Being an entrepreneur is not for everyone. It requires a person to face uncomfortable risks, to believe in something that has never been before and struggle to make it a reality. Most importantly, it takes a continuous relentless dedication. As an employee you have a boss or owner dealing with the stress of where the next dollar will come from, how rent and labor costs will be paid for, lawsuits, injuries, the economy, the weather, pandemics, the next president and a million other things. An employee knows that at 5 p.m. they go home. They clock out. You do not clock out as an entrepreneur, your mind is constantly working and navigating all the above issues which seem to come out of nowhere. It sounds cynical, but it’s the reality of being a business owner. But that doesn’t scare you and that’s why you are here.
This is why the first question an entrepreneur should ask themselves is: “Am I ready to dedicate my time, money, and effort into this new endeavor?” It’s a good question to ask because if you’re not mentally prepared you can lose all three.
As business attorneys we have met with all types of business owners and the underlying theme among the successful ones is that successful business owners are dedicated, disciplined and take the time to protect their businesses by being aware of laws, rules and regulations. You will find some who will cut corners, enter verbal agreements, ignore rules and regulations, only to face lawsuits, fines, penalties and eventually loss of business.
Market research will tell you if there’s an opportunity to turn your idea into a successful business. It’s a way to gather information about potential customers and businesses already operating in your area. Use that information to find a competitive advantage for your business.
Market research balances consumer behavior and economic trends to confirm and improve your business idea.
It’s crucial to understand your customer or client base from the outset. Market research lets you reduce risks even while your business is still just a flicker in your imagination.
Gather demographic information to better understand opportunities and limitations for gaining customers. This could include population data on age, wealth, family, interests, or anything else that’s relevant for your business.
Answer the following questions to get a good sense of your market:
You’ll also want to keep your ear to the ground with the latest small business trends. It’s important to gain a sense of the specific market share that will impact your profits.
You can do market research using existing sources like google maps, and other market research tools that can help you find niches, or you can do the research yourself and go direct to consumers and taking your own surveys.
Existing sources can save you a lot of time and energy, but the information might not be as specific to your audience as you’d like. Use it to answer questions that are both general and quantifiable, like industry trends, demographics, and household incomes. Check online or start with our list of market research resources.
Asking consumers yourself can give you a nuanced understanding of your specific target audience. But, direct research can be time consuming and expensive. It might also give you skewed results of you are not careful. Use it to answer questions about your specific business or customers, like reactions to your logo, improvements you could make to buying experience, and where customers might go instead of your business.
Competitive analysis helps you learn from businesses competing for your potential customers. This is key to defining a competitive edge that creates sustainable revenue.
Your competitive analysis should identify your competition by product line or service and market segment. Assess the following characteristics of the competitive landscape:
Several industries might be competing to serve the same market you’re targeting. Important factors to consider include level of competition, threat of new competitors or services, and the effect of suppliers and customers on price.
Your business plan is the foundation of your business. It’s a roadmap for how to structure, run, and grow your new business. You’ll use it to convince people that working with you — or investing in your company — is a keen business decision.
A good business plan directs you through each stage of starting and managing your business. You’ll use your business plan as a roadmap on how to structure, run, and grow your new business. It’s a way to think through the key elements of your business and give you a good perspective.
Business plans can help you get funding or bring on new business partners. Investors want to feel confident they’ll see a return on their investment. Your business plan is the tool you’ll use to convince people that working with you — or investing in your company — is a smart choice.
There’s no right or wrong way to write a business plan. What’s important is that your plan meets your needs.
Most business plans fall into one of two common categories: traditional or lean startup.
Traditional business plans are more common, use a standard structure, and encourage you to go into detail in each section. They tend to require more work upfront and can be dozens of pages long.
Lean startup business plans are less common but still use a standard structure. They focus on summarizing only the most important points of the key elements of your plan. They can take as little as one hour to make and are typically only one page.
This type of plan is very detailed, takes more time to write, and is comprehensive. Developers, Landlord, Lenders and investors commonly request this plan.
You might prefer a traditional business plan format if you’re very detail-oriented, want a comprehensive plan, or plan to request financing from traditional sources.
When you write your business plan, you don’t have to stick to the exact business plan outline. Instead, use the sections that make the most sense for your business and your needs. Traditional business plans use some combination of these nine sections.
