Starting a business can feel overwhelming. Whether you’re opening a brick and mortar store or an online business, there are a lot of steps involved in turning your idea into reality. Creating a business plan and securing funding are a solid beginning; at this point you’ll also need to do a few things to make sure your business is legal.
Steps to Legally Starting a Business: It Takes More Than a Business Plan!
Picking a name is a fun element of starting a business. A name not only tells potential customers what you sell but it also reveals something of your personality. Before you jump into the next activity on your business plan and start advertising your store front or online business, make sure someone else isn’t already using the name. Fortunately, most states offer a searchable database through the Secretary of State’s Office. Also, be sure to do a national trademark search to find out if another company owns the rights to the name.
It’s also extremely important to choose an appropriate structure when starting a business. Will you be operating as a sole proprietorship, a Limited Liability Company or something else? The form your brick and mortar or online business takes will determine which regulations you are governed by as well as the taxes you’ll need to pay. A second part of this process is obtaining a federal tax ID number. The IRS uses this number to locate your company and assess the appropriate tax level. You’ll also need an employee identification number, better known as a tax ID, before you can start hiring.
Whether you’re a brick and mortar store or an online business, you’ll need to secure the proper licenses and permits. Some companies, like ones that sell alcohol, need federal approval. Different states have different rules. The Small Business Administration has a helpful tool to get you started. It’s quick and easy; all you need to do is enter your zip code and business type.
Once you’ve completed the above steps, you’re just about ready to open to the public. One of the last things to do is familiarize yourself with the laws concerning employees. There’s quite a bit to learn. Some of the finer points center around verification and insurance. Even if you’re an online business, the federal government requires companies to verify all employees are eligible to work in the United States by filling out an I-9 form. Finally, if you plan on having employees then workers’ compensation insurance is a must.
Of course there’s plenty more to know when it comes to starting a business, but these few important steps should help get you started on the right path to creating a successful company. Does your business plan allow for these vital start-up activities?
Structure Law Group is a San Jose based firm that specializes in business issues including business formations, commercial contracts and taxation.