There are 31.7 million small businesses in the US as of March 2021. So if you’re beginning a new entrepreneurial journey, you’re in good company!
Starting a new, successful business is a huge dream for many. There’s nothing more appealing than being your own boss, following your passions, and choosing your working hours.
But the reality is a bit different. You need to ensure you have legal business practices and that you set up your venture the right way so nothing will get in the way.
You can take care of most legalities when you set up your business so, lucky for you, all you have to do is maintain them. Follow these tips to start your 100% legal, successful business today!
- Learn From Business Professionals
Are you clueless about business and have no idea where you start? Then you will need some outside support.
If you attempt to set up your business with no help, you’re going to be scratching your head over simple details instead of moving forward.
Two people you should consult when setting up a business are a lawyer and an accountant. They will be able to give you specific guidance related to your industry.
But you should also consider hiring a business coach or mentor who also has experience working in your field. They will help you improve your business ideas, keep you accountable, and offer support throughout the process.
Taking a few business courses won’t hurt, either. Online courses from Udemy in subjects like marketing, human resources, and payroll will be a huge help in the beginning. Read business and management books like Dare to Lead by Brené Brown in your spare time and learn as much as you can.
- Choose a Business Structure
To run a legal business, you will need to set it up through the proper channels. So, you will need to choose a business structure. Most businesses have two choices:
- LLC (Limited Liability Company)
- Corporation (C Corp)
An LLC will separate your business assets from your personal assets. But, you are still responsible for your company and can file your business taxes with your personal taxes.
If you set up a corporation, you do not file your business taxes with your personal taxes. This option offers you the most protection, but it is expensive.
Weigh up all the pros and cons before making your decision.
- Register Your Business Name
You don’t have to register your business’s name, but you should. It will protect your name from competitors and copycats. Registering your business will also allow you to check that someone else hasn’t got the same name.
There are different legal business name protection options. You can protect it at a state level (entity) or a federal level (trademark). If you plan to franchise your business in the future, the federal level is the best option.
Keep your business name short, catchy, and relevant to your industry.
Nowadays, you should also snap up your business’s name as a website domain and on social media platforms. These are important considerations when choosing a name, too.
- Organize Your Finances
Whether you like it or not, money makes the world go round. It’s unlikely that you will be able to start a business without it.
With the help of an accountant, work out exactly how much money you will need to set up your business. Most start-ups are self-funded but you might need to consider angel investors or venture capital funds.
Once the funds are in the bag, you’ll need to put them in a bank. Open a business bank account so you can keep your personal and company funds separate.
Want to hire employees and apply for a business license? You’ll need a federal tax ID number for that. It’s also called an Employer Identification Number (EIN).
If you choose a C Corp business structure, you will need an EIN number to do that, too.
Check with your state if you need to register for a state tax ID number. Some states need them but some don’t.
- Find a Separate Commercial Workspace
Unless you’re still in the “working out of your garage” phase of your business, find office space to lease. Or, if you’re opening a shop front, find the appropriate piece of real estate to rent or buy.
Do this as soon as you can so that you have a proper business address to include on your applications.
- Create a Solid Business Plan
Few businesses survive without a proper business plan. It is your company’s bible during the first year and will give your business focus and clear goals to work towards.
Here are some things you need to include in your business plan:
- Brief company description
- Profiles of partners
- Employee structure
- List of suppliers
- Market research
- Details of products and/or services
- Funding breakdown
- Financial projections for the first year
You will likely need a business plan if you pursue investors or loans. Don’t be afraid of making it too detailed because that’s exactly what a business plan should be.
- Apply for Licenses and Insurance
No matter what business you are opening, you will need a business license. Some hospitality businesses will need alcohol and other licenses.
You will also need to take out business insurance before you start operating. Not only to protect your customers and clients but to protect yourself, too.
Make Sure Your New, Legal Business Stays That Way
Setting up bank accounts, applying for tax numbers, and buying insurance isn’t very exciting. But owning a 100% legal business means you are more likely to thrive and expand.
You don’t want anything to get in the way of your growth, and if you follow these tips then nothing will!
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