Starting a business is exciting, but can also be stressful when making sure everything is in place. After doing market research, choosing an industry or specialty, creating a business plan, picking a location, and funding your business, you still have a handful of administrative steps to complete to ensure you meet all of your legal obligations.
Selecting a business structure is one of the most important decisions that you could make when starting a business. Common choices are:
- Sole proprietorship
- Limited Liability Corporation (LLC)
- C Corporation
- S Corporation
There are several factors to consider when determining the best structure, such as whether you will be running the business yourself, starting it with partners, or forming a larger company with many employees. You will also want to consider the tax implications and personal liability of each when deciding which business structure is right for you.
Register Your Business
Depending on your business structure and location, in most cases you will need to register your business in the state where you are conducting business. If you are using a DBA (“doing business as”) for your company, you will need to register that name along with your legal entity name. If you want to trademark your business name, product name or brand, you will have to register with the United States Patent and Trademark Office.
Federal and State Tax IDs
A federal tax ID, also known as the Employer Identification Number (EIN), is like a social security number for your company, and allows you to pay your taxes, apply for business permits and licenses, open a bank account, and hire employees. This is a necessary step when you form a corporation.
Licenses and permits
You may need to apply for different types of licenses and permits depending on the location and type of business that you conduct. Some common types of licenses include: general business operation license, sales tax license, occupational and professional licenses, and health department permits.
Open a Business Account
It is important to separate personal finances from your business and open a business bank account. This will also allow you to start building up credit for your business and show that you are able to take on a business loan when needed.
The legal and tax-related aspects of starting a business can be complex and it is best to consult with a professional. Contact H&H CPAs to find out more about starting a business.