Starting your own business can be an exciting and rewarding experience. It gives you the independence to be your own boss, develop your own vision and build something that you can be proud of. Some of the biggest brands in the world started with just an idea and a lot of hard work.
As a small business, it is easy to get caught up in the excitement of starting something new but while you might only have a small turnover and a couple of staff initially, you will still have to meet the legal requirements of your state and the federal government. Here are some of the most important:
Company structure and taxes
Deciding what your company’s structure will be is one of the first decisions you will have to make. It determines the taxes you will pay and what paperwork you will be required to submit. The different types are as follows; Sole Proprietor, Partnership, Corporation, S Corporation, Limited Liability Company, Non-profit.
Sole proprietors pay their tax through their personal income tax return. Partnership companies pay taxes through the personal tax returns of each business owner. Corporation tax is paid by the corporation. S Corporation tax is paid through the personal income tax returns of the business owners but they must be paid reasonable compensation for this. A Limited Liability Company is a combination of the Sole Proprietor and Partnership business structures. Taxes are paid in the same manner as a partnership company but owners receive a personal liability shield. Non-profit businesses are usually tax exempt. You can get the tax forms you need from the IRS website. It is also worth noting that taxes and regulations can increase as your business grows and becomes more like a corporation. Corporation taxes are generally more complicated, so at this stage it is worth getting professional advice from an attorney.
Permits and licenses for your business
Some businesses will require a license or permit in order to trade. The permit or license you require depends on the industry you are in. It includes but is not limited to agriculture, aviation, maritime transport, radio and TV broadcasting, investment advising, interstate ground transport, mining and drilling, wildlife and fish, environmental and alcoholic beverages. Most business will be required to register with state agencies but not the federal government. However, if you need a license or permit you are required by law to obtain one. Check with the governing federal agency before you start your business.
Choosing a name for your business
Before you print the business cards, signs and adverts for your business, you will need to make sure the name you have chosen is not already registered. You can do this by checking with the US Patent and Trademark Office or USPTO. Once you know the name is available, register it with the USPTO even if you aren’t ready to launch yet. You can do this with an Intent to Use application. This is also a good opportunity to register any logos, designs or other intellectual property.