Starting your own business is exciting. But before you can start, you need to follow some legal procedures and provide the necessary documents. In this post, let’s list all the things that you need to set up your own business in the US.
1. Register Your Business Name
To get started, pick a unique business name to give your business a new identity. Once you’ve zeroed in on the name of your choice, register it with the Secretary of the State.
In addition to this, it is a good idea to purchase a trademark for your business. This can ensure that your business’ identity can’t be copied by others.
2. Select the Type of Legal Entity
After the registration process, the next step is to pick a legal entity type for your business. Each legal entity type has different options for profit sharing and taxation. Invest some time into understanding which legal entity type will be the most appropriate for your business.
Some of the popular options include:
- Limited Liability Company (LLC)
- Partnership
- Sole Proprietorship
- Non-Profit Organization (NGO)
- Corporation
- Trust
3. Get Your State Filings Done
You’ve got a great name and the right legal entity type. Next, you need to finish your state filings. This will register and formally set up your business.
Keep in mind that the process for state business formation filing will depend on the legal entity type (for example, the LLC or Corporation) that you have chosen. So, read up on what is required to finish state filing for your legal entity type.
4. Apply For Your Tax ID Number
Your tax ID number, also known as the Employer Identification Number (EIN), is crucial to the smooth functioning of your business. It is a unique number that is given to businesses to identify them for taxation purposes. For the application, you must have a Taxpayer Identification Number that is valid.
Apply for it so that you can open a bank account, hire employees, and even report income. Without your tax ID number, you won’t be able to do any of these basic things.
5. Create Legal Contracts
From the beginning, you need to be prepared for any business-related conflicts that may arise at a later stage. That’s where detailed, well-written agreements and contracts come into the picture. They help set the right expectations before you get started.
All businesses need to draft an Operating Agreement or Corporate Bylaws, as well as some other common documents, including:
- Non-disclosure agreement (NDA)
- Employment agreement
- Independent contractor agreement
6. Open a New Bank Account
The final step is to create a new bank account that is solely dedicated to your business. Keep in mind that this account is only for your business transactions. Do not use it for your personal expenses.
For this, you will need to provide your EIN, state formation documents, and other relevant documents.
Do you want more details on the legal requirements of starting your own business? Take a look at this infographic created by GovDocFiling.
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