Startups and small businesses have been the silver lining in a year as chaotic and unprecedented as 2020. Amid the COVID-19 pandemic, many individuals have realized that the time to start a business is now and are embracing their inner entrepreneur by starting a business. While so many of these businesses are based online, through e-commerce sites and platforms like Shopify, others have turned to traditional brick-and-mortar storefront locations, fit for specific offerings and services.
Starting a small business with a physical storefront is entirely different than starting a company that relies solely on its online presence. Beyond finding a building location and leasing the space, a brick-and-mortar storefront needs a few additional items before it can officially open for business on Main Street.
Let’s take a look at the key materials necessary to start a Main Street business.
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Entity formation
Generally, the default entity formation status for entrepreneurs is a sole proprietorship. This is an entity that requires little paperwork and is inexpensive, allowing the owner to be responsible for all aspects of the business. However, the downside to being a sole proprietor is that the owner is held responsible for everything that impacts the business, both good and bad.
Brick-and-mortar storefronts may be privy to more unforeseen circumstances than their online counterparts. Situations can range from sudden lawsuits to natural disaster crises. The best way to protect the business, and its owner, is to incorporate as an entity formation that provides liability protection.
Limited liability companies (LLCs) and corporations are two examples of legal entities that may protect a business and entrepreneur with limited liability. This creates a separation between the business and its owner, ensuring the owner’s assets are not negatively impacted in the fallout.
Related: Which Legal Entities are Best for Main Street Businesses?
Tax ID
Tax IDs are often referred to as employer identification numbers, or EINs. Tax IDs are necessary in order to hire employees, which will be a necessity at some point if you’re planning to open a brick-and-mortar storefront.
What else can this nine-digit number do for your small business?
An EIN is issued to small businesses by the IRS. It helps identify and track employer tax accounts, ensuring that your business is collecting payroll taxes. If you plan to incorporate as the aforementioned LLC or corporation, you’ll need to obtain a tax ID to identify the business. You may also use a tax ID to open a business bank account and establish a business credit profile.
Trademarks
The unique name of your business, its logo and design help identify your company and differentiate it from competing companies. If these trademarks are not registered, however, they run the risk of being plagiarized or infringed upon.
Filing to register a trademark at the federal level ensures that the owner of the business receives exclusive rights to the mark. Remember that prior to filing, you’ll need to conduct a name search through a trademark database. A successful search where your trademark does not match an existing or pending application means you may move forward and fill out a trademark application to register the trademark.
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Registered agent
Brick-and-mortar storefronts receive a great deal of paperwork delivered to their space. Some of this paperwork may be sensitive in nature. Entrepreneurs may prefer to keep these documents confidential, and the best way to go about doing that is to appoint a registered agent (RA) for the business.
A registered agent acts as the official point of contact between your business and the state. They accept paperwork on behalf of the business from county and state agencies. Then, the RA organizes the documents and passes them along to the business owner in a timely, professional manner. This ensures no paperwork falls in between the cracks (which can sometimes happen if an entrepreneur attempts to be their own RA) and helps keep the business in compliance with the state.
Business licenses
Obtaining business licenses (often plural for most establishments) is necessary to ensure your brick-and-mortar storefront may safely operate within a specific city, state and industry.
The types of business licenses and permits that a storefront is required to have varies depending on the aforementioned factors. Companies relating to customer health, like restaurants and nail salons for example, will need health licenses in order to safely operate.
Not sure what other specialty business licenses or permits your company should file for next? Reach out to your local Secretary of State to find out.
