We’re chugging right along with our series – Business Basics: How to Start a Business with Authenticity and Intention. If you’ve missed any portions, be sure to check out 01 The Idea and 02 The Name before continuing on. Today, we’re making sure you’ve taken care of the legal necessities to start your business. Please note that this is NOT legal advice, and you should consult legal counsel for your specific situation. We are simply sharing what’s worked best for our clients and ourselves.
We’re doing this MVP style – Minimum Viable Product, that is.
Remember in Part 01 when decided to skip the formal 40-page business plan in favor of just getting started? We’re going to do the same thing here. Today we’ll be setting up the minimum legal requirements to start operation of your new business so you can get going as fast as possible. Is it a weekday? If so, in most areas you can be registered by the time it gets dark.
The first thing you’ll need to do to get started is determine your business structure. Depending on your plan and those involved, you may need to create a C or S corporation, an LLC, a partnership or a cooperative. However, for today’s tasks, we’re going to assume you’re starting your business in the simplest possible form: a sole proprietorship, in which you are the sole owner and singularly responsible for it’s assets and liabilities. Again, one last time: we are not advising that you should necessarily start as a sole proprietorship – if you have any questions, you should consult legal and/or tax experts. However, if you are going to be starting as an SP, read on!
Registering Your Business Name
The first thing you’ll need to do is to register your business name with the local and state authorities. Assuming your business name (the one you chose in Part 02!) is anything but just your first and last name, you’ll likely need to file a DBA or “doing business as”. This can typically be done with your county clerk’s office and costs around $25. You’ll need to use your assumed name on all of your other permits, licenses and bank accounts, so be sure to go ahead and do this.
In general, only businesses involved in federally regulated activity will need to get any permits or licensures from the federal government. These industries include agriculture, alcoholic beverages, aviation, firearms, ammunition and explosives, fish and wildlife, commercial fisheries, maritime transportation, mining and drilling, nuclear energy, radio and television broadcasting, and transportation and logistics.
Local + State Permits/Licenses
Depending on your state, county and city regulations, as well as your industry, you may or may not need additional permitting to open your business. Use the SBA’s Permit Me tool to search your zip code for the required permits. For many small home-based or online businesses, you will not need any additional registration beyond your DBA. As always, be sure to check with your local authorities for any requirements. If you plan to have a retail space or storefront, you will have additional city permitting to acquire.
There are legal and financial obligations involved with hiring employees, including verifying eligibility, reporting hires to the state and withholding taxes from their wages. For more about hiring your first employee, refer to this SBA article.
A majority of new businesses will only need to do one thing – register your DBA and sail off into the sunset (or, into setting up the financial requirements for your business). File your DBA as soon as you have your name selected to begin business operation.