Have you been considering starting your own business but haven’t figured out how to structure it? Here are some tips on getting started. First, decide what the company will do.
Then, formulate a general strategy of where to take it from there. One task is to complete a checklist of necessary tasks to set up and structure your business: we’ve compiled a list below that explains how to set up your business.
Table of Contents
Six Steps To Set Up Your Business
1. Give Your Business a Name
When choosing a name for your business, you want to make sure it is something memorable that consumers are not going to forget. It is not necessary for your business name to share a name with your product. This can go a long way if you decide to expand your business areas.
For example, you may want to sell a product called Dog Wipes. Let’s say, you have decided to expand your portfolios and want to sell Cat Wipes. So, it is better if your company’s name is Pet Wipes, as this name will cover all the future products you’re going to offer.
This way, you won’t have to rename your company if you ever expand into other types of products.
When brainstorming for new business ideas, it’s important to make sure you have a list of at least five-ten company names. After that, use online resources to find out if there are any existing businesses using your chosen name before registering the name.
If after doing research, there are still many good names having great potential then discuss them with your friends and family members to avoid any confusion on which one should be chosen going forward.
The next step is to trademark your new name. This will help you ensure that nobody else uses it and also ensure people know who owns the rights of the name you have chosen.
2. Register A Domain For Your Business
Like anybody else, you want your domain name to be unique. Shorter is the better. If the name of your business is too long, you should change it to make it shorter. To register a domain for your business, you first need to buy a domain name. Then, set up an email address and a business phone number.
If your business is named Sofia’s Beauty Care Service, you might want to choose a shorter, simpler domain name like “sofiacare.com” over “sofiacareerservice.com.”
When choosing a domain registrar, it’s important to consider what else the company offers beyond just domain names. Most registrars also sell email addresses and website builders, so it’s important to find one that offers all the services you need. Squarespace, Wix and Weebly are some of the best names that offers everything related to hosting, right from domain name registration, hosting to building a website.
Having a separate business phone number is preferable for a few reasons. First, it gives your clients and customers a sense of professionalism. They won’t feel like they’re calling your personal cell phone and will be more likely to do business with you. Second, it helps you to professionally separate your work life from your personal life. You can also use Google Voice to give out your business number instead of your personal number. This way, you can control who has access to your business contact information.
3. Incorporate Your Business
You need to form a legal entity in order for your business and personal assets be protected. There are three main options, limited liability companies (LLCs), S corporations or C-corporations that you can choose from when creating one of these types; they all have their pros and cons but will provide the appropriate level of protection depending on what type suits best. The key thing with any kind is knowing which option works well enough so as not end up regretting later down the line because some other decision might have been wiser afterall.
An LLC, or limited liability company, offers several benefits for business owners. These include reduced paperwork, less stringent reporting, and a more flexible management structure. LLCs are also flow-through entities, which means that the income and losses from the business pass through to the owner’s tax return each year.
With an LLC, you do not have to take a salary since all income flows directly through your tax return. This is how the company pays you from what they generate in profits.
When you are looking for investment from outside sources, it is often a good idea to form a corporation. This provides a number of benefits for your business. Primarily, it makes it easier for investors to put money into your company. Additionally, there are two types of corporations you can form: an S corporation or C corporation. Each has its own advantages and disadvantages, so be sure to do your research before making a decision.
Like LLC, S corporation is also a flow-through entity having some similarities to LLC. In S corporation, the number of shares issued cannot exceed 100 and each share must be owned by an individual who is United States citizen or resident alien (i.e., not foreign).
Corporations are great because there’s no limit on how many shareholders they can have. However, one downside is that C-Corporations must pay income tax each year which means you should set up your business such that during the course of its operation (and not just at inception), wages will be paid instead of salaries so as avoid double taxation at year end.
You can either create a new legal entity yourself using your Secretary of State’s website or you could use an easier service, like MyCorporation. This will add minimal cost and make the process much simpler.
4. Get EIN Number
To apply for an Employer Identification Number (EIN), you can go online to the IRS website. The application is simple and takes just a few minutes to complete. After submitting the form, you will instantly receive your EIN on the confirmation screen. The EIN is necessary for tax reporting, opening a business checking account and applying for licenses.
5. Get Licenses And Permits
To obtain licenses and permits for your business, you’ll need to research the requirements at the federal, state, county, and city level. Licenses and permits may be required at different levels depending on the type of business you start. The Small Business Administration (SBA) is a good place to start researching licensing and permit requirements at the federal level. For state-level licensing and permitting requirements, reach out to your state’s business licensing department. For city-level licensing and permitting requirements, check with your city’s business affairs office.
Let’s say you are interested in starting a taco truck. What you need is a food truck operating permit. Maybe, you are all set to launch a beauty care service. In that case, you may need a beauty care permit.
6. Open A Business Checking Account
The first step of opening a business checking account is to provide your LLC/corporation filing receipt and EIN. You can then go straight to the bank where you have an active personal account, in order for both accounts to be accessible through one online portal; this way it will make managing finances easier.
Having multiple account relationships with one bank can get you benefits like reduced fees. You’ll be able to access easy account transfers and online payroll services for contractors and employees all in one place.
Now that you have a business structure in place, it’s time to think about how best to launch your dream company!
The Team Compare BizTech is made up of people from marketing backgrounds, digital marketing & content marketing backgrounds, each with unique experiences and nuggets of wisdom to share with you. The team is passionate about creating unique, accurate, and engaging content.