How to start a business in New Hampshire in 8 steps
New Hampshire is a state of great beauty and attracts thousands of tourists every year. From the Seacoast to the White Mountains, there is no shortage of quaint towns with charming little stores. One of the most appealing aspects of visiting and doing business in New Hampshire is no sales tax, and New Hampshire is the only state in the entire country to do away with this. Also, According to nheconomy.com, New Hampshire has one of the lowest tax burdens for businesses in the country. That being said, opening a shop in the state could be a very smart move.
While New Hampshire may be one of the best states to start a business, there is still quite some groundwork to be laid ahead of time. You will need to establish a legal structure, register your business with the state, and apply for a license—among other tasks. However, before you do all that, you will need to brainstorm and decide on the kind of business you want to start.
1) Think about the type of business you want to start
You know the entrepreneur life is for you, but you’re unsure what business you want to start. Perhaps, it’s a bar, a laundromat, or a barbershop. Whatever the business idea is, make sure to do plenty of research ahead of time. You don’t want to end up in an industry you are not passionate about. You want to enjoy every day you walk into your shop—not dread it. Pay a visit to some of the area businesses and draw on their experiences. They have been in your shoes before and can give you an honest rundown of what running a business in New Hampshire is like.
Owning and operating a business is not for everyone. You are responsible for overseeing so many day-to-day operations: customers, staff, inventory, finances, and other administrative duties. Not to mention the opening and closing procedures. Whatever you do, don’t forget to ask yourself the important questions beforehand, as they will weed out any underlying doubts and uncertainty.
Luckily, there are plenty of business resources available through the New Hampshire Small Business Development Center. This organization is committed to economic development in the Granite State, and its resources have been carefully curated to ensure success for the businesses that utilize them. The New Hampshire Small Business Administration office is another great resource to take advantage of, and they have a great guide for New Hampshire business owners.
2) Set up your legal structure
There are several different ways to structure a business in New Hampshire. It’s important to choose the structure that meets your unique business needs, as well as your personal and business goals. There are 5 main structures available, and each carries its own set of benefits:
- Sole proprietorship: A sole proprietorship is one of the easiest structures to establish because, well, you’re the only employee! In a sole proprietorship, you receive the profits, but any debt accrued from the business is your responsibility. You will need to file a trade name with the Secretary of State, which is a mandatory requirement by the state.
- Partnership: Sometimes, two heads are better than one, and you may want to tap into the expertise of another professional. If this is the case, a partnership may be the best option for you. In a business partnership, you and your partner are no different than a sole proprietor in that your assets are not subject to liability protection. In New Hampshire, three types of partnerships are available: General Partnership, Limited Partnership, and Limited Liability Partnership.
- C Corporation: If you want to build out a large company with several employees, a corporation might make the most sense. A C Corporation is a business structure where owners and shareholders are taxed separately from the business entity. Technically, you only need one person to form a corporation. However, this type of structure is usually pursued when there are several shareholders on board. As a corporation, you will need to assemble several documents, such as the articles of incorporation and corporate bylaws for governance.
- Limited Liability Company (LLC): Unlike the other two structures, an LLC offers you the financial protection of a corporation. It can also be a great option if you are looking for more flexibility regarding taxes. While an Operating Agreement is not required in NH, it is good to have one when establishing an LLC. However, you will be required to submit several forms, such as the Certificate of Formation.
- Nonprofit: A nonprofit is a legal entity that generates income through donations and grants. If you are looking to focus on social causes in your work, this is the best way to structure your organization. In many states, including New Hampshire, nonprofits are tax exempt. As a nonprofit in the state, you will be required to file an annual report and a Form 990 with the NH Director of Charitable Trusts.
Once you have decided on a business structure for your startup, you will need to develop a business plan. The business plan is a key component that outlines everything a person needs about the business—from customer demographics to the management team.
3) Name and register your business
The next step in the process is an exciting one—naming and registering your business with the Secretary of State! There are some rules in New Hampshire when it comes to naming a business, and they can vary depending on the business structure in place. However, no matter the business structure, it is important to keep it simple and unique. It is advised that you conduct a business name search before proceeding.
- For LLCs - Your LLC name must not be easily confused with government agencies such as the FBI or treasury. Also, it must include “Limited Liability Company” or abbreviations “LLC” or “L.L.C.”
- For corporations - Your corporation name must reflect what is outlined in the Articles of Incorporation. You must include the terms “corporation,” “incorporated,” or “limited” in your name.