Briefly tell your reader what your company is and why it will be successful. Include your mission statement, your product or service, and basic information about your company’s leadership team, employees, and location. You should also include financial information and high-level growth plans if you plan to ask for financing.
Use your company description to provide detailed information about your company. Go into detail about the problems your business solves. Be specific, and list out the consumers, organization, or businesses your company plans to serve.
Explain the competitive advantages that will make your business a success. Are there experts on your team? Have you found the perfect location for your store? Have your found a niche where there is a high demand but low supply? Your company description is the place to boast about your strengths.
You’ll need a good understanding of your industry outlook and target market. Competitive research will show you what other businesses are doing and what their strengths are. In your market research, look for trends and themes. What do successful competitors do? Why does it work? Can you do it better? Now’s the time to answer these questions. Most business owners do not do this or they do it mentally based of their experiences or word of mouth. However, conducting a substantial market analysis can protect you from pitfalls that you might encounter deep into running your business instead of at the outset.
Tell your reader how your company will be structured and who will run it.
Describe the legal structure of your business. State whether you have or intend to incorporate your business as a C or an S corporation, form a general or limited partnership, or if you’re a sole proprietor or limited liability company (LLC).
Use an organizational chart to lay out who’s in charge of what in your company. Show how each person’s unique experience will contribute to the success of your venture. Consider including resumes and CVs of key members of your team. In the beginning all the roles might be you. Its true that many business owners wear a lot of hats but planning the future and creating a delegation plan can help you scale your business and get the most benefit out of your business structure.
Describe what you sell or what service you offer. Explain how it benefits your customers and what the product lifecycle looks like. Share your plans for intellectual property, like copyright or patent filings. If you’re doing research and development for your service or product, explain it in detail.
There’s no single way to approach a marketing strategy. Your strategy should evolve and change to fit your unique needs.
Your goal in this section is to describe how you’ll attract and retain customers. You’ll also describe how a sale will actually happen. You’ll refer to this section later when you make financial projections, so make sure to thoroughly describe your complete marketing and sales strategies.
It’s a good idea to consult with marketing professionals when thinking about this topic. You will need to gain a good understanding about marketing costs as a startup cost and also what it will cost during the lifetime of your business. Depending on your budget there are many options here. Word of mouth and referrals from friends and family is a great way to start for free. However, depending on how fast you want to scale your business, you might need to put some marketing dollars to expand that reach. Include these costs in your business plan as they are a considerable expense when starting a business and should not be overlooked.
If you’re asking for funding, this is where you’ll outline your funding requirements. Your goal is to clearly explain how much funding you’ll need over the next five years and what you’ll use it for.
Specify whether you want debt or equity, the terms you’d like applied, and the length of time your request will cover. Give a detailed description of how you’ll use your funds. Specify if you need funds to buy equipment or materials, pay salaries, or cover specific bills until revenue increases. Always include a description of your future strategic financial plans, like paying off debt or selling your business.
Supplement your funding request with financial projections. Your goal is to convince the reader that your business is stable and will be a financial success.
If your business is already established, include income statements, balance sheets, and cash flow statements for the last three to five years. If you have other collateral you could put against a loan, make sure to list it now.
Provide a prospective financial outlook for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, be even more specific and use quarterly — or even monthly — projections. Make sure to clearly explain your projections, and match them to your funding requests.
This is a great place to use graphs and charts to tell the financial story of your business.
Use your appendix to provide supporting documents or other materials were specially requested. Common items to include are credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents, and other contracts.
This type of plan is high-level focus, fast to write, and contains key elements only. Some lenders and investors may ask for more information.
You might prefer a lean startup format if you want to explain or start your business quickly, your business is relatively simple, or you plan to regularly change and refine your business plan.
Lean startup formats are charts that use only a handful of elements to describe your company’s value proposition, infrastructure, customers, and finances. They’re useful for visualizing tradeoffs and fundamental facts about your company.
There are different ways to develop a lean startup template. You can search the web to find free templates to build your business plan. We discuss nine components of a model business plan here:
Note the other businesses or services you’ll work with to run your business. Think about suppliers, manufacturers, subcontractors, and similar strategic partners.
List the ways your business will gain a competitive advantage. Highlight things like selling direct to consumers, or using technology to tap into the sharing economy.
