure you choose, you will have different tax obligations.
When you start a business on your own, its structure is automatically a sole proprietorship. There are different pros and cons of sole proprietorships. With this simple, low-cost structure, you and the business are the same entity. However, if your company acquires debt it cannot pay, your personal assets are at risk.
If your business will have several owners, you could form a partnership. Like sole proprietors, you and your partners are the same entity as the company. You and your partners are personally liable for business debt.
You might decide to incorporate your seasonal business. Incorporation is more expensive than other business structures and has more rules for your accounting program. But, you and the company are separate entities, so your personal assets are protected.
You can also form an LLC (limited liability company). An LLC combines characteristics of a corporation and a sole proprietorship or a partnership. Your business and personal liabilities are separate. The pass-through entity tax passes through the owners and onto the company.
Look into each structure to decide which is right for your seasonal business. You may want to consult an accountant before making a choice.
Step 2: Register your business
If your business name is not your own name, you need to register the business name with your secretary of state. The name must be different than all other companies in the state.
Let’s say your name is Joe Smith and you want to open a company called Joe’s Tree Service. Since the name of the company is different from your name, you must make sure the name is not already taken and register it.
To operate under a name other than your legal business name, you can get a DBA name. What is a DBA? DBA stands for “doing business as,” and refers to a fictitious name under which a business chooses to operate.
Also, register for necessary business licenses and permits. Your industry and location determine the licenses and permits you need. You can get a seasonal business license, which is temporary. Or, you can get a license that lasts all year.
Step 3: Create a business plan
A small business plan helps you organize your ideas, tasks, and strategies. Before you start your seasonal business, take time to prepare a plan.
Start by planning where you will run the seasonal business. Can you run your company online? Or, do you need a physical location? If you need space, you could share a location with another business that operates during a different season.
Include a budget in your business plan. As a seasonal business, your available funds may change greatly through the high and low seasons. A budget helps you manage and project cash flow. Create a business budget around a list of your expenses and projected revenue. Also, determine your initial funding sources and how you will spend startup capital.
Step 4: Market your business
A market analysis can help you decide how to market your seasonal business. Conduct a market analysis to see which products or services will be the most profitable. Gather data from state and local commerce websites, interviews, surveys, and competitors.
Once you conduct a market analysis, use your findings to market the business. A seasonal business gives you a short window to make a profit. You want potential customers to know about your company long before that window opens. Market before your season begins to avoid a slow start.
Step 5: Hire employees
Do you need workers for your seasonal business? Finding quality employees is essential for how to start a seasonal business. You only make money during part of the year, so every sale counts. Hire employees that offer excellent customer service, display efficient work habits, and are reliable.
Make sure you comply with all employer laws. You need to know your federal, state, and local employment regulations and payroll taxes. Payroll software can help you record payroll and pay employees. Some software programs file and deposit payroll taxes for you.
Whether you operate seasonally or year-round, you need to record your business’s transactions. Track your books with Patriot’s online accounting software. We offer free setup and support with our simple, streamlined program. Try it for free today!
This article is updated from its original publication date of May 3, 2016.This is not intended as legal advice; for more information, please click here.