- For a sole proprietorship - If you want to use a different name than your surname, you must file for a Doing Business As (DBA) name.
- For a partnership - Like a sole proprietorship, you will need to file for a DBA name if you wish to use a different name than partners’ names.
Once you have decided on a name, you will need to fill out an Application for Reservation of Name with the Secretary of State. Names can be reserved for up to 120 in the state of New Hampshire, and there is a $15 filing fee.
4) Apply for licenses and permits
A business license is mandatory and allows you to operate your business in the state of New Hampshire legally. You can find a full rundown of the required licenses on nh.gov. Business licenses are offered in a wide variety of industries. These include, but are not limited to:
Permits are a bit different than licenses in that they are typically given for health and safety-related reasons. For example, there are environmental permits given to New Hampshire businesses that collect waste and recycled products.
Bear in mind that some towns in New Hampshire have different criteria for obtaining licenses and permits. These are called municipal permits and licenses, and businesses in trades such as architecture and child-care may be subject to them. Additionally, all licenses and permits expire annually, so you will need to renew when each year is up.
5) Choose a location
Another exciting part of starting a business—aside from giving it a name—is finding a location. If you are in food service, you will have an ample selection of spaces to choose from. You could opt for a spacious and airy spot in a historical building or go small-scale and trendy with a food truck.
There are a few things to consider when deciding on where to set up shop. You want to make sure it is a large enough space where you have room for storage and inventory. Additionally, make sure it is located in a place that attracts visitors year-round. If we can make a little recommendation, try looking at towns on the seacoast such as Portsmouth or closer to the ski slopes in Conway.
6) Open a business bank account and prepare for future taxes
The next step is not quite as fun as choosing a name or location but is equally essential—and that’s opening a business bank account. If you are a sole proprietor, a personal bank account will suffice. However, if you are a corporation, you will need to open a business account to separate assets and liabilities. You will also need a business credit card for things like company outings and office supplies. Many banks, such as the Bank of New Hampshire, offer flexible commercial credit card services that include perks like free online reporting tools and no fees for additional employee cards.
When it comes to taxes, you will need to obtain a business tax ID and federal Employer Identification Number (EIN) from the IRS for both state and federal tax filing. Taxing requirements vary depending on the business structure, so it is important to research the specifics. Keep in mind: if you are a business that has accumulated more than $222,000 in gross receipts from business activities, you will be required to file a business enterprise tax return in the state of New Hampshire.
We also recommend hiring a bookkeeper to manage the business finances. Additionally, you may want to keep an account on retainer. Accountants are aware of all rules and regulations and can be a godsend come time for tax filing.
7) Purchase business insurance
Purchasing small business insurance is not a step to overlook, as it protects your business in case of an incident. Depending on the industry you’re in and the structure of your business, the following policies may be required—especially when applying for licenses and permits:
- Workers’ compensation insurance - Say an employee falls and breaks their knee on the job—workers ’comp will cover any medical bills associated with the injury. By law, all public and private employers are required to have workers’ comp insurance. The New Hampshire Department of Labor has a Workers’ Compensation Division that offers information on cost containment and other legal matters.
- General liability insurance - While New Hampshire does not require General liability insurance by law, it is a must-have for any business owner. It protects your business and personal assets from legal claims such as personal injury or property damage. It will pay the medical bills of an injured patron should they fall in your place of business.
- Business interruption insurance - In the event of a natural disaster, such as an extreme winter storm (which is commonplace in NH), business interruption insurance covers any lost income. In fact, several businesses that have suffered COVID-related losses have been covered by this type of insurance.
- Business property insurance - Also called Commercial Property Insurance, Business property insurance protects you if your place of business is damaged or destroyed. If you own expensive equipment, it will also be protected from incidents like theft.
All of the insurance options listed above, except workers’ compensation, may be purchased in one policy called a Business Owner’s Policy. We like to make it easy here at Huckleberry.
8) Create a marketing plan, hire employees, and more
The final step is developing a comprehensive marketing plan. This may include social media, as well as digital platforms. Several marketing agencies across New Hampshire can help you execute your plan, and you can find a full list here.
Unless you are a sole proprietorship or partnership, you will need to think about hiring your first employee. The New Hampshire Department of Labor has abundant resources that can help you through this journey of business ownership.
Starting a business anywhere in the world isn’t simple, but there are people and resources to guide you every step of the way. Huckleberry is one of those resources. We want to make it faster than ever for you to purchase protection for your New Hampshire business! We’re talking faster than you can down a couple of apple cider donuts.