List any resource you’ll leverage to create value for your customer. Your most important assets could include staff, capital, or intellectual property. Don’t forget to leverage business resources that might be available to women, veterans, Native Americans, and HUBZone businesses.
Make a clear and compelling statement about the unique value your company brings to the market.
Describe how customers will interact with your business. Is it automated or personal? In person or online? Think through the customer experience from start to finish.
Be specific when you name your target market. Your business won’t be for everybody, so it’s important to have a clear sense of whom your business will serve.
List the most important ways you’ll talk to your customers. Most businesses use a mix of channels and optimize them over time.
Will your company focus on reducing cost or maximizing value? Define your strategy, then list the most significant costs you’ll face pursuing it.
Explain how your company will actually make money. Some examples are direct sales, memberships fees, and selling advertising space. If your company has multiple revenue streams, list them all.
Your business plan will help you figure out how much money you’ll need to start your business. If you don’t have that amount on hand, you’ll need to either raise or borrow the capital. Fortunately, there are more ways than ever to find the capital you need.
The key to a successful business is preparation. Before your business opens its doors, you’ll have bills to pay. Understanding your expenses will help you launch successfully.
Calculating startup costs helps you:
Most businesses fall into one of three categories
START UP COSTS
Each of the above business categories will have different start up costs. Here are common startup costs you’re likely to have no matter what. Look through the following list, and make sure to add any other expenses that are unique to your business:
Once you have your list of expenses, you can estimate how much they’ll actually cost. This process will be different for each expense you have.
Some expenses will have well-defined costs — permits and licenses tend to have clear, published costs. You might have to estimate other costs that are less certain, like employee salaries. Look online and talk directly to mentors, vendors, and service providers to see what similar companies pay for expenses.
Once you’ve identified your business expenses and how much they’ll cost, you should organize your expenses into one-time expenses and monthly expenses.
One-time expenses are the initial costs needed to start the business. Buying major equipment, hiring a logo designer, and paying for permits, licenses, and fees are generally considered to be one-time expenses. You can typically deduct one-time expenses for tax purposes, which can save you money on the amount of taxes you’ll owe. Make sure to keep track of your expenses and talk to your accountant when it’s time to file your taxes.
Monthly expenses typically include things like salaries, rent, and utility bills. You’ll want to count at least one year of monthly expenses, but counting five years is ideal.
Add up your one-time and monthly expenses to get a good picture of how much capital you’ll need and when you’ll need it.
It’s a good idea to create a formal report of your expected startup costs.
You want it in a format that’s clear and easy to understand. Investors and lenders compare expected costs to projected revenue and determine the potential for your business to profit.
Your business location is one of the most important decisions you’ll make. You have probably even seen yourself, even on the same street intersection, that businesses on one side see more traffic than others. Whether you’re setting up a brick-and-mortar business or launching an online store, the choices you make could affect your taxes, legal requirements, and revenue.
In California, you’ll need to register your business, pay taxes, and get licenses and permits in the place you choose to locate your business.
Where you locate your business depends in part on the location of your target market, business partners, and your personal preferences. In addition, you should consider the costs, benefits, and restrictions of different government agencies.
When you calculate your startup costs, take into account the way different expenses might cost more or less depending on your location.
Costs that can vary significantly by location include standard salaries, minimum wage laws, property values, rental rates, business insurance rates, utilities, and government licenses and fees.
If you buy, rent, build, or plan to work out of a physical property for your business, make sure it conforms to local zoning requirements.
Neighborhoods are generally zoned for either commercial or residential use. Zoning ordinances can restrict or entirely ban specific kinds of businesses from operating in an area. For example, there has been a growing interest in vacation rentals such as Airbnb or VBRO but many cities and Home owners associations restrict or completely ban short term rentals.
You might have fewer zoning restrictions if you base your business out of your home, but zoning ordinances can still apply even to home-based businesses.
Zoning laws are typically controlled at the local level, so check with your department of city planning, or similar office, to find out about the zoning laws in your area.
Consider the tax landscape for the state, county, and city. Income tax, sales tax, property tax, and corporate taxes can vary significantly from place to place.
In fact, In California there are many cities that create tax environments that are very friendly to certain kinds of companies. That’s part of the reason why developers, tech startups, financial institutions, and manufacturing tend to concentrate in certain areas of the country.
