Starting a new business is an exciting time, but it's important to make sure you take care of all the necessary steps to ensure your startup legal entity is set up properly.
Choosing a name for your business is an important step in the process of setting up a legal entity. The name you choose should be unique and distinguishable from other businesses in your industry. It's a good idea to do some research to make sure the name you want is available and not already being used by someone else. You can lookup existing trademarks on USPTO plus do a Google search of the name to see what comes up. Also ensure that the name is easily spelled when pronounced so that your customers will be able to find you. Ideally, you would also be able to obtain the .com domain for your name if a website will be an important channel for your business.
Once you've chosen a name for your business, you'll need to file the appropriate paperwork to register your business as a legal entity. The exact process for doing this will vary depending on the type of legal structure you've chosen and the state in which you're doing business.For example, if you've chosen to set up your business as a sole proprietorship or partnership, you'll need to register your business with the state and obtain a business license. If you've chosen to set up your business as a corporation or LLC, you'll need to file articles of incorporation or articles of organization with the state. You may also need to file additional paperwork, such as bylaws or an operating agreement, to outline the internal rules and procedures of your business.Here are some common options to consider:
When deciding on a legal structure for your business, consider your business's size, type, and future plans, as well as your personal liability and tax considerations. It's a good idea to consult with a lawyer or accountant to help you make the best decision for your business and to help you navigate the process of filing the appropriate paperwork and ensure that everything is properly set up. They can also help you understand any ongoing legal obligations you'll have as a business owner, such as filing annual reports or holding shareholder meetings.
There are a few factors to consider when deciding which state to register your legal entity in:
You may have heard that many companies choose to register in Delaware. There are a few reasons for this:
While Delaware may not be the best option for every company, its favorable business laws, efficient court system, and established corporate law make it an attractive state for many businesses.It may be helpful to seek the advice of a lawyer or accountant when deciding which state to register your legal entity in. They can help you understand the potential consequences of registering in different states and make a recommendation based on your specific business needs. Ultimately, the best state to register your legal entity in will depend on your business goals and circumstances. It's important to carefully consider your options and seek professional advice to make the best decision for your business.
Once you've decided on a legal structure, you'll need to register your business with the appropriate government agencies. This will typically involve obtaining a business license and registering your business name. You may also need to register for any applicable local licenses or permits, such as a sales tax permit or a zoning permit. You should also consider registering for any necessary federal licenses or permits, such as those required for businesses in specific industries, like food service or healthcare.In addition to these steps, you may also want to consider other legal issues such as intellectual property protection, employment agreements, and contracts with suppliers and customers. Depending on your startup type, you may now have annual reports or other documents to file, so set reminders to ensure you remember the timing of these important documents, in addition to taxes.
The specific legal entity paperwork and steps required to register a business will depend on the type of legal entity you are forming and the state in which you are registering.The typical steps involve:
Additional steps prior to registration are involved for certain types of businesses:
Note that the next suggested step will be to set up your business bank account.
It is important to keep your personal finances separate from your business finances for accounting, tax, and audit purposes, so getting this set up early is helpful.
You’ve set up your entity!Taking the time to properly name and set up your business as a legal entity will help ensure the long-term success and stability of your business. It will also give you the legal protection you need to operate your business and enter into contracts with customers and suppliers.