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One of the most common questions entrepreneurs ask as they start their business is what comes next. You have a great idea and draft a business plan that establishes a timeline of goals you plan to reach. The next step is to start working to reach these goals and milestones.
As your business begins to grow, remember to protect it. These legal assets will ensure its protection before the startup fully opens its doors for business.
1. Incorporate or form a limited liability company (LLC)
The act of incorporating a business allows the owner to create a business structure that acts as a separate legal entity. Generally, most businesses start off as a sole proprietorship entity. This is a default entity formation where the owner assumes responsibility for everything that impacts the startup.
However, assuming this much responsibility can sometimes be a bit overwhelming for entrepreneurs. Incorporating or forming an LLC allows businesses to act as legal, separate entities through limited liability protection. This protection ensures that the owner’s personal assets, including houses and cars, are not at risk in the event of an unforeseen circumstance. Pick an entity formation that is the best fit for your business, ranging from an LLC to a corporation, and receive peace of mind through limited liability protection.
2. File for trademark protection
Do you have a unique business name, logo, design, or slogan for your business? If you said yes, you will need to file a trademark application to protect this mark.
Before filing a trademark application, however, conduct a name search for the trademark. This may be done through a trademark database like the USPTO’s Trademark Electronic Search System (TESS). Conducting a name search allows you to see if the name is available to register, if it is already registered by someone else, or if it is pending registration elsewhere. If it is available to register, you may file a trademark application. This ensures you, as the owner, receive exclusive rights to the trademark.
3. Obtain an employer identification number (EIN)
Once you incorporate or form an LLC for your business, the IRS will issue you a nine-digit number called an employer identification number (EIN). This tax ID legally identifies tax accounts and helps ensure that the business stays in compliance by paying federal and payroll taxes.
Where else can you use an EIN? An EIN is a requirement to hire employees for your business. It is also necessary to open a business bank account and establish business credit. If you did not incorporate or form an LLC, you may obtain an EIN by completing an EIN application and submitting it in for approval.
4. File for business licenses and permits
Your business may require certain business licenses and permits to operate in its given city, county, and state. These may vary depending on the type of industry you are in and what your business does. Check in with your local Secretary of State to determine which business licenses and permits you will need to file for your company.
5. Designate a registered agent
A registered agent acts as the point of contact between your business and the state. You may act as your own RA if you are able to meet certain requirements. For example, you will need a physical street address where you may accept service of process and availability between general business hours.
If you find you are unable to meet these requirements, that’s okay. You may work alongside a third-party registered agent. This RA will accept service of process, organize documents, and deliver these materials to the business and its owner in a timely, confidential manner.
6. Obtain business insurance
Any number of scenarios may present risks that threaten a small business. This is where it helps to obtain business insurance for your company. Study different types of business insurance that may be beneficial to your business. For example, you may find it’s a good idea to obtain general liability insurance to help protect your business in the event of financial losses. Once you determine the proper insurance policy, obtain it to protect your company and yourself.
7. File for a doing business as name (DBA)
Do you plan to conduct business under a name that is different from your existing corporate name? If so, you will need to file for a DBA.
A doing business as name is the public registration of a name under which you plan to do business. Having a DBA allows your business to open a business bank account and accept checks and payments under the DBA. You may also publicly advertise the business under the DBA and establish a separate business identity for customers and vendors.
8. Stay on top of annual maintenance documents
Remember that once you incorporate your business, you need to keep it in compliance with its Secretary of State. A few methods for keeping in compliance may include meeting deadlines for filing and renewing documents and paying fees on documents such as annual reports. Keep a running list of deadlines in place. This ensures you do not miss any upcoming deadlines and do not fall into bad standing with your small business.