One of the most common questions I get is “What are the steps to starting my business?”. There are many possible answers to this question, but this article will give you the 7 steps to start your business legally.
Yes, you need to find suppliers, market your business, and hire help, but before you get there, there are some fundamental steps to take to just get your business started, the right way.
7 Steps to Start your Business Legally
Step 1: Plan your business
Before you start your business, you need to have a plan. Now, you don’t need to have the next 5 years planned out, but you need to know whether your business idea is even feasible.
Starting a business usually involves money, so you need to know how much money it’s going to take and how much money you have available to invest. If you need more than you have, you need a plan to get it.
You need to figure out how your business will logistically work. What do you need to make this dream a reality?
Step 2: Choose your business name & legal entity
You need a name for your business. Before you can move on with any of the other steps, you need to know what your business is going to be called. This may involve filing for a doing-business-as (DBA) or assumed name in your state.
Every business operates as some kind of legal entity. You can proactively choose this or one will be assigned to you by default. Even if you end up in the same place, I think choosing how you want to operate your business is a good idea.
Check out this post for more information on the 5 legal business types. If you decide you want to form an LLC and need help, send me an email at andrea@YourEntrepreneurSchool.com for information on my LLC formation service.
Step 3: Get your business licenses and/or permits
This will depend on what kind of business you have and where you live. There are many possible licenses and/or permits you may need. Research what you need in your area for the type of business you have and register for them.
Step 4: Set up your tax accounts
No matter how your business is structured, you will have to pay certain taxes. This includes filing for an Employer Identification number (EIN) with the IRS. There are federal income taxes and state/local income taxes, as well as other tax accounts like unemployment tax, franchise tax, sales & use tax, etc.
Step 5: Set up your bank accounts
Whether you are operating as a sole proprietor or have a formal business entity, you need separate bank accounts just for your business. If you are operating as an LLC or other business entity, this is super important to keep from mixing business and personal funds to help protect your liability protection.
Step 6: Set up a system for recordkeeping
As a business owner, you are required to report your income and maintain certain records. This may depend on what type of business you have, but at a minimum you need to keep complete & accurate records for your income and expenses.
Step 7: Create your website & online marketing-legally!
These 7 steps are crucial for all business to make sure you start your business legally. Once you’ve completed them all, you can feel confident your business is on a strong foundation.
Disclaimer: This site, and all information contained herein or through communication with me, is intended as legal information only. I am an attorney, but I am not your attorney, so nothing on this site, nor any communication with me, shall create an attorney-client relationship. I am not liable for damages or losses based on any action taken, or inaction, based on the information contained on this site. All areas of the law are fact specific and there is no substitute for legal advice from an attorney licensed in your jurisdiction who is familiar with the specific facts and circumstances of your situation.