How To Start A Business In New Hampshire

Are you dreaming of starting your own business in New Hampshire but not sure how to begin? To help simplify making your dream a reality, our guide is here to help you move forward.

Steps To Start A Business In New Hampshire

Step 1: Choose a Business Idea

Starting your own business in New Hampshire begins with a big decision: figuring out what kind of business you want to run. Maybe you’ve already got a great idea in mind, or perhaps you’re still thinking it over.

Either way, we’ve got a collection of business ideas that might provide some inspiration or help research your business idea further. Our library offers plenty of information on various industries, costs to start, tips, and lots more.

Step 2: Write a Business Plan

Once a solid business idea is in place, it’s time to start working on the business plan. A business plan will help you identify the resources needed to get your business off the ground and outline the path you need to take. It will also provide potential investors and lenders with an understanding of your goals and objectives so they can make informed decisions about whether or not to fund your business.

Creating a business plan your first time can seem like a big task, but we have a guide on writing a business plan to help you get started.

Step 3: Find Financing

After the idea has been finalized and the business plan is ready to go, the next step is to make sure you can get the funds to make it all happen. Small businesses in New Hampshire have access to various funding options, including personal funds, conventional bank loans, SBA loan guarantees, microloan programs, and investors. Each funding option has its own advantages and disadvantages, and it is important for businesses to carefully consider their options before making a decision.

Conventional bank loans are a common option for funding a business. These loans usually require collateral, good credit scores, and a personal investment (typically between 15% and 25% of the total startup costs), so they may not be accessible to everyone.

If the bank decides the loan is too risky to fund themselves, the Small Business Administration (SBA) provides loan guarantees to help small businesses secure from a bank.

Microloan programs provide small businesses with short-term loans ranging from $500 to $50,000. Microloan programs are offered by non-profit organizations such as the Granite State Development Corp’s GSDC Micro Loan fund. The interest rates for microloans are typically higher than traditional loans, but the lending criteria are usually more flexible than the bank.

Investors are another potential source of funding for businesses in New Hampshire. Investors can provide capital in exchange for equity in the company or other financial returns on their investment.

Step 4: Select a Business Structure

The next step to starting a business in New Hampshire is selecting a business structure (also called a business entity), which is how a business is legally organized to operate. Choosing the right type of structure for your business is important as it will determine how it is taxed and the legal liabilities of its owners.

In New Hampshire, there are four common types of business entities: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).

A sole proprietorship is a business owned by one person. This type of structure has the simplest setup and requires minimal paperwork (if any) to get started. The owner has complete control over the business but also carries all of the financial risks and liabilities. Pros include ease of formation and complete control over the business. Cons involve unlimited personal liability and potentially more difficulty in raising capital.

In a general partnership, two or more people share ownership in a business. Like a sole proprietorship, the partners are personally responsible for the business’s debts and liabilities. Pros include shared responsibility, pooled resources, and simplicity in formation. Cons consist of unlimited personal liability, potential disputes among partners, and challenges in raising capital.

A corporation is a legal entity that is separate from its owners (referred to as shareholders). It can make a profit, be taxed, and be held legally responsible for its actions. It offers limited liability protection, meaning shareholders are not personally responsible for the business’s debts and liabilities. Pros include limited liability, easier access to capital, and potential tax advantages. Cons involve complex formation, potential double taxation (profits taxed at the corporate level and again at the shareholder level), and extensive administrative requirements.

The Limited Liability Company (LLC) combines elements of both sole proprietorships/partnerships and corporations for its owners (referred to as members). Pros include limited liability, easier administration compared to the corporation, and tax flexibility. Cons consist of more complexity in formation compared to sole proprietorships and general partnerships, plus state filing and renewal fees.

Forming a corporation or LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.

Some popular formation services include:

IncFile - Great service and free registered agent the first year.

Northwest - Privacy-Focused: Free registered agent and private business address for 1 year!

ZenBusiness - Easy to use and free registered agent for 1 year!

Step 5: Register the Business

Once the business structure is set up, the next phase is to get the business registered. Registration requirements vary depending on what the business does and the specific rules of the municipality where the business is located. The overall process for obtaining necessary permits and licenses is generally straightforward, and here are some common ones to consider:

State business registration: All businesses operating in the state will need to register with the New Hampshire Secretary of State. In addition, businesses are subject to the Business Profits Tax, a tax based on annual income, or the Business Enterprise Tax, which is based on total compensation paid out, including dividends and interest.
Employer Identification Number: An Employer Identification Number (EIN) is a unique identification number that is assigned to businesses by the Internal Revenue Service (IRS). General partnerships, corporations, multi-member LLCs, or any business with employees are required to get one.
Business licenses: There isn’t a state of New Hampshire business license; however, some cities and towns require businesses to obtain local permits before operating within their jurisdiction.
Business name registration: Sole proprietorships and partnerships operating under a business name, versus the owner(s) full first and last name, will need to file a Registration of Trade Name, also known as a DBA or Doing Business As with the Secretary of State.
Professional licensing: Some professions or occupations, such as accountants, barbers, body artists, hunting & fishing guides, and manicurists, require licensing in New Hampshire.
Zoning: Before starting to operate a business (even if it’s home-based), be sure to check local zoning regulations to ensure the business can legally operate out of its location.

