New Year’s Resolution: New Business?
The New Year is upon us and with a new year brings new beginnings.
Everyone is making resolutions for personal growth, health, wealth, travel. What we see each new year is a spike as well in individuals taking the leap to start a new business or begin a new side hustle to generate extra income for their household. If this is you, we have compiled some information to help you get started off on the right foot.
Our team can speak from experience and tell you the following is imperative to the success of your business. You can’t shortcut this process or it will cause you many sleepless nights as an owner down the road. Whether you are going to be a self-employed one-man band or running a corporation with employees, there are things to take note of. Along with the following, we have also created this New Business Checklist for you. Download, print out, and check off as you go and you will be right on your way!
But first, we will start here.
I. Business Structure
The first step is to decide what type of business structure is best for you. The good news is you don’t have to do this alone. We encourage you to do some research and see what the different options are, but we highly recommend you lean on your attorney and tax professional in making this decision. This decision has many ripple effects, so it is one that needs to be given some thought.
II. Bylaws and/or Articles of Incorporation
Once you’ve made the decision for how you will be structured that will determine if you need an attorney to draft bylaws and/or articles of incorporation.
III. Federal Identification Number (FEIN)
Next you will need to apply for a federal identification number for your business. We suggest doing this for almost all structures. It will be your social security number for the business. You can apply for an FEIN online through irs.gov and it only takes a matter of minutes.
IV. Register with Secretary of State
Depending on what type of business you are, you may need to register with the Secretary of State that you are operating.
V. Bank Account
At this point you can now take the documents you’ve obtained along with your FEIN and open a bank account. Most banks require these documents in order to establish a business bank account. It is important that you establish a business account that is separate from your personal account. Depending on the type of entity you’ve chosen it may even be required.
VI. Tax ID Numbers
Are you going to have employees? If so, you’re going to need some additional ID numbers. You might be required to have tax ID numbers for unemployment, withholding, local, etc. Along with payroll ID tax numbers you may need sales tax numbers. Your tax professional would be a great resource to lean on for obtaining these.
As a business owner you will want to protect yourself and your investment by purchasing insurance. Each business’ need for insurance will vary so make sure you seek a reputable insurance agent that gets you the coverages you need.
Does your industry require certain permits or licenses? You’ll need to purchase a local business license to operate in the city limits of where you are located, if required.
As you can see it can become very overwhelming to even begin this process. This isn’t an all-inclusive list so we encourage everyone to surround yourself with knowledgeable and experienced professionals like Lockshield Partners Accounting Services to assist you with this exciting change.