Some state and local governments offer special tax credits for small businesses. You might also find state-specific small business loans or other financial incentives.
Incentive programs and benefits are often related to job creation, energy efficiency, urban redevelopment, and technology.
Visit local SBA Offices, Small Business Development Centers, Women’s Business Centers state and local government websites to find more information.
The federal government offers benefits to small businesses that contract with the government and are based in underutilized areas. Check into the Historically Underutilized Business Zones (HUBZone) program to see if you qualify for preferential access to federal procurement opportunities.
The legal structure you choose for your business will impact your business registration requirements, how much you pay in taxes, and your personal liability.
Your business structure affects how much you pay in taxes, your ability to raise money, the paperwork you need to file, and your personal liability.
You’ll need to choose a business structure before you register your business with the state. Most businesses will also need to get a tax ID number and file for the appropriate licenses and permits.
Our California business attorneys can help you choose a business structure carefully. While you may convert to a different business structure in the future, there may be restrictions based on your location. This could also result in tax consequences and unintended dissolution, among other complications.
Consulting with our business attorneys to start up your business entity today.
A sole proprietorship is easy to form and gives you complete control of your business. You're automatically considered to be a sole proprietorship if you do business activities but don't register as any other kind of business.
Sole proprietorships do not produce a separate business entity. This means your business assets and liabilities are not separate from your personal assets and liabilities. You can be held personally liable for the debts and obligations of the business. Sole proprietors are still able to get a trade name also called a DBA (doing business as) or a fictious business name. It can also be hard to raise money because you can't sell stock, and banks are hesitant to lend to sole proprietorships.
Sole proprietorships can be a good choice for low-risk businesses and owners who want to test their business idea before forming a more formal business. Speak to one of our attorneys to see if your business is a low risk business or not.
Partnerships are the simplest structure for two or more people to own a business together. There are three common kinds of partnerships: general partnerships, limited partnerships (LP) and limited liability partnerships (LLP).
General Partnerships are partnerships between two or more people. All the partners are responsible for the liabilities of the business. Technically it’s a sole proprietorship among two or more people. General Partnerships do not need to be in writing but it’s a very good idea to document the relationship between the parties. If there is no writing the California default rules governing partnerships will apply. Profits are passed through to personal tax returns.
Limited partnerships have only one general partner with unlimited liability, and all other partners have limited liability. The partners with limited liability also tend to have limited control over the company, which is documented in a partnership agreement. Profits are passed through to personal tax returns, and the general partner — the partner without limited liability — must also pay self-employment taxes.
Limited liability partnerships are similar to limited partnerships, but give limited liability to every owner. An LLP protects each partner from debts against the partnership, they won't be responsible for the actions of other partners.
Partnerships can be a good choice for businesses with multiple owners, professional groups (like attorneys), and groups who want to test their business idea before forming a more formal business.
An LLC lets you take advantage of the benefits of both the corporation and partnership business structures.
LLCs protect you from personal liability in most instances, your personal assets — like your vehicle, house, and savings accounts — won't be at risk in case your LLC faces bankruptcy or lawsuits.
Profits and losses can get passed through to your personal income without facing corporate taxes. However, members of an LLC are considered self-employed and must pay self-employment tax contributions towards Medicare and Social Security.
LLCs can have a limited life in many states. When a member joins or leaves an LLC, some states may require the LLC to be dissolved and re-formed with new membership — unless there's already an agreement in place within the LLC for buying, selling, and transferring ownership.
LLCs can be a good choice for small, medium, large- or higher-risk businesses, owners with significant personal assets they want protected, and owners who want to pay a lower tax rate than they would with a corporation.
A corporation, sometimes called a C corp, is a legal entity that's separate from its owners. Corporations can make a profit, be taxed, and can be held legally liable.
Corporations offer the strongest protection to its owners from personal liability, but the cost to form a corporation is higher than other structures. Corporations also require more extensive record-keeping, operational processes, and reporting.
Unlike sole proprietors, partnerships, and LLCs, corporations pay income tax on their profits. In some cases, corporate profits are taxed twice — first, when the company makes a profit, and again when dividends are paid to shareholders on their personal tax returns. Many would call this two levels of tax.
