Starting a Business in 7 Steps
Choose a business name for your business
Decide on a legal structure for your business
Register the business
Obtain an EIN
Open a business bank account
Set up accounting and record-keeping
Obtain insurance
Before starting a business, you will typically think about a variety of factors to determine if entrepreneurship is the right path for you. You have your idea, goals & dreams in mind. Perhaps you have even begun earning extra income in your operations. Here are the 7 steps to stay on the right path to be in compliance!
1. Choose a business name for your business
Choose a unique name for your business that is not already in use by another business. Here are some ways to research if a business name is in use:
Conduct a Google search: Start by conducting a Google search of the name you want to use to see if any other companies or websites are using it. This can help you identify potential competitors or businesses that may already be using a similar name.
Search the USPTO trademark database: The United States Patent and Trademark Office (USPTO) maintains a searchable database of registered trademarks. You can search this database to see if the name you want to use has already been registered as a trademark by another company.
Check with your state's Secretary of State: In many states, businesses are required to register with the state's Secretary of State. You can check with this office to see if the name you want to use is already registered by another company in your state.
Use a domain name registrar: You can also use a domain name registrar, such as GoDaddy or Namecheap, to search for available domain names that match the name you want to use. If the domain name is already taken, it may be an indication that the business name is in use.
By conducting thorough research, you can avoid potential legal issues and ensure that your business name is unique and memorable. It's also a good idea to consult with a legal professional or trademark attorney to help you navigate the process of choosing and registering a business name.
2. Determine the business structure
You need to decide on the legal structure of your business, such as:
Sole Proprietorship: "Sole Prop"
Single Member LLC: "SMLLC"
Partnership (1065): "Partnership"
C Corporation: "C Corp"
S Corporation: "S Corp
To make an informed decision, it's a good idea to consult with a legal or financial professional who can provide guidance on the pros and cons of each legal structure. A lawyer can advise you on the legal requirements and obligations associated with each structure, while an accountant can help you understand the tax implications and financial considerations.
Ultimately, the decision on which legal structure to choose will depend on your specific business needs and goals. By doing your research and seeking professional advice, you can make an informed decision that sets your business up for success.
3. Register the business
Register your business with the appropriate state agency and obtain any necessary permits and licenses. The state and local agencies that a business needs to register with in the US may vary depending on the location & also the legal structure of the business entity. The registration typically includes:
Secretary of State & Or The County Recorder’s Office: Businesses are usually required to register with the Secretary of State in the state where they plan to operate. This process establishes the legal existence of the business and registers its name. For Fictitious Business name or DBA, the business’s would file it at the County’s Recorders office.
Department of Revenue/Taxation: Businesses are also required to register with their state's Department of Revenue or Taxation to obtain any necessary tax IDs, licenses, and permits.
County/City Clerk: Some states or localities may require businesses to register with their county or city clerk's office to obtain local business licenses.
Workers' Compensation Agency: Businesses with employees may be required to register with their state's Workers' Compensation Agency to obtain workers' compensation insurance.
Industry-specific agencies: Depending on the type of business, there may be additional state or local agencies that need to be contacted, such as the Department of Agriculture, Department of Transportation, or Department of Environmental Protection.
4. Obtain an EIN
Apply for an Employer Identification Number (EIN) from the IRS. An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify a business entity for tax purposes. the 4 steps to apply for an EIN online:
Go to the IRS website: Visit the IRS website and click on the "Apply for an EIN Online" link. You will be directed to the EIN application page.
Fill out the application: Fill out the online application form with your business information. You will be asked to provide your business name, address, and type of entity, as well as your name and Social Security number if you are the owner.
Review and submit: Review the application to ensure all information is correct and complete, then submit it electronically. You will receive an immediate confirmation of your EIN.
Download and save your EIN: Once you have received your EIN, download and save the confirmation document for your records. You will need this number to file tax returns and other important business documents.
5. Open a business bank account
Open a separate bank account for your business to keep your personal and business finances separate. Keeping a separate business bank account is important for maintaining accurate financial records, complying with legal and tax requirements, building business credit, and projecting a professional image.
6. Set up accounting and record-keeping
Set up a system for keeping track of your business finances and accounting. An accounting system is necessary for a business to effectively manage its finances, comply with tax regulations, prepare financial reports, maintain accurate records, and make informed decisions about your business's financial future.
7. Obtain insurance:
Purchase any necessary insurance policies for your business.
Start operations: Once all of the necessary steps have been completed, you can begin operating your business. Remember, starting a business takes time, effort, and dedication. But with careful planning and execution, it can be a rewarding and fulfilling experience.
Running and operating a business requires ongoing attention to many details to ensure compliance with tax laws and regulations. Here are some key considerations to keep in mind:
Keep accurate financial records: It's essential to keep accurate and up-to-date financial records to track income, expenses, and deductions. This will help you prepare and file tax returns accurately and on time.
Understand your tax obligations: Make sure you understand your federal, state, and local tax obligations, including income tax, payroll tax, sales tax, and other applicable taxes. Keep track of filing deadlines and make sure you submit the required forms and payments on time.
Maintain good communication with the IRS and state tax authorities: If you have any questions or concerns about your tax obligations or filing requirements, reach out to the IRS or state tax authorities for guidance. It's better to be proactive and address any issues early on than to wait until problems arise.
Stay informed about tax law changes: Tax laws and regulations can change frequently, so it's important to stay informed about any changes that may affect your business. You can subscribe to IRS newsletters or consult with a tax professional for updates and guidance.
Use tax software or consult with a tax professional: Consider using tax software or working with a tax professional to help you prepare and file your tax returns accurately and on time. This can help you avoid costly mistakes and penalties.
If you need the right tax professional to help you with your tax filing needs, we can definitely help you out!
