In this post, I outline necessary steps to make your business a legal entity for conducting business transactions. I offer practical advice and necessary links for accomplishing these steps based on my experience of starting a small business,
If you read no further, consider using this free resource: https://www.irsvideos.gov/Business/SBTW for necessary and uncomplicated information for serious and successful business owners.
Starting a small business is a privilege, opportunity and responsibility to yourself, your supporters, and the community you serve. As you take on a leadership role in your community you will receive many rewards for your hard work.
Your great idea feeds your motivation for starting a small business allowing you space for creativity, to gain independence, generate income, and provide products and service to others. Keep your great idea thriving, as it will also motivate you through the “other” parts of creating a business.
Like planning for a road trip, the path to establishing a legitimate business requires practical research, thought, and planning. No matter if you desire a simple mom & pop store or to generate a nationally recognized business. Your business requires the following steps to build you a strong business foundation, leading to your successful business. Keep your dream in check with goals, a timeline, support, and courage.
So, let’s get started: In the next month or two, taking these are steps will have your business up and running three months from now.
Generate a Business Name that reflects your vision.
Give yourself time to understand your product and services. How does your business name reflect your product and is there room to grow? Workshop and test out your business name with trusted, insightful friends. It should reflect the scope of business and pass the test of time as your business grows.
Establish the address and dedicated phone number you will use to conduct business.
If using a home business your home address will be used. If you have another permanent location, use that address. A post office box will likely not be accepted in your applications.
Articles of Incorporation: Selecting your business structure
Determine who will run and be legally responsible for the business. Yourself alone? Two or more equal partners? A body of investors, a board? Depending on your answer, you will be given options to classify your business structure. (The IRS small business online workshops explain this in lesson one.)
Business structure options include Limited Liability Corporation (LLC); sole proprietor (single owner); partnership (two or more legally identified individuals); corporation which usually have a decision-making body identified and/or financial investors/stakeholders. You will be asked to determine the business structure when applying for your State’s Articles of Incorporation. If ap
plying in New Mexico Secretary of State, you will need to establish a user account, see: https://portal.sos.state.nm.us/BFS/online/Public/DLLCVideo A nominal yearly fee is required.
Apply online for your business license, you will need the information from above to take this next step. In Albuquerque you can go to, https://www.cabq.gov/planning/business-registration this will require a nominal fee, renewed yearly.
A Federal Employee Number referred to as an IEN, is required for business transactions and potential taxes. There is no fee. Go to www.irs.gov and type in the keyword EIN.
Open A Business Banking Account:
Your bank or credit union will likely require your business license, articles of incorporation and IEN to establish your business as a legal entity before opening a business account in your name. Opening a separate business account is advised to keep personal separate and maintain your business transactions.
Note: If you elect to use point of sale purchases such as Square App or Godaddy, your sale can be linked directly into your business account rather than a personal account. (Point of Sale, or POS, is another topic I’ll cover in another post). Having a business account allows you to separate business expenses, making for good practice and expense records. It is also wise to maintain receipts and records in your physical office and/or scan them into a file, for tax purposes. (The IRS small business link offers additional information on record keeping, accounting, and bookkeeping.)
Purchase your website domain name, this is a recurring cost and should stay with you as long as you have your business. Consider using your business name for consistency. Website development and design are user friendly and more manageable these days. It will however take several weeks to personalize it to your business and set up your inventory. If this is out of your skill range, you may want to hire a social media consultant. Your website is an important investment especially with home businesses, with the option for online sales and customer engagement. (Some startup options include Squarespace and Godaddy, each has its benefits and restrictions).
When you have your business name, location, website, phone number and other relevant information established, it is time to create business cards designed to engage everyone you know. Yes, business cards are still in fashion and handy for introducing your business, products, services to potential customers, encouraging traffic to your website. If you already have basic cards, no problem, use them. You might need to write in your new website address or email. Take time to design your new cards as an investment you are proud to share.
These are some basics for a establishing a legitimate business.
Take pride in these first steps to claim and create your new identity, space, and place within your community. By taking time to understand, plan and complete these steps, you will secure confidence in conducting transactions as a legitimate business ,and your customers and community will have confidence in you.
Yes, this is a lot of work, and worth it!
In my next “Tips for Startups” I’ll section the growing a business into manageable parts, beginning with “Idea Development”
Future Startup Tips will address:
A basic strategy for your business plan.
Identifying and reaching your customers.
And developing your support network
If you find these tips helpful, return or tips and resources for startups and small business owners.