Step 6: Open a Business Bank Account

The next step is to open a business bank account. While sole proprietors and partnerships can use the owner’s personal bank account, separating personal and business funds is a better way to keep track of business expenses and revenue, which will help with accounting and tax purposes.

Separating business and personal funds is especially important for corporations and LLCs as this helps protect the owner’s personal assets in case of legal or financial issues that may arise with the business by avoiding the comingling of funds.

Step 7: Hire Employees

If you plan to hire employees, it can be easy to get overwhelmed by the process. As a new employer, you will need to register with the New Hampshire Department of Employment Security and the Internal Revenue Service, in addition to paying worker’s compensation insurance, displaying labor law posters, and paying payroll taxes.

Step 8: Obtain Business Insurance

As a small business owner in New Hampshire, it is also important to understand what insurance coverage your business may need. Insurance can help protect your business from financial losses due to unexpected events such as accidents, natural disasters, and lawsuits.

In New Hampshire, all employers with employees must purchase workers’ compensation insurance coverage. This type of policy covers employees injured while performing their job duties and helps cover medical expenses and lost wages due to an accident or illness related to their job. Also, business owners may need to purchase commercial auto insurance if they own vehicles used for business purposes. This insurance covers damages caused by an accident involving a business-owned vehicle. Personal policies don’t often protect a vehicle owner if the vehicle is damaged while being used for business purposes.

Many businesses have general liability insurance covering common third-party risks such as property damage, bodily injury, and personal or advertising injury claims. It also protects against claims arising from negligence or errors made by employees or contractors working on behalf of the business.

Step 9: Set up an Accounting System

Another step to take care of when starting a business is putting a bookkeeping system in place. When it comes to bookkeeping, several types of records need to be maintained, such as sales receipts, accounts payable and receivable, bank statements, payroll records, invoices, and other important financial documents. It’s important to keep these records organized to have an accurate picture of the financial health of your business.

Bookkeeping is an essential aspect of running a successful small business, as it is not only used to prepare taxes but also helps track financial transactions and monitor the financial health of the company.

This material is property of StartingYourBusiness.com

Common questions when starting a business in New Hampshire

What are the steps to starting an LLC in New Hampshire?

There are three main steps to starting an LLC in New Hampshire. These include:

1. Making sure the LLC name is available
2. Appointing a New Hampshire Registered Agent
3. Filing the Certificate of Organization

For more details on setting up an LLC, check out our guide on how to start an LLC in New Hampshire.

How much does it cost to start an LLC in New Hampshire?

The cost to start an LLC in New Hampshire is $100 to file the Certificate of Organization with the New Hampshire Department of State.

Does a sole proprietor need a business license in New Hampshire?

In New Hampshire, whether a sole proprietor needs a business license depends on the type of business they plan to run and where it’s located, not the business structure itself.

Unlike some states, New Hampshire does not have a general business license requirement for all businesses. However, certain types of businesses may need specific licenses or permits to operate legally.

For example, businesses involved in regulated industries such as food services, health care, childcare, and construction may need to obtain specific licenses or permits. Additionally, local governments in New Hampshire, such as the city or town where the business is located, may have their own licensing requirements. It’s important for sole proprietors to check with their local city or town clerk’s office to find out about any local licensing or permit requirements.

New Hampshire Small Business Resources

There are 136,506 small businesses in New Hampshire, which is 98.9% of all businesses in the state,¹ and 49.2% of New Hampshire employees work for a small business.² Because of the economic impact of small businesses, there are a number of small business resources to help New Hampshire businesses start and grow. Some of these include:

Center for Women & Enterprise: The CWE offers programs and services to assist women in starting and growing their businesses.
New Hampshire Procurement Technical Assistance Program: The PTAP assists businesses in New Hampshire that are interested in contracting opportunities.
New Hampshire Small Business Development Center: The SBDC is a resource for small to medium-sized businesses, offering advice and education to support growth and development.
SCORE: SCORE provides education and mentorship from volunteer business professionals.
Small Business Technical Assistance Program: The New Hampshire Department of Environmental Services offers the SBTAP program to assist small business owners in understanding and complying with air and other environmental regulations.