Setting up your first business involves a lot of busywork (and paperwork), but so long as you get everything in order, you’ll have no problems. This post will show you how to settle on a company structure, register your business name, and much more.
Choosing a Business Structure
Your first move will be to determine your company’s structure. This becomes far easier to figure out with customizable business forms. For example, you could set up clear articles of incorporation that match your business.
Here are your main options:
- Sole proprietorship: You alone own the unincorporated company.
- Partnership: You and a partner share responsibilities and liabilities.
- Corporation: You run the firm but are accountable to shareholders.
- Limited liability company: You aren’t liable for any business debts.
Research each business structure carefully to find one that fits how you want to operate.
Registering Your Company
You must register your business name immediately. However, there are a few exceptions — for example, sole proprietors can use their legal name. This is where your articles of incorporation come into play; you’ll need to submit these to your state.
You’re obligated to register your enterprise in any state where any one of the following applies:
- Your business has an address there
- You have employees working there
- You make significant revenue there
- You regularly meet with people there
Working Out a Partnership
Anyone setting up a company with a partner should already know where each party’s duties will start and end. Ideally, your skills will complement each other. Your partner, for example, might be much better at marketing tasks, and you might excel at day-to-day operations.
A good partnership agreement can sort out any confusion. This is absolutely essential — even if you’ll be partnering with family. These documents clarify ownership percentages, profits, duties, and more to keep everything fair; any partnership could easily turn sour without a form like this.
Licenses and Permits
Most businesses require special permits and licenses to operate, no matter their sector or the services they provide. For example, you’ll typically need a general business licence to operate; check your state to see its requirements.
Some industry-specific business activities are federally regulated and need extra permits. These include:
- Moving animal products over state lines
- Making, importing, or selling alcohol
- Broadcasting information via radio or TV
- Maintaining or operating an aircraft
- Driving an oversized or overweight vehicle
- Commercial fishing as a whole
However, you’ll first need an employer identification number, which lets you pay business taxes, hire people, and acquire any necessary permits. If your business needs to pay state taxes, you’ll also need a separate state tax ID number.
Arranging the Right Insurance
Business insurance is essential for paying off unexpected costs. If someone sues you or you get caught up in a natural disaster, good insurance could be the difference between staying open and closing permanently.
The main types of insurance you should look into include:
- General liability insurance (protects any business from most liabilities or damages)
- Commercial property insurance (protects property owners from property damage)
- Product liability insurance (protects manufacturers/retailers from defective products)
- Home-based business insurance (protects businesses that operate from your home)
- Professional liability insurance (protects service providers from malpractice/errors)
You can also get a combined business owner’s policy that includes all the above.
Setting Up Your Company’s Finances
It’s best to open a separate bank account for your business, even if you’re a sole proprietor. This way, you can ensure you don’t mix your finances, which could cause issues with your taxes and any liability protection your business has.
You’ll usually be fine with a business checking account; this lets you receive customer payments and handle your general expenses. However, you may also want a savings account to set aside cash reserves in an emergency.
A business bank account also simplifies bookkeeping. On this topic, QuickBooks and other key accounting tools help you stay compliant while integrating with your bank. However, you’ll want to hire a dedicated accountant as your company grows.
Protecting Your Intellectual Property
You must register any trademarks you plan to use for your business. Technically speaking, you’ll own it as soon as you create it, but registering it gives you more benefits, namely:
- The right to sue someone who misuses your trademark
- A clear paper trail in the USPTO’s trademark database
- The right to use the ® symbol alongside your trademarks
- Easy proof of ownership in intellectual property disputes
You should also patent any invention or process your business creates. This gives you exclusive use of that creation for 15-20 years.
Final Thoughts
You can only confidently (and correctly) set up your enterprise if you complete the above tasks; skipping any could spell disaster. However, with the right online templates, you’ll find it easier to get everything together without spending a fortune.
