How to Start a Small Business

A business is so many things but there are a few basic things that you need to do just to get started. Some of these steps are business steps and some are basic business steps. Either way they need to be on your list. In this lesson we show you some of these basic steps.

The Basics

Here are the steps you need to take to set up your business. Each of these steps are detailed in other lectures in this course:

• Pick a Name. You need to pick a name for your company. Once you have one you like, you need to take some steps to see if it is available:
  • Check The US Patent and Trademark Office. Search the U.S. Patent & Trademark Office’s trademark database to see if anyone is using a similar name or any variations. If your name isn’t registered there, go ahead and apply for a trademark.
  • Domain Name. Run a quick Google search to make sure no one else has the one you want, and then register it through a domain service. If you’re planning on incorporating your business, don’t forget to contact your state filing office to see if there are any other companies conducting business under the name you want.
• Establish Your Company/Entity. You must set up a company through which all of your business activity occurs. While you can technically go into business without a company being set up, there are significant legal risks of doing so. There are several often used services that will help your set up your company in whatever form you have chosen (corporation, limited liability company, etc.). Once you have decided, these services will handle all the details for you. Also note that when you incorporate in a state (like Delaware) in which you are not present, you will need what they call a “registered agent” – basically a “presence” in that state. These services can play that role as well.
• Obtain a Tax ID. This is the number the United States government uses to identify your business. To open a business bank account, you will first need to request a tax ID number from the IRS. Once the IRS issues you a number, you will then need to obtain a tax ID number from the state in which you intend to do business. To get a federal tax ID number, you must fill out IRS Form SS-4 (available from the IRS Web site, click on “Forms and Publications”) and either mail or fax it to the IRS office indicated in the instructions to Form SS-4. There is no fee. Most IRS offices will issue the number by mail within two to three weeks after they receive your Form SS-4. To obtain your state tax ID form, go to Tax and Accounting Sites Directory and click on “State and Local Tax.” The bank will also ask to see your company’s articles of incorporation and your corporate seal.
• Licenses. Some business activities require licenses. For example, real estate brokers need to be licensed brokers. Find your state on the U.S. Small Business Association website to see what types of permits and licenses are needed to legally operate in your city, county, and state. Some areas require you to have a license as soon as you open up shop, so make sure you know the exact time frame you have. Then, once you’ve received the appropriate documents, be sure to properly display them in your business.
• Set up a Business Bank Account. If you’re operating your business under your own name, you can ask your customers to make their checks payable directly to you and deposit them in your personal checking or savings account. However, if you’ve incorporated your business and selected a corporate name, you must first set up a business checking account so that you can deposit checks made out to your company. Generally, local banks and credit unions are perfect fits for small businesses. The documents you’ll need to bring to the bank depend on the type of entity you are, but most likely, you’ll need your tax ID number and any documentation that has your official business name printed on it. Unless your business is involved in gambling, government, precious metals, or telemarketing, you can set up an account directly online.
• Insurance. Businesses with employees are required by some states to purchase workers compensation, unemployment and wage replacement insurance.
• Create a Founder’s Agreement. When starting a business with others, it’s super important that everyone is on the same page right from the start. A founders’ agreement will protect all parties involved by spelling out all the complex parts before any issues arise. Your agreement should have a clear explanation of all responsibilities, compensation, equity ownership, intellectual property, and vesting terms.
• Privacy Policy. When you launch your website, you need to make sure you have a privacy policy that describes the exact data you’re collecting from visitors. The data you’re collecting may be in the form of email addresses, names, credit card information, and other personal details you’re using to conduct business. Get started with this RocketLawyer template, fill in the gaps, and then run it by a licensed attorney.While doing so, make sure you also go through this checklist to comply with the California Online Privacy Protection Act (CalOPPA), one of the most stringent online privacy laws out there. Even if your business isn’t in California, you’ll definitely end up with Californians visiting your website, so make your policy airtight.

Obviously these are just the basics but this should get you started.