We learned last week that the process of starting and running a successful and sustainable business involves a lot more than one would think.
In addition to a good idea and a market need for your product/service, business owners must consider their business plan, business structure, and their business location. And even then, there is always more to do.
Let's cover the remaining 5 steps you'll need to in order for you to start a thriving business.
6. Register your business
Before you or your business can legally operate, unless you are conducting business as a sole proprietor and under your own name, you must register with the state and local government. This will ensure you are doing things right in the eyes of the law, but also you might be available to personal liability protection and other legal and tax benefits.
If you are planning to do business in multiple states, including the one you registered in, you will need to fill out registration documents in both.
These documents will vary depending on the state and business structure, but they generally include:
- Business name
- Owner or management structure
- Name of registered agent
- Total number and value of shares, if applicable
While most local governments don't require businesses to register with them, some businesses may need to apply for licenses or permits. We'll discuss this more in detail under number 8.
Business owners should do their research and consult a legal team to ensure they are fulfilling all the registration requirements on the federal, state, and local level.
7. Apply for EIN & Tax ID
As soon as your business is registered, consider applying for an employer identification number (EIN) from the IRS with a simple online application.
The EIN is like a social security number for your business. And though it's not required for sole proprietorships with no employees, this number allows you to file federal taxes, hire employees, and open a business bank account.
Additionally, some states have their own tax ID numbers meaning you'll also need to pay state income tax and unemployment tax. Check with your state for the specific application process.
8. Apply for licenses and permits
As we mentioned, local governments often will require businesses to obtain specific licenses and permits in order to do business legally.
For example, bars/restaurants need health inspections and liquor licenses, hair stylists need cosmetology licenses, and if you're renovating a space to sell products or perform services, you may need to request a zoning change from the local officials.
Business owners should plan ahead so that they have adequate time to obtain these licenses and permits from their local city hall before opening their doors. The last thing you want to happen at this point is for the government to shut your business down.
9. Open a business bank account
Keeping your business and personal finances separate is key to managing your business finances and making sure tax season goes smoothly.
But, just like business structures can vary, so do the types of business bank accounts.
As a new small business owner, you should look for:
- A simple checking account with no or low monthly fees
- A bank that has convenient locations and hours of operation
- Online banking and mobile apps to help you manage your money on the go
- Loan products in case you need additional growth capital
After you determine your bank, open your bank account by providing them with the following documents:
- Official business formation documents
- Business name and location
- Date the business was established
- Business owner's Social Security number, address, and date of birth
10. Open shop and grow!
Congratulations! You fulfilled all the professional and legal requirements of setting up your business and are ready to open your doors.
It's an exciting time, but the work is far from over and this is only the beginning for your life as an entrepreneur. To make a profit and stay afloat, your business will need to grow and that takes time and effort.
Consider collaborating with more established brands in your industry or partner with an organization to get your name and products or services out there.
Starting and maintaining a business can be a lonely job. But, it doesn't have to be.
At R&R Legal, we want to be your legal strategic advisor, ensuring your business has the appropriate foundations you need to grow as big as you want to go and the systems to protect what you've built.
No need to do this alone. Reach out today to learn how we can work together.