Let’s Go! Phase I Startup
Many look at today’s circumstances in the lenses of a glass half empty. However, for those of us who looks at the glass half full, we may see this as the perfect opportunity to re-position ourselves with starting a business. I, think this is an opportunity to lay the foundation and quietly do the work to be perfectly prepped for when normalcy returns. In fact, there are many opportunities extended to those who properly establish their business to be viewed as legit in the eyes of the government, organizations, agencies and financial institutions. Furthermore, the goals is not to leave any money on the table and truly maximize your opportunities.
For example, do you ever find yourself questioning where is all of those opportunities, contracts and grants for small businesses you continue to hear about; but never see? Ultimately, it all begins with you aligning your business in a favorable manner which allows you to qualify to access the right connections. Therefore, we will begin with the basics to insure we don’t miss a step. Although, some of these steps may seem redundant or you may have already completed the task; it’s vital to list them to insure no step is overlooked or skipped.
What Type of Business Startup
For starters, you must determine what your business will do or provided. In other words, what is it you want to do? In brief, you want to decide on the service(s) and/or product(s) you want to provide. Additionally, you want to do your research on whatever you decide to do. For example, if I wanted to start a business selling women’s shoes, I would want to identify the best location I could sell the shoes. In detail, I would want to research if online or local was best; possible both online and local if profitable. Plus, I would have to find where I can get a great product for the best price. Additionally, I would want to see what’s my competition; and so on. Make sure your not going into a venture blindly. You should always do your due diligence.
Once you have decided on what your business will be, you need to get incorporated. Yes, incorporated. Undoubtedly, the thought of getting incorporated can be overwhelming; yet, it is pretty simple to accomplish. First, you should understand there are essentially four types of corporations you can select from.
Limited-Liability Company (LLC)
LLCs are known as the simplest of the four corporation types. LLCs provides flexibility you do not have with other corporations. In short, it blends certain characteristics of corporations and partnership together. For example, LLCs provides liability protection between your personal and business affairs as your would have in a corporation. As well as, allowing you to pass through taxation available with a partnership. However, the one key factor most owners look over is creating an operating agreement. This documentation can be you safety net if ever this is a liability claim against you or your business.
A non profit is an organization who chooses to use any surplus revenue to further the entity rather than to distribute it as a profit
Simply put, a C Corporation is any company that is taxed separately from it’s owner’s. For instinct, C Corporations are taxed for they’re earnings. In addition, a C Corporation can have unlimited shareholders (stocks) both domestic and international.
This is a corporation who has chosen to pass corporate income, losses, deductions, and credit through to their shareholders for federal tax purposes. In other words, the corporation will not be taxed. The monies are being taxed as income to the shareholder. However, in order to elect to operate as a S Corporation, the company must:
- Use Only one class of stock
- Have 100 or less shareholders
- Must be a domestic or LLC entity who has elected to be taxed as a corporation
Once you have a full understanding of the types of corporations, you must choose which structure works best for your business and move on to the next step of obtaining an Employer Identification Number (EIN).
Obtaining Your EIN
After you have decided on the structure of your business, your next step is to obtain an Employer Identification Number (EIN). Now, don’t let the name fool you out of going forward with getting one. Although, it’s name suggest you need to have employees; that is not the case. You can and should still obtain your EIN even when you don’t have employees.
Since your business’ EIN is the equivalent to your personal social security number, you can understand the importance when establishing your business. Furthermore, you will use your EIN, when creating business credit, opening business account, getting your certifications, etc.
Register Your Business
Now you are ready to register your business with your state. Each state has their on requirements and process to complete this process. In an effort to better assist you, I have provided direct links for each state below. Click on the state name below to be redirected to the appropriate website to complete the registration process.
In conclusion, the above steps are the initial phase in establishing a business. Although, this information may seem simple or even well known; it is important not to overlooked or missed any steps. When you complete each phase of this process, it is extremely important every step is completed in proper order. As you go through the process, you will need to reference information from documents received during this phase and this will remain true as we go alone.