1. Write a Business Plan
The first step for a small business owner is often to write a Business Plan. A Business Plan can help keep a business focused on success by setting forth actionable steps.
While there is no standard format for this plan, it can be helpful to include:
- Your business concept.
- Company structure.
- Marketing plan.
- Financial plan.
- Competitor analysis.
Including action items, or a to-do list, with a timetable and deadlines, may provide the organization needed to realize your business goals.
A Business Plan can help you attract investors or funding. Many investors or financing entities might not want to approve funds for a new investment without seeing a solid Business Plan.
2. Choose a legal business structure
Before forming your small business, you may want to decide what kind of legal entity you'll be forming. The business structure you choose will affect your taxes, legal responsibility, and more. You can choose whether your small business will be a corporation, sole proprietorship, partnership, or limited liability company (LLC). In the end, the legal structure you choose for your small business will likely depend on your business goals and current needs.
If you do not choose a structure, you will likely be considered a sole proprietor or a general partnership (if you have a partner).
3. Become a legal business entity
New business owners typically need to apply for permits and business licenses in their area in order to legally operate. Licenses and permits may be required from both state and local governments covering various legal requirements for:
- Fire safety.
- Occupancy limits.
- Building code requirements.
- Food service permits.
If you choose to make a formal legal entity for your business, other than a sole proprietor or partnership, you usually register and file Articles of Incorporation with a state government. These documents list your business name, address, business purpose, legal structure, stock details, and other details about your company. Some LLCs may need an Operating Agreement as well. Your paperwork typically needs to appoint a Registered Agent — a person or company who can receive legal and tax documents for your business. The agent can be you, a service, or a person you trust, so long as they meet your state's legal requirements.
4. Register a business name
It is good to pick a name that matches your brand and attracts customers. State laws usually do not allow companies to use a name that is already in use, or a name that is too similar to one already registered. A business name search in your state's database, or nationally, can be helpful to see if the name is already taken by another entity. Once you choose a business name, you may want to register it before someone else takes it.
Even if you are forming a sole proprietorship, you may want to register a unique business name for branding and operations. You may be required to register a fictitious business name or a "doing business as" (DBA) name to conduct business.
5. Start a website and social media accounts
Starting a website for your small business will help new clients or customers find you. In addition, many consumers rely on social media to discover new businesses, so opening social media accounts is also a good idea. This is especially true if part of your Business Plan and marketing strategy relies on digital marketing. On your website and social media accounts, be sure to include and prominently display your:
- Business name.
- Contact information.
The main social media accounts you may want are Facebook, Instagram, LinkedIn, and Twitter. You might also set up a Google Business account and a YouTube channel. Social media accounts are great for running online ads as part of a digital ad campaign.
6. Apply for an Employer Identification Number
The Internal Revenue Service requires each small business to apply for an Employer Identification Number (EIN). You may need to apply for an EIN if any of these are true:
- You have employees.
- Your business is a corporation or a partnership.
- You file any employment tax returns.
- You withhold income taxes or have a Keogh plan.
You may also need an EIN if your business is involved with any of these:
- Trusts, except certain grantor-owned revocable trusts, IRAs, or Exempt Organization Business Income Tax Returns.
- Real estate mortgage investment conduits.
- Nonprofit organizations.
- Farmers' cooperatives.
- Plan administrators.
If you file for an EIN online, your small business will usually get a number instantly. But if you fax or mail your application, it typically takes longer to receive your EIN. You usually need to apply for an EIN before filing any tax return or making a deposit for your small business.
7. Protect Copyrights, Trademarks, and Trade Names
You might need to register trademarks and file copyright protections if your small business has any special logos, names, or terms you want to protect. These are often called intellectual property. While you may still have some legal protections without registering your intellectual property, taking the step to register affords you additional protections.
Requirements to register trademarks vary from state-to-state. You can also register your small business name with the U.S. Patent and Trademark Office. Federal trademark registration requires a nationwide search to make sure the name is not already taken, as well as meeting certain application criteria. Once you trademark your business name, logo, or other mark, then it is protected nationally.
Copyright protections let a small business protect creative works, like menus, software, photos, and more from being used by others without permission. If you copyright your business's creative works, then proving those works are uniquely yours, if needed, will be easier. Also, showing how infringing use of your work damaged your business may be easier as well.
8. Set up billing and invoicing
Setting up a billing and invoicing system is another key step in launching your small business. For example, you can deal with payments using the paper method, go totally paperless and online, or use a hybrid system. Before choosing a payment processing company, it is wise to research them well because some offer a flat rate or charge varying fees for their services.
For invoices, many online accounting services let you make invoices and send them to your customer via email. Then your customer can pay you directly from the invoice link.
Have legal questions about starting your small business? Reach out to a Rocket Lawyer On Call® attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.