How to Start a Business Part 2 - The Legalities of It All
I hope you enjoyed my first installment of how to start a business. If you missed it, you can check it out here.
Today as promised I’ll talk about the legalities of starting a business. First let me say that I am not a lawyer and I’m not an accountant. What I share is what I’ve come to learn through hard work and experience.
First things first…
YOUR BUSINESS NAME: First thing you must do after you have decided what your business will be is to select a name for your business. Your name should identify what you do. Keep it simple. Many designers use their own name in the name of their company. I did and I have no regrets. Most importantly, make sure that no one else uses your name. You will need to check with your state and reserve your name. You might also want to check and see if the website with the same name is available before you lock down a name.
BUSINESS ENTITY: Next decide what type of entity you want to be. Here are just some of the types of entities available:
Sole Proprietorship
Partnership
Limited Liability Company
Corporation C
Corporation S
Each type of entity has it’s own advantages and disadvantages and I would never presume to tell you which one is right for you. This is where you might want to meet with a lawyer or accountant.
EIN: Once you’ve done these things, it’s time for you to register for an EIN (Employer Identification Number). You do that with the IRS. You don’t want to use your social security number.
SALES AND USE TAX: If you sell things you will need to get a sales tax ID from your state. If you sell online, be sure to check with your state for the specifics because each state has it own set of rules.
INSURANCE: Will you need insurance? Again this is something you will have to decide for yourself but if you decide that you do, I recommend starting with the company that you already use for home and car.
LICENSING: Do you need a business license? I recommend that you check with your local municipality.
EXPENSES: Once you’ve got that all squared away, be sure to keep track of expenses. Remember you are going to have to pay tax on what you earn so keep track of everything coming in and everything going out. Make sure to keep your personal money separate from your business money. Open a separate bank account and use a separate credit card for expenses. You will be glad you did come tax day.
I hope that helped if you are contemplating or just beginning to start a business.
Next time I’ll address the branding and promoting yourself. So be sure to sign up below so you won’t miss it.
Thanks for stopping by.
Until next time…
