So you’ve decided to start your own business. Congratulations! Starting and running a successful company is an exciting and rewarding experience, but there are also many things that you’ll need to consider and plan for before you can actually get started. Whether you want to set up an LLC or another type of corporation, the following tips will help guide you through the process of setting up your company.
1. Consider your risk tolerance
When you start an LLC, there will be some risks involved with the way you set up your business and how you run it. Your level of comfort with those risks can help determine which business structure is best for you. For example, if you’re okay with taking a big financial gamble in exchange for more flexibility and control over how your company functions, then an S corporation might be right for you. On the other hand, if taking on too much risk makes you nervous, then perhaps a C corporation is more appropriate.
2. Choose a business structure
One of the first decisions that you’ll need to make when starting a new business is what type of legal entity your company will be – i.e., whether it will be structured as a sole proprietorship, partnership, limited liability company (LLC), or corporation. That’s the idea behind forming an LLC. But before you get started, there are certain things to consider and plan for first. Each of these structures has its own advantages and disadvantages, so it’s important to choose the one that makes the most sense for your particular business. If you choose to be the owner of an LLC, it’s important to be familiar with what your business structure is and all the benefits that come with it. You’ll also want to ensure that you conduct as much research into possible investors, lenders, and bankers as you can. Be aware of the implications that choosing to form an LLC might have for these types of businesses, as well as any partners or investors in your business.
3. Determine your business name and register it
Once you’ve selected a business structure, you’ll need to come up with a name for your company. This name should be reflective of what your business does, easy to remember, and not already in use by another company. Once you have a few potential names in mind, you’ll need to check with your state’s secretary of state office to make sure that no one else is using that name – and if they are, you may need to select a different one.
4. Decide where your business will be located and register a physical address
Another important decision that you’ll need to make when starting your company is where it will be based. Depending on the type of business structure that you’ve chosen, there may also be additional requirements for registering different locations. For example, LLCs must have a registered agent in every state in which they do business, whereas corporations must register their principal address in each state as well.
5. Appoint a registered agent
Aside from appointing a registered agent, you also need to file appropriate forms with the state secretary of state office (for corporations). If you want to set up your new company as an LLC or corporation, there are several filing requirements that you’ll need to take care of with your state’s secretary of state office. This includes appointing a registered agent, who will be responsible for receiving legal documents on behalf of your company, as well as filing Articles of Incorporation (for corporations) or Articles of Organization (for LLCs).
6. Obtain any necessary licenses and permits
Depending on the type of business that you’re starting, you may also need to obtain certain licenses and permits in order to operate legally. For example, businesses that sell food or alcohol will need to obtain the appropriate license from their state or local government, while companies that deal with hazardous materials will need to have a permit from the Environmental Protection Agency (EPA).
7. Open a business bank account and obtain insurance
Once you’ve taken care of the administrative details of setting up your company, you’ll also need to set up a business bank account and obtain adequate insurance coverage. This will help protect your personal assets in case your business is ever sued or encounters other financial difficulties.
8. Comply with applicable tax laws
Finally, it’s important to make sure that you comply with all applicable tax laws when starting your new company. This includes obtaining an Employer Identification Number (EIN) from the IRS, as well as filing any required state and local tax forms. Depending on the type of business that you have, you may also be required to pay quarterly estimated taxes throughout the year.
By following these steps, you can start your new business off on the right foot and ensure that it’s set up for success.