Corporations have a completely independent existence separate from its shareholders. If a shareholder leaves the company or sells his or her shares, the C corp can continue doing business relatively undisturbed. A C corp has its own interests separate from the shareholders because it is its own entity
Corporations have an advantage when it comes to raising capital because they can raise funds through the sale of stock, which can also be a benefit in attracting employees.
Corporations can be a good choice for medium- or higher-risk businesses, those that need to raise money, and businesses that plan to "go public" or eventually be sold.
Remember C corps only maintain limited liability status if the owners keep their money and actions separate from their personal affairs. Once a person uses a corporation for their own personal use it could be “pierced” and you can become personally liable for the corporations liabilities. Speak to one of our attorneys for more information about piercing the corporate veil.
An S corporation, sometimes called an S corp, is a special type of corporation that's designed to avoid the double taxation drawback of regular C corps. S corps allow profits, and some losses, to be passed through directly to owners' personal income without ever being subject to corporate tax rates.
Not all states tax S corps equally, but most recognize them the same way the federal government does and tax the shareholders accordingly. Some states tax S corps on profits above a specified limit and other states don't recognize the S corp election at all, simply treating the business as a C corp.
S corps are created by filing an election with the IRS to get S corp status.
There are special limits on S corps. Check the IRS website for eligibility requirements. To qualify for S corporation status, the corporation must meet the following requirements:
Even with S corp election you'll still have to follow the strict filing and operational processes of a C corp.
S corps also have an independent life, just like C corps. If a shareholder leaves the company or sells his or her shares, the S corp can continue doing business relatively undisturbed.
S corps can be a good choice for a businesses that would otherwise be a C corp, but meet the criteria to file as an S corp.
Nonprofit corporations are organized to do charity, education, religious, literary, or scientific work. Because their work benefits the public, nonprofits can receive tax-exempt status, meaning they don't pay state or federal income taxes on any profits it makes.
Nonprofits must file with the IRS to get tax exemption, a different process from registering with their state.
Nonprofit corporations need to follow organizational rules very similar to a regular C corp. They also need to follow special rules about what they do with any profits they earn. For example, they can't distribute profits to members or political campaigns.
Nonprofits are often called 501(c)(3) corporations — a reference to the section of the Internal Revenue Code that is most commonly used to grant tax-exempt status.
Compare business structures
Compare the general traits of these business structures, but remember that ownership rules, liability, taxes, and filing requirements for each business structure can vary by state. The following table is intended only as a guideline. Please confer with a business tax specialist to confirm your specific business needs.
Unlimited personal liability
Two or more people
Unlimited personal liability unless structured as a limited partnership
Self-employment tax (except for limited partners)
Limited liability company (LLC)
One or more people
Owners are not personally liable
Personal tax or corporate tax
Corporation – C corp
One or more people
Owners are not personally liable
Corporation – S corp
One or more people, but no more than 100, and all must be U.S. citizens
Owners are not personally liable
Corporation – B corp
One or more people
Owners are not personally liable
Corporation – Nonprofit
One or more people
Owners are not personally liable
Tax-exempt, but corporate profits can’t be distributed
There’s no such thing as a perfect name. At the end of the day your name is what you make it. Some of the most successful businesses have bizarre and unfamiliar names. However, you will want to think about your customer and how they might perceive your name. If it’s too difficult to remember, pronounce, say or spell they might have difficulty even searching for it. You’ll want to choose a business name that reflects your brand identity and doesn’t clash with the types of goods and services you offer. Most importantly, you must make sure your business name isn’t being used by someone else. If you use an existing business name you may be liable for trademark infringement which might to forfeiting your profits to that existing business.
An entity name can protect the name of your business at a state level. Depending on your business structure and location, the state may require you to register a legal entity name.
Your entity name is how the state identifies your business. Each state may have different rules about what your entity name can be and usage of company suffixes. Most states don’t allow you to register a name that’s already been registered by someone else, and some states require your entity name to reflect the kind of business it represents (e.g. medical corporations)
In most cases, your entity name registration protects your business and prevents anyone else in the state from operating under the same entity name. However, there are exceptions pertaining to state and business structure.
A trademark can protect the name of your business, goods, and services at a national level. Trademarks prevent others in the same (or similar) industry in the United States from using your trademarked names.
