The first step to any great business is a great idea.
It’s the next few steps that often elude people and stop those great ideas from becoming productive.
In order to actually establish your business as a legal entity, there are a number of important decisions and steps that you have to take:
1. You need to determine what type of business you’re running. Is it a sole proprietorship or a partnership? If you want to protect your personal assets from creditors, you may want to establish a limited liability corporation (LLC). You may even choose to incorporate the business — especially if you have dreams of eventually offering stocks on the open market.
2. You need to file the appropriate papers with the federal and state government to register your business. This may include several smaller steps, such as establishing a bank account for your business, obtaining an employer identification number (EIN) and obtaining any state-specific documentation you need for your type of business entity.
3. You may need licensing. Depending on what your great idea includes, you may need to apply for and acquire specific licensing in order to operate. For example, a microbrewery may or may not require special licensing, depending on where you live.
4. You need insurance. This could be as simple as taking out insurance that would cover you if you happen to be unable to work (especially if you are a sole proprietor). However, it may also include more complicated forms of insurance if you have employees — such as unemployment and workers’ compensation. Business liability insurance may also be necessary to protect you in case you are sued by an unhappy customer over a contract dispute or by a disgruntled former employee.
These are just a few of the more noteworthy aspects of starting your own business — but they’re important to get right. It’s wisest not to choose to go it alone if you don’t have previous experience.
For more information on the legal ins-and-outs of starting your own business, talk to an attorney who has expertise in the area of business formation. For more information on how our firm approaches the situation and to learn how we may be able to help you, please visit our page.