Starting Your Own Business: 5 Key Steps
Is starting a business one of your New Year's resolutions? If so, what are the first steps you need to take?
As the year opens with new possibilities, so do the opportunities for you to become your own boss by getting your own venture off the ground. FindLaw's Free Enterprise blog is here to help, with a five-part series on the legal ins and outs of Starting Your Own Business.
Today we'll begin with a general overview. While being your own employer won't be easy, completing these five key steps will have you well on your way to entrepreneurial greatness:
1. Choose a Legal Structure.
Like planning out a commercial construction project, you need a legal structure to support and provide the foundation for your fledgling business. With sole proprietorships and various partnerships and corporations, there are a variety of different legal structures to choose from.
If you do choose to incorporate your business, you'll have a host of other legal decisions to make.
2. Get a Tax ID Number.
Almost every new small business will need some form of federal tax ID number, often called employer identification numbers (EINs). Some sole proprietors can get along legally without an EIN (by using their own Social Security numbers instead), but it makes better legal and financial sense to have one just in case.
3. Obtain Licenses and Permits.
Before you even start putting any money into your business, you need to make sure that you have the necessary state and local business licenses for your new small business. This will also give you a chance to register your business' name as one that reflects your ambitions.
You'll also need to obtain all the necessary zoning, building, health, and fire permits that come with operating your business out of a physical location.
4. Sign Up for Banking and Credit.
Every business needs a flow of credit and a place to keep its profits, so it's paramount that you get a bank account for your small business. Depending on your small business' credit score, you may be able to apply for differing types of lucrative small business loans as well.
If you're having trouble finding funding, a business credit card can be a great source of available spending money. Just remember that these cards may still affect your personal credit.
5. Draft Contracts for Employees and Contractors.
Growing your business will take help, namely from employees and independent contractors, who need well-drafted contracts to work for your business. You shouldn't just settle for the standard form contract.
When dealing with independent contractors, make sure to get a tax ID from each contractor. You'll thank yourself at tax time.
These are just basic steps of what you'll need to start your business. Tomorrow in our Starting Your Own Business series, we'll discuss the legal ins and outs of incorporation.
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Related Resources:
- 10 Steps to Starting a Business (U.S. Small Business Administration)
- 5 Clauses Every Partnership Agreement Should Include (FindLaw's Free Enterprise)
- How to Draft a Business Franchise Agreement (FindLaw's Free Enterprise)
- 5 Tips for Independent Contractor Agreements (FindLaw's Free Enterprise)