For example, if you were an electronics company and wanted to call your business ElectoShak and one of your products called BlazeWire 3000, trademarking those names would prevent other electronics businesses or similar products from using those same names.
Businesses in every state are subject to trademark infringement lawsuits, which can prove costly. That’s why you should check your prospective business, product, and service names against the official trademark database, maintained by the United States Patent and Trademark Office.
For more information on trademarks see our trademarks page.
You might need to register your DBA — also known as a trade name, fictitious name, or assumed name — with the state, county, or city your business is located in. Registering your DBA name doesn’t provide legal protection by itself, but most states require you to register your DBA if you use one. Some business structures require you to use a DBA.
Even if you’re not required to register a DBA, you might want to anyway. A DBA lets you conduct business under a different identity from your own personal name or your formal business entity name. As an added bonus, getting a DBA and federal tax ID number (EIN) allows you to open a business bank account.
Multiple businesses can go by the same DBA in one state, so you’re less restricted in what you can choose. There’s also more leeway in the clarity of business function.
Determine your DBA requirements based on your specific location. Requirements vary by business structure as well as by state, county, and municipality, so check with local government offices and websites.
If you want an online presence for your business, start by registering a domain name — also known as your website address, or URL.
Once you register your domain name, no one else can use it for as long as you continue to own it. It’s a good way to protect your brand presence online.
If someone else has already registered the domain you wanted to use, that’s okay. Your domain name doesn’t actually need to be the same as your legal business name, trademark, or DBA. For example, ElectoShak could register its domain name as electonicsRus.com.
You’ll register your domain name through a registrar service. Consult a directory of accredited registrars to determine which ones are safe to use, and then pick one that offers you the best combination of price and customer service. You’ll need to renew your domain registration on a regular basis.
Once you’ve picked the perfect business name, it’s time to make it legal and protect your brand. If you’re doing business under a name different than your own, you’ll need to register with the federal government, and maybe your state government, too.
Your location and business structure determine how you’ll need to register your business. Determine those factors first, and registration becomes very straightforward.
For most small businesses, registering your business is as simple as registering your business name with state and local governments.
In some cases, you don’t need to register at all. If you conduct business as yourself using your legal name, you won’t need to register anywhere. But remember, if you don’t register your business, you could miss out on personal liability protection, legal benefits, and tax benefits.
Most businesses don’t need to register with the federal government to become a legal entity, other than simply filing to get a federal tax ID. Small businesses sometimes register with the federal government for trademark protection or tax-exempt status.
If you want to trademark your business, brand or product name, file with the United States Patent and Trademark office once you’ve formed your business.
To create an S corp, you’ll need to file form 2553 with the IRS.
If your business is a limited liability company (LLC), corporation, partnership, or nonprofit corporation, you’ll probably need to register with any state where you conduct business activities.
Typically, you’re considered to be conducting business activities in a state when:
Some states allow you to register online, and some states make you file paper documents in person or through the mail.
Most states require you to register with the Secretary of State’s office, a Business Bureau, or a Business Agency.
If your business is an LLC, corporation, partnership, or nonprofit corporation, you’ll need a registered agent in your state before you file.
A registered agent receives official papers and legal documents on behalf of your company. The registered agent must be located in the state where you register.
Many business owners prefer to use a registered agent service rather than take on this role themselves.
If your LLC, corporation, partnership, or nonprofit corporation conducts business activities in more than one state, you might need to form your business in one state and then file for foreign qualification in other states where your business is active.
The state where you form your business will consider your business to be domestic, while every other state will view your business as foreign. Foreign qualification notifies the state that a foreign business is active there.
Foreign qualified businesses typically need to pay taxes and annual report fees in both their state of formation and states where they’re foreign qualified.
To foreign qualify, file a Certificate of Authority with the state. Many states also require a Certificate of Good Standing from your state of formation. Each state charges a filing fee, but the amount varies by state and business structure.
In most cases, the total cost to register your business will be less than $500, but fees vary depending on your state and business structure.
The information you’ll need typically includes:
The documents you need — and what goes in them — will vary based on your state and business structure.
Articles of organization
Articles of organization is a simple document that describes the basics of your LLC. It includes business information like the company name, address, member names, and the registered agent.
LLC operating agreement
An operating agreement describes the structure of your company’s financial and functional decisions. It defines how key business decisions are made, as well as each member’s duties, powers, and responsibilities. It’s widely recommended to create one to protect yourself and your business, even if your state doesn’t mandate it.
