Starting a small business can feel like a difficult task. While the rules can vary depending on what industry you want to work in and where you live, for the most part, it’s actually a surprisingly simple process that can be completed in less than a day. But you should have a clear idea of what you’re doing before you get started. Once you know what you want to set up a company for, registering is as simple as going online. Here are the steps required for setting up your company properly.
Pick a business name
Don’t agonize endlessly about picking the perfect name before you register your business, because you can operate under a variety of different names. Your business name doesn’t have to be the one you introduce yourself to clients with - it just has to be the name included in your legal paperwork. That means that you can name your business John Smith Operations, and then come up with a clever, catchy name later. Pick a business name, and then register it with your state. You will have to avoid infringing on other peoples’ trademarks when you select your name.
Will you create a legal entity?
How you register your business depends on what kind of work you want to put into maintaining your business. There are lots of options, but the important thing to keep in mind is what kind of business you make will affect whether or not you can hire employees. In short: if you want to hire employees, don’t register as a sole proprietorship.
If you’re going to be working by yourself, a sole proprietorship will do. But if you at any point see yourself expanding or want to bring in a partner, you should pick something else. You can create a corporation, a legal entity to represent your business, if you’re concerned about liability risk, or you can form a limited liability corporation which combines the upsides of a partnership and a C-corp.
Register with the IRS and the state
If you are going to have an employees and register as anything other than a sole proprietorship, you will also need to get an employee identification number, a federal tax number that helps you pay taxes for any employees you hire. This process is free and allows you to protect yourself from identity theft - you can use the EIN instead of your personal social security number to identify your business in legal paperwork, reducing your exposure risk. Use the IRS website to get the EIN quickly and easily.
Apply for the necessary licenses
After you’ve registered your business and picked up your EIN, your next step will be obtaining the necessary business licenses and permits required to operate your new business. You cannot operate your business without a permit. The process is often as simple as registering with your local municipality or filling out a form online.
If you aren’t sure about what permits you need or have any more questions, you can always reach out to your state’s Small Business Administration department to inquire about the process and make sure you’ve done everything right. Once you’ve done that, you can move on to setting your business up for operation.
Jeremiah Owyang is an entrepreneur