Starting a new business is an exciting venture that requires critical decisions and strategic planning. Before diving in, it’s essential to consider the market for your product or service, understand your competition, and accurately assess your financial resources. These initial factors can set the foundation for a successful and sustainable business.
Please note: This article is intended to provide food for thought and is not intended to give legal or financial advice. Please consult an accountant or attorney for professional advice.
Let’s start at the very beginning….
So, you are ready to start a new business? How exciting! According to Indeed.com, Much of what determines whether a company has longevity depends on the planning process. Business planning should start well before you open your first store or place your first ad. Of course, there are always influences outside your control, from significant changes in the stock market to unfavorable weather.
Conducting market research and analyzing your competition is vital to grasping the business environment and identifying your competitors. This strategic insight will pinpoint your potential customer base, enabling you to tailor your products or services effectively. Additionally, thorough research can provide valuable information, guiding you in choosing a business name that connects with and captivates your target audience.
Domain Name and Business Name
It is vital to your new brand that your entity name and domain name match.
A domain or domain name is an identification tool on the Internet that helps represent one or more IP addresses. An IP (Internet Protocol) address is a numerical instruction that helps direct someone to an Internet page. The domain name Accumera.com, for example, when clicked on, will take the user to our website. Our business name is Accumera LLC, which is a Limited Liability Company. We will talk about that later on in this blog.
You can check name availability in many states before forming the entity and simultaneously check domain name availability on services like GoDaddy. Please be aware that the domain name could be slightly different from the entity name if it is already taken.
Business Structure
According to the IRS, When beginning a business, you must decide what form of business entity to establish. Your form of business determines which income tax return form you must file. The most common forms of business are sole proprietorship, partnership, corporation, and S corporation. A limited liability company (LLC) is a business structure allowed by state statute. Legal and tax considerations enter into selecting a business structure.
- Sole proprietorships. A sole proprietor is someone who owns an unincorporated business by themselves. If you are the sole member of a domestic limited liability company (LLC) or the shareholder of a corporation, no matter the tax designation, you are not a sole proprietor.
- Partnerships. A partnership is a relationship between two or more people to conduct trade or business. Each person contributes money, property, labor, skill, and shares in the business’s profits and losses.
- Corporations are the “standard” type of corporation. They can have unlimited owners who are provided with limited liability protection. Corporations are a popular entity for companies looking for funding from venture capitalists.
- S corporations. S-corporations are C-corporations that have elected S-Corp status with Federal and State tax agencies. They provide flow-through taxation to shareholders but limit the number of shareholders.
- A limited liability company (LLC) is a business entity that offers limited liability protection. It can be taxed as a Partnership or corporation or have flow-through taxation to the members.
- Non-Profit. Not-for-profit corporations are entities formed for purposes other than making a profit. This includes charitable, religious, educational, and scientific companies.
General Tasks for a New Business
You’re on your way- you formed your company, yet there is much to do. Here are some suggestions for things to consider:
- Apply for an Employer Identification Number (EIN). If you plan on forming a new company or have just formed one, you will most likely need an Employer Identification Number (EIN), also known as a Federal Tax ID Number. This EIN is the corporate equivalent of your social security number. It is required if you intend to hire employees, open a bank account, or file a tax return.
- State Tax ID. The need for a state tax ID number ties directly to whether your business must pay state taxes. Sometimes, you can use state tax ID numbers for other functions, like protection against identity theft for sole proprietors.
Tax obligations differ at the state and local levels, so you must check with your state’s websites. To know whether you need a state tax ID, research and understand your state’s laws regarding income and employment taxes, the two most common forms of state taxes for small businesses. The process to get a state tax ID number is similar to a federal one but will vary by state. You’ll have to check.
- Apply for a business license and permits, if applicable. Something often overlooked when starting a business is the requirement that you may need licenses and permits to conduct business on a federal, state, or local (city, county, or town) level. Knowing the business license requirements associated with your venture is essential.
Certain types of businesses, such as restaurants, construction companies, online businesses, or even home-based businesses, may have requirements that are particularly important to understand. However, you may be unfamiliar with them. Requirements can range from a basic business license to operate within a city or county to a specific permit to sell alcohol or lottery tickets.
- Apply for appropriate trademarks, copyrights or patents. Intellectual Property, such as patents and trademarks, can be used for many things, such as collateral for a loan or to prove ownership. Accumera will provide trademark and patent searches if required.
- Purchase insurance policies. Consult with your insurance agent to discuss Errors and Omissions, liability, and other types of insurance depending on the nature of your business.
- Marketing! Don’t stress. Marketing is about getting the word out, building a website, and selling your goods or services. The US Small Business Administration offers a wealth of information.
- Open a business bank account. Starting a new company comes with a flurry of decisions, and one of the crucial ones is choosing the right bank for your business accounts. With so many options out there, take your time and review which bank will offer the perks and services that align with your company’s needs.
- Corporate Compliance. Understanding what you must do for business compliance for your new company is essential. Most entities filed at the state level will have annual or biennial reports that must be filed; these usually request critical information such as addresses or owner information, and there is typically a fee associated with them. In some states, these can be costly and perhaps have penalties for not filing, some financial and others where your company can become inactive.
One compliance factor for most new companies is the Corporate Transparency Act, which requires a federal filing with FinCEN. Companies not falling under one of the 23 exemptions must file a BOIR (beneficial ownership report) to notify FinCEN of their owners. There are substantial penalties for not filing: up to $500 in civil penalties or up to $10,000 or two years in prison in criminal penalties.
Are you ready to form your new entity?
Accumera LLC provides accurate, expeditious, and personal formation services in all US states and DC. Whether you’re looking for a Corporation, PC, LLC, PLLC, or Not-For-Profit company, we are here to help. We have created formation packages that provide everything you need to get started. Contact us to get started and make your new entity stress-free!
Resources: Indeed.com, IRS, SBA