Certificate of limited partnership
This simple document describes the basics of your limited partnership. It notifies the state of the partnership’s existence and contains basic business information like the company name, address, and partner names. Not all states require it, and some states call it by a different name.
Limited partnership agreement
A limited partnership agreement is an internally binding document between all partners that defines how business decisions get made, each partner’s duties, powers, and responsibilities. It’s widely recommended to create one to protect yourself and your business, even if your state doesn’t mandate it.
Limited liability partnership
Certificate of limited liability partnership
This simple document describes the basics of your limited liability partnership. It notifies the state of the partnership’s existence and contains basic business information like the company name, address, and partner names. Not all states require it, and some states call it by a different name.
Limited liability partnership
Limited liability partnership agreement
A limited liability partnership agreement is an internally binding document between all partners that defines how business decisions get made, each partner’s duties, powers, and responsibilities. It’s widely recommended to create one to protect yourself and your business, even if your state doesn’t mandate it.
Corporation (any kind)
Articles of incorporation
The articles of incorporation — or a certificate of incorporation — is a comprehensive legal document that lays out the basic outline of your business. It’s required by every state when you incorporate. The most common information included is the company name, business purpose, number of shares offered, value of shares, directors, and officers.
Corporation (any kind)
Bylaws or resolutions
Bylaws (called resolutions for nonprofits) are the internal governance documents of a corporation. They define how key business decisions are made, as well as officer and shareholders’ duties, powers, and responsibilities. It’s widely recommended to create one to protect yourself and your business, even if your state doesn’t mandate it.
In addition, some states also require you to register your DBA — a trade name or a fictitious name — if you use one. Check with us to determine what the requirements are in your area.
Typically, you don’t need to register with county or city governments to actually form your business.
If your business is an LLC, corporation, partnership, or nonprofit corporation, you might need to file for licenses and permits from the county or city.
Some counties and cities also require you to register your DBA — a trade name or a fictitious name — if you use one.
Local governments determine registration, licensing, and permitting requirements, so visit local government websites to find out what you need to do.
Some states require you to provide reports soon after registering depending on your business structure.
You may need to file additional documentation with your state tax board or franchise tax board. These filings are typically referred to as Initial Reports or Tax Board registration, and most often need to be filed within 30-90 days after you register with the state.
Check with your local tax office or franchise tax board, if it applies to you.
You’ll use your employer identification number (EIN) for important steps to start and grow your business, like opening a bank account and paying taxes. It’s like a social security number for your business. Some — but not all — states require you to get a tax ID as well.
Your Employer Identification Number (EIN) is your federal tax ID. You need it to pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits.
It’s free to apply for an EIN, and you should do it right after you register your business.
Your business needs a federal tax ID number if it does any of the following:
Apply for an EIN with the IRS assistance tool. It will guide you through questions and ask for your name, social security number, address, and your “doing business as” (DBA) name. Your nine-digit federal tax ID becomes available immediately upon verification.
If you are unsure about what to choose or how to fill out these forms our attorneys can do this for you so there is no mistake.
If you already have an EIN, you might have to change or replace it with a new one if certain changes have occurred with your business.
Types of business changes that might require you to change or replace your EIN are:
Your requirements will depend on your business structure and the kind of change that occurred. Check with the IRS to determine exactly whether you need to change or replace your EIN.
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’ll need to check with your state’s websites.
To know whether you need a state tax ID, research and understand your state’s laws regarding income taxes and employment taxes, the two most common forms of state taxes for small businesses. Alternatively you can schedule a call with us to help guide you down this path.
Seven states have no income tax, and another two only impose tax on income from dividends. States that do tax income will determine figures based on business structure.
Keep your business running smoothly by staying legally compliant. The licenses and permits you need for your business will vary by industry, state, location, and other factors.
You’ll need to get a federal license or permit if your business activities are regulated by a federal agency.
If you import or transport animals, animal products, biologics, biotechnology or plants across state line.
U.S. Department of Agriculture
If you manufacture, wholesale, import, or sell alcoholic beverages at a retail location.
Alcohol and Tobacco Tax and Trade Bureau
Local Alcohol Beverage Control Board
If your business involves operating aircraft, transporting goods or people via air, or aircraft maintenance.
