What do I need to do to legally start a business?

What do I need to do to legally start a business? // Contrapreneur

In today’s world where it seems like everyone on instagram is an entrepreneur, or at least a brand. But getting a business started legally is about the same as it was 20 years ago. Slow. Bureaucratic. But really, not that difficult.

There’s plenty of service businesses out there who could help you out, but I’ve always done my own business startup paperwork. It’s really not that hard, you learn a few things in the process and DIYing it will save you money. If your business is in the US, here’s the non-negotiables:

  1. Stop worrying about what to name your business.

    In fact, hold off on all the dreamy branding work that is a forever-journey and just get your company legal. Seriously. You can change the name you operate under later with a simple Doing Business As (DBA) form.

  2. Apply for a business license.

    Just google “business licenses in [town/city/county you’re registering your business in] and complete the, usually short, paperwork your town/city/county requires. Not all locations require business licenses, but most do. Expect this to cost a little money, usually under $100.

    This is the time you will choose what sort of business you want to register as. A sole proprietorship is the most basic and a good choice if your business is low-risk but doesn’t offer much in the way of legal protection. An LLC is a good choice if you need more legal protection but don’t plan to incorporate. Then we get into corporations, where what’s available changes a bit state to state. A corporation is good for some small businesses, particularly S Corps and B Corps, or just a regular Corp if you plan to go public of seek VC funding. We contrapreneur are particularly fond of B Corps if your state offers that opportunity because they allow you to build purpose into the binding legal structure of your business.

  3. Get a DBA if you need one.

    Okay, now don’t get hung up on the name/domain/social handle thing yet. You can always simply get an additional DBA if you need to change the name of your business. If you are a sole proprietorship operating as your name, you likely don’t need a DBA. Pretty much everybody else does. You can get multiple DBAs, for example, we operate as Contrapreneur but also Contrapreneurship.com so we got a DBA for both. (Hint: DBA's are also sometimes known as a Fictitious Business Names.

  4. Get your EIN.

    An Employer Identification Number (EIN) allow the government to track your business transactions for tax purposes. If you are a sole proprietorship, you can use your social security number, but it’s not a great idea to be passing your social security number around so probably everybody should get an EIN.

  5. Open a business bank account

    It’s a good idea to do this before you make your first transaction so you can keep your business finances separate from your personal finances. Try to find a bank that invests in good, is a B Corp or is local to your area if you can.

Perhaps you’ll need these tOO:

  1. Get your local LICenses in order

    Here’s where it gets tricky because a local wine bar is going to need totally different licenses than a daycare. Get in touch with your local business licensing department and they’ll be able to help you sort through what you need. Some potentials to consider are: land use permits, liquor licenses, health department licenses but what’s required will be very different business-to-business.

  2. Trademark

    Not all business need a trademark, but if you have a name or logo that is a huge part of your brand, like Contrapreneur, you probably should. Now if you’re opening up a little local coffeeshop business named after your dog, probably not so vital. It is a good idea to make sure somebody hasn’t already trademarked your name to avoid potential complications. You can search the trademark database here.

  3. Sellers Permit

    Sometimes also know as a Certificate of Resell will be required if you sell products so that you can collect sales tax. It also is required if you’ll be buying wholesale from other companies to make your product. Go to your states department of taxation website to check out your particular requirements.

  4. Employer Laws

    If you’re hiring employees right from the start, make sure you’ve met all laws applicable to hiring in your area.

Disclaimer: Do your own research. What we’ve shared above is intended to help you know where to get started. Contrapreneur is not responsible for any misinformation. Consult legal council if in doubt. This article is written with the US audience in mind.

Sarah DanuComment