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Many entrepreneurs get into business for themselves for the project and work that they want to do, with the business being the way to achieve those ambitions. While there is the undeniable lure of being your own boss and making your own decisions, there are surely those who would sooner do without the headaches and hassles that come with running your own startup, chief among them the quotidian tasks necessary to meet the legal standards of business ownership.
When it comes to the requirements of starting and running a business, many first-time founders are somewhat in the dark about everything that needs to be done. While many have plenty of experience in the industry they’re going into, or years in the business world at large, having your own company is an entirely different prospect, with its own set of demands and requirements. And without experience, it is hard for first-timers to know all the rules and regulations to satisfy and stay out of trouble.
The first thing that any entrepreneur needs to do is to establish their business as solidly as it exists in their mind. I’ve already discussed the importance of incorporation previously (link to article), but a business entity is just the first legal step. Next, you have to settle on a name for your company. This might seem simple, but it can be tricky given how many businesses already exist. You don’t want to use a name already registered to another person and risk legal action against your company. Doing a search both in databases of registered business names and trademarks as well as a broader search of the internet can avoid any duplication. And if your company name is different from the name of your business entity, you’ll need to file a DBA (Doing Business As) in order to operate under the chosen name.
Once you’ve settled the matter of a name, you need to obtain a tax ID number, known as an Employer Identification Number (EIN). An EIN is required for corporations or partnerships and those who have or will have employees and allows the government to track transactions and filings from your business. Fortunately, an EIN is a relatively easy thing to obtain — you can apply for one for free and get it instantly from the IRS.
You also have to consider any applicable licensing or permits from local, state or even federal bodies required to operate your business. Businesses with physical locations in particular need to concern themselves with zoning to operate in a specific location and licenses for a specified purpose, as well as making sure that the building conforms to any guidelines surrounding your particular type of work and general health and safety requirements. Even for those operating online, there are still steps that need to be taken to ensure that the business is conforming to regulations, particularly if you’re operating across state borders. If you’re curious as to what is required in your state, the Department of Labor offers a listing of state labor offices and their websites.
One overlooked aspect of starting a business, at least early on, is establishing separate bank accounts for your business. It’s easy to skip in the beginning stages of a startup when your income is zero, but you’ll want to separate or disentangle your personal finances from your business spending and liabilities, plus establish good credit for your entity. And, you’ll be grateful for the separation once your company starts earning revenue or it comes time for tax preparation.
Perhaps the best overarching suggestion for those unclear or unsure about what to do in any of these matters is to seek out professional help (the legal kind, not the psychiatric, though one may question their sanity if they’re thinking of starting a business.) Laws and regulations can be dense and complex, and mistakes costly. Talking with a business lawyer might be a greater expense than you want to incur during the early stages of your business, but it’s more cost effective than trying to fix mistakes.
The tedious legal and regulatory wranglings required to run a business are certainly no one’s idea of fun, and no prospective founder has ever waxed rhapsodic about the prospect of filings and compliance and all of the work that goes with complying with the rules in place. But anything worth doing is worth doing right, and founders might come to find that many of the regulations in place are there with the intent to prevent problems and to help companies stay out of trouble. #onwards.
July 2, 2019 at 08:31AM
Forbes – Entrepreneurs