Federal Aviation Administration
Firearms, ammunition, and explosives
If your business manufactures, deals, or imports firearms, ammunitions, and explosives.
Bureau of Alcohol, Tobacco, Firearms and Explosives
Fish and wildlife
If your business engages in any wildlife related activity, including the import or export of wildlife and derivative products.
U.S. Fish and Wildlife Service
If your business engages in commercial fishing of any kind.
National Oceanic and Atmospheric Administration Fisheries Service
If you provide ocean transportation or facilitate the shipment of cargo by sea.
Federal Maritime Commission
Mining and drilling
If your business is involved in drilling for natural gas, oil, or other mineral resources on federal lands.
Bureau of Safety and Environmental Enforcement
If your business produces commercial nuclear energy, is a fuel cycle facility, or is involved in distribution and disposal of nuclear materials.
U.S. Nuclear Regulatory Commission
Radio and television broadcasting
If your business broadcasts information by radio, television, wire, satellite, or cable.
Federal Communications Commission
Transportation and logistics
If your business operates an oversize or overweight vehicle. Permits for oversize and overweight vehicles are issued by your state government, but the U.S. Department of Transportation can direct you to the correct state office.
U.S. Department of Transportation
Check to see if any of your business activities are listed here, and then check with the right federal agency to see how to apply.
The licenses and permits you need from the state, county, or city will depend on your business activities and business location. Your business license fees will also vary.
States tend to regulate a broader range of activities than the federal government. For example, business activities that are commonly regulated locally include auctions, construction, and dry cleaning, farming, plumbing, restaurants, retail, and vending machines.
Some licenses and permits expire after a set period of time. Keep close track of when you need to renew them — it’s often easier to renew than it is to apply for a new one.
Every state, county, and city regulations are different. Industry requirements often vary as well. Speak to an attorney to help you navigate these regulations.
A small business checking account can help you handle legal, tax, and day-to-day issues. The good news is it’s easy to set one up if you have the right registrations and paperwork ready.
As soon as you start accepting or spending money as your business, you should open a business bank account. Common business accounts include a checking account, savings account, credit card account, and a merchant services account. Merchant services accounts allow you to accept credit and debit card transactions from your customers.
You can open a business bank account once you’ve gotten your federal EIN.
Most business bank accounts offer perks that don’t come with a standard personal bank account.
Here are things to consider when you’re opening a merchant services account:
Payment processing companies are an increasingly popular alternative to traditional merchant services accounts. Payment processing companies sometimes provide extra functionality, like accessories that let you use your phone to accept credit card payments. The fee categories that you need to consider will be similar to merchant services account fees. If you find a payment processor that you like, remember that you’ll still need to connect it to a business checking account to receive payments.
Opening a business bank account is easy once you’ve picked your bank. Simply go online or to a local branch to begin the process. Here are some of the most common documents banks ask for when you open a business bank account. Some banks may ask for more.
Other Business Considerations:
Once your business is set up now the real fun begins. Every business interaction or transaction has legal significance and you should protect yourself and your business in every aspect. Below are some considerations you should be thinking about in different areas of business.
Leasing – Leasing buildings, offices and other property – many instances business owners will have to lease property or equipment to get their business going. Entering a lease is a commitment and one should be aware to read through the lease carefully. Yes they are boring and long documents but the implications can be vital to the future of your business.
Insurance – All businesses should have insurance. It protects you from unintended consequences that you may not be able to afford if you had no insurance. Also, many industries might be required to be insured or bonded to operate. Make sure you have the proper insurance before starting business. Insurance also is a great way to protect the assets of your business and all that you have built.
Contracts, Agreements and Disclosures – Businesses offering products and services should have contracts, agreements, waivers, releases, and disclosures when dealing with customers and clients. They help set expectations, limit liability, inform, and assign responsibility. Putting things in writing is the best way to protect and prove business transactions. Businesses without proper contacts and agreements might face difficulty when involved in a dispute. In many states, just like California, some agreements must be in writing to be enforceable. The beautiful thing about these types of written documents is that they can further help limit your liability beyond even what a LLC or corporation can do. As long as they are fair and do not go against any laws contracts, agreements, waivers, releases, and disclosures are one of the most powerful tools in business.
Get help with your business with us.