Conquer the Legalese of Business Formation

Seemingly daunting paperwork can be a large hurdle to overcome for many entrepreneurs. Keep it simple and focus your efforts; it can easily be accomplished. First, you must...

Seemingly daunting paperwork can be a large hurdle to overcome for many entrepreneurs. Keep it simple and focus your efforts; it can easily be accomplished. First, you must define the legal structure of your business — Sole Proprietorship, Corporation, LLC, etc. From there it is important to comply with all local, regional and national regulations or it can prove costly later. Cover all the bases & think of your business in three fundamental areas: Local, State & Federal.

Local Compliance

Business Licenses are issued by cities to businesses located within the city limits and for businesses conducting business within the city limits. These licenses can be obtained through the city hall. The fee for a business license is based upon the projected sales and category of the business.

Some states do not require a general “business” license; however, there are a number of regulatory agencies that have licensing and permitting requirements based on the type of service, or products associated with your business.

An Assumed Name Certificate or d.b.a. (doing business as) for each name (or deviation of that name) the business will use must be on file with the county clerk in each county where a business premise will be maintained.

The business name must be registered with the county clerk’s office and/or the Secretary of State. Search your proposed business name on the United States Patent & Trademark Office and your Secretary of State.

State Compliance

Register with your local Secretary of State. Locate your state via SOS Directories like this one: State and Local Government on the Web

Federal Compliance

Your business must have a federal identification number (federal tax number/EIN). If your business will be a sole proprietorship and you will not have employees, you may use your Social Security number for this purpose. Form SS-4, available from the IRS, is used to obtain this number.

Also, as a business owner you must be aware of your tax responsibilities: Income Tax, Estimated Tax, Self Employment Tax, and State Sales Tax. Call the IRS at 1-800-829-1040 to obtain the number by phone, or visit their website at IRS.gov for more information.

While there are many other legal areas that businesses will have to embark on dependent on industry — these are the basics to get you up and running.

 

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