What You Need To Start A Business

Starting a business seems really complicated. And yet, tons of people are doing it. According to the 2015 Kauffman Index, over half a million people start new businesses every single month in the United States. If there are that many new businesses being started, it can’t be that complicated, right?

It’s not the idea that stands in people’s way a lot of the times either. Most potential entrepreneurs aren’t sitting around thinking, “I’d love to start a business but I just don’t have an idea for what that business would do.” Most people have a great business idea that they’ve been sitting on for a long time, because pulling the trigger seems like a pipe dream.

We are not saying that starting and growing a business will be like a walk in the park. It won't. It will be a major investment of your time and often money. That being said, it is also very doable. You just have to be able to navigate your way through some simple logistics.

Step 1: Pick a Name

Figuring out what you want your business to be called can feel pretty overwhelming. Don’t get me wrong, your company name is a big deal. But... the first company name you pick doesn’t have to be etched in stone. You can always change it. It’s a little bit of a pain, as you’ll have to repeat some of the steps on this list, and depending on where you are located there may be expenses incurred, but still, changing your name is doable. Just don’t make a habit of it.

Step 2: Get an Employer Identification Number

An Employer Identification Number (or EIN) is the official federal tax number (sometimes called a “tax ID number”) for your business. This is kind of like your company’s social security number. The process for obtaining one is easy, quick and free. You just have to go to the IRS website and apply.

Every type of company (corporation, LLC, partnership) needs an EIN except for a sole proprietor who doesn’t plan on having any employees. But every company, including sole proprietorships, should get an EIN anyway, since they allow you to use an ID number other than your social security number.

Step 3: Register Your Name With Your Local Government

If you are setting up a sole proprietorship or partnership and you want your business to be called something other than your given name, you have to register a trade name, also known as a DBA (which stands for “Doing Business As”). LLCs and Corporations can also file for a DBA if they want to go by something other than the name they have registered (hint: this is how you change your business name later on).

If you are starting a corporation (LLC, S-Corp or C-Corp), you’ll also need to file registration forms with your Secretary of State’s website and pay the corresponding fees. You can get individualized state information and links through the US Small Business Administration website.

Step 4: Get a Business License

Most cities will require you to get a license to do business, and usually pay some kind of registration fee. You might be tempted to think you can get away with not paying for a license, especially if you are working out of your home and doing business solely online. But trust me, they will find you. And if they find that you have been dodging them, the fines can start getting pretty hefty.

Depending on where you live/plan on operating your business, there may be additional forms to file. For instance, some places require a separate registration to operate a home business.

Step 5: Get a Reseller’s ID or Seller’s Permit

If you sell physical goods, you need to get a seller’s permit. You can apply through your state department’s website or your state’s franchise tax board.

Basically, the seller’s permit is the mechanism through which you collect sales tax from your customers and pay that tax to the state.

There are some added bonuses of having a seller’s permit. In some states, you can give your reseller’s ID to certain suppliers so that you don’t have to pay sales tax on your materials. The reseller’s ID will also let you shop at certain wholesale supply stores.

That’s more or less it for the paperwork. Easy, right?

Now, that doesn’t mean that’s ALL you should do when starting a business. You still should write a business plan, figure out financing, open up a bank account – you know, all that good stuff. Oh yeah, and don't forget your logo, website and all of those other great marketing efforts we love to talk about. But in terms of the steps to legally count as a business, the above should have you covered.

Need help from a team with experience launching new businesses? We want to help you grow your business. Contact us today.