You’ve got your brilliant idea, you’re ready to spend every waking moment on your business, and you want to get started now. But what happens first? Starting a business requires you to be managing a lot of things at once and that juggling act begins immediately. You need to create a viable business plan, properly incorporate (or not incorporate) yourself, legally protect yourself and your business, and make sure you’ve filed any government forms for taxes or licensures.
A business plan is the best way to get your ideas on paper and forces you to answer questions you may be avoiding or may not have thought of. This plan will act as your business’ roadmap and will guide the decisions you make for your company. It will provide you with financial projections, an in-depth understanding of your customer, a marketing plan, and an operations plan. Not all business plans need to be lengthy, detailed documents, but every business should have some form of plan in place.
Picking the right legal entity for your business can have a huge impact on your bottom line. It has tax implications for both you and the business, determines how much liability is tied to you, and regulates how your business will be able to operate. For entrepreneurs just starting out or those planning on keeping their business small and simple, a sole proprietorship may be all you need. If your aspirations are much larger and require significant financial investments, a corporation may be a better choice. And those that find themselves in the middle may want to consider a partnership or LLC, where you can experience the best of both worlds - liability protection and tax relief.
After you have chosen the best legal entity for your company, you will need to find out exactly what licenses, forms, or accounts you will need to legally run your business. Even if you choose the simplest path of sole proprietorship, you may still need to take special steps to make your business legal. If your business name is anything other than your legal name, you will need to register it with the appropriate agencies. You also need to make sure that your company is in legal tax standing by filing for a tax identification or business number. Also, special licenses and permits exist at the federal, state, provincial, and municipal levels and you are responsible for finding out which apply to your business. Without proper permission, you may not be able to legally operate your business.
After you have taken all of the steps to ensure your business is operating legally, it is time to take even more steps to further protect your company and assets. Even the most successful of companies can be brought to its knees by a seemingly small oversight, so it is extremely important to make sure you have covered all of your bases. At each turn you should be consulting experts that can guide your decision-making, including lawyers, accountants, and industry experts. Anything that has value to your company should also be properly insured, not to mention personal liability insurance to protect you from anything that may happen to your company. Another extremely important area to protect is your intellectual property. Patents, trademarks, and strong contracts should accompany any proprietary information or designs that your company holds.
For many entrepreneurs, bringing the dream of a business to fruition is a life-changing event. There are endless tasks to complete, but once you begin you will slowly start to see your hard work payoff. It is extremely important to make sure you are following all regulations that apply to your business and consult experts as often as possible. Once you have created a legal entity in the eyes of the government and provided proper protection for it, you are ready to release your business to your customers and bring your business to a whole new level.
All information provided in this article is for educational purposes and should not be used as the sole resource in making a decision. It is important to consult a lawyer and accountant before all major business decisions. Please refer to our Terms of Service for more details.