Starting a new business can be daunting; especially if your operations are based in an unfamiliar state. There are various local regulations and challenges of which you need to be aware. So why does it? Maybe it has to do with client accessibility. Other times, it’s an individual choice to live in that part of the county.
Whatever the reason, you need to know the ins and outs of starting over in a new place. Here’s what you must consider before setting up shop in a new state.
Need to Get Different Licenses and Certifications
Every state has their own sets of licensing and certification protocols. These can be highly specific between different states and industries. Restaurateurs are especially prone to the various discrepancies from place to place (such as minimum wage requirements).
There are many permits and licenses necessary to open a restaurant in most states. You will need a business license and a food handler’s permit. You will need liquor and music licenses if you want to offer those things. The costs and trouble of getting these certifications can really add up. It’s important to look at all requirements before you decide to make a move.
Different Tax Codes and Incorporation Fees
There are huge differences between incorporation requirements and taxes between states. States such as Wyoming have extremely low incorporation costs, as well as tax rates. This can be extremely favorable for starting a business. Then again, it’s also important to note that Wyoming doesn’t have a high population of consumers. This isn’t important for certain companies. But businesses that require heavy foot traffic for success should keep this in mind. If you’re starting an online-only business, however, states with low taxes and costs make sense.
Different Insurance Requirements
Insurance requirements also vary by state. This probably won’t be an issue if you’re the sole proprietor of your company. But if you plan on hiring employees, you need to pay attention to this.
Business insurance comes in many forms. For instance, the requirements and costs of workers’ compensation change when you cross state lines. What was totally commonplace in your former location might be against the law in your new one. Make sure you consider the potential impact of this on your business before you start anew in a different state.
How Much Will It Cost to Live and Do Business There?
It’s essential that you factor in other costs before starting up in a new state. Rent can single-handedly determine the profitability of a business. Consider some of the higher rent states, such as California, Washington, and New York. These are all desirable places to start a business. They attract some of the best talent. Plus, people in these states tend to have more disposable income. This means that they have more potential to spend money on your goods. However, these pros can be totally offset by exorbitant office or retail lease prices. You need to do some research before jumping into a high-rent city.
Don’t forget that you’ll need to pay for yourself to live as well. Can you afford to spend thousands of dollars per month on food and rent while starting a new business? If you’re an experienced entrepreneur, the answer is probably yes. But people with less money and experience might struggle to make ends meet in an expensive location. This can put extreme strain on your business, and potentially cause failure.
You need to think about a lot of things before starting a business in a new state. Financial implications are of course paramount. However, you also need to consider if the choice will ultimately give you fulfillment. If not, you should keep looking for a new location.