Who doesn’t want to create the next big thing?
The best way to realize our dream of starting a business is to proactively tackle the more daunting tasks – like legal issues – before they become major hurdles.
After you have planned and brainstormed and strategized, and you now have your own great idea to act on, a major part of your initial implementation should pertain to the legal issues relating to your new business. Discussions with a lawyer in your area — specifically, one in the state in which you’ll be doing business — can be super helpful, as there are legal documents and processes for opening and operating a business. A lawyer can guide you along but here we will mention some of these things for you to consider.
First, your business should be incorporated. This protects you in case the business fails or legal action is brought against the business for some reason. When you incorporate, only the assets of the business are at risk and your own private property is safe, unavailable to be taken to cover the losses of your incorporated business.
It is fairly easy to incorporate in every state: search online for “[your state] Secretary of State,” as that is the office that processes the incorporation, generally online. Although this office may be available to answer a few of your questions, employees are generally unable to give legal advice, of course, you may feel much more comfortable having a lawyer’s help as you complete this process. Consider this investment one of the most important that you make, as it is well worth avoiding mistakes in the process that could cost you far more.
Next, apply online (at www.irs.gov/businesses/small-businesses-self-employed) for an EIN, or “employer identification number” which is like a social security number for your business. It isn’t always required but is generally advised for a few reasons, not the least of which is helping you to keep your personal and business finances separated, further protecting you from identity theft, among other benefits. It is also free to request.
Your EIN helps you open your business bank account (so that all business income and expenses are documented for tax purposes), perhaps even apply for a business loan, and to establish your business legitimacy with vendors and clients, both.
There are other considerations as well, of course: depending on your business type, you may need insurance to cover liabilities, if potential injury is possible on business property, for instance. If you have invented a new product you will want to apply for a patent (at www.uspto.gov/patents/apply) to prevent others from stealing your product ideas. (Again, investing in an attorney’s help could be really helpful here, as patent law is rather specialized.)
Also, after your business is set up, you will need to determine how to advertise your product or service: “word of mouth” is always the best kind of advertising, but social media and traditional advertising can be useful when you’re just starting out. Especially if you plan to have employees, you will need to document policies and procedures as early and often as you’re able, to be as clear as possible about all expectations of your business and of your employees.
Once you’ve thought and dreamed for what may have been a long time, many say it can be a relief to finally have a to-do list. While tasks marked “legal” may feel at first like they’re less creative or more intimidating, marking these off your list is what will allow you the freedom to finally create a successful business for yourself and all those who use it.