You’re considering starting your business, but you don’t know where to begin. We understand it can be scary — but, as they say, “Don’t let the fear of striking out keep you from playing the game.” We’re here to help you get past that fear with a seven-step guide to legally starting your business.
Step 1: Form a business plan.
You’ve figured out what you want your business to look like and what you’re going to sell, right? And you’ve made some money? Great! Now, you need to form your business plan. We believe that writing out your business plan can mean the difference between success and failure.
Your business plan will give you an overview of what this new venture will eventually look like. It should include finances (i.e. how much you want to make, how much you’re selling your products or services for, etc.), whether you’ll have employees or contractors, what roles you want to hire for, and more. The business plan will help keep you focused and give you a plan to move forward.
Step 2: Apply for an EIN.
Next, you’ll want to apply for a tax ID with the Internal Revenue Service. Specifically, the IRS will give you an employer identification number. You can apply for an EIN online.
To be eligible for an EIN, the person applying has to have a taxpayer identification number (either a social security number, an employer identification number, or an individual taxpayer identification number).
The IRS can also help you understand what you need to know about federal taxes when opening up your business.
Step 3: Research and file your state’s LLC application.
No two states are created equally when it comes to what businesses need to operate in them. To make sure you don’t need any additional paperwork or licenses, search for the Secretary of State website in your state and review their guidelines for filing a new LLC. Some Secretary of State websites have a complete checklist (like Colorado!) containing everything you should do to start a new business. What a win!
Not sure where to find this info? Simply Google “[your state] LLC filing.”
You’ll need your EIN to file an application and you may have to wait up to a few weeks for that to get approved. We recommend researching the application process before starting it so that you can find out what paperwork you need to have ready to make sure it goes smoothly.
Step 4: Look into local business licenses.
Similar to your business application (Step 2), applying for a business license is completely dependent on your state, county, or city. A business license authorizes your business to operate in compliance with the appropriate laws.
You’ll want to determine what type of license(s) you’ll need, as well as if you’ll need any permits to operate your business. Then, you’ll find what agency in your area runs the business license applications and what documents you need. Keep in mind that the cost of a business license can run up to a few hundred dollars, and that it can take some agencies a few weeks to approve your license. If you have multiple offices in different areas — i.e. if you currently work in one state but have your LLC based in another — you may need to look into both areas’ licensing requirements.
Don’t forget that when your license is up for renewal, there will also be fees and paperwork associated with that.
Step 5: Open a business bank account.
Once you receive your EIN, you can open a business bank account. A business bank account protects your personal finances from any events that happen in your business — and it can help you really shift your mindset as a business owner!
When choosing your bank, you should consider the perks the bank offers. Specifically, research which banks offer online business banking, what introductory offers are available, as well as long-term interest rates and fees. Once you’ve chosen your bank, open your account. VOILA! You’re one step closer to legalizing your biz!
Step 6(ish): Consider a patent, copyright, or trademark.
While you’re not required to get a patent, copyright, or trademark, you’ll want to consider if one is right for you.
Patents are intended to prevent others from making, using, or selling your invention. This is specific to a physical invention as opposed to an idea. Patents cost a lot of money so you’ll only want to do this if necessary.
A registered copyright protects original work of authorship. This would include paintings, photography, etc. While you automatically have a copyright upon finishing a creative work, you’ll want to register the copyright if you want to be able to pursue infringement claims if someone copies it.
You should also add a copyright notice to the footer of your website! (e.g. © 2021)
A trademark is a word, phrase, or symbol that distinguishes a source of goods. It’s usually in the form of your business name or logo. Similar to a copyright, a registered trademark ensures your work is not being used by others.
Need help trademarking your business? We have a course for you.
Step 7: Get the right contract templates.
Finally, you’ll need legitimate contracts that protect the work your business does from bad clients, poor timing, and total curveballs (like COVID-19).
And, guess what? We can help with that! We’ve created contract templates to help other business owners get things off the ground with confidence. From an LLC Operating Agreement to a Non-Disclosure Agreement, we want to help you take the guessing out of starting your business.
Start your biz off right.
Starting a business can be daunting — we get it! But understanding the overall process can help you get off to a good start. If you’re ready to take the first step, consider our Business Foundation Bundle as it can help you protect and grow your business with must have legal documents.