If you have been running an informal business from your home or garage (for instance, baking specialty cakes for the local community or selling homemade natural beauty products to neighboring homes or any other type of sales activity) and want to take it to the next level, incorporating your business is the first important step in that direction.
Many small business entrepreneurs find the entire process of formalizing their business activities extremely effort- and time-intensive and fear taking the first step itself. If you’re considering giving your little home enterprise a legal identity, here are some quick tips to get through the process effortlessly.
Pick a name and have it registered
To get going, the first thing you need to do is find a suitable name, do a name check to know if it’s available and get it registered at the earliest. Avoid spending weeks on end to find the perfect business name or you will unnecessarily delay the administrative process.
Not many people know that the name of a company can be changed later; however, this would mean even more paperwork, so think of a good name that you’ll want to keep forever.
Get the taxation structure in place
Each type of business entity has a different tax structure. For instance, an LLC can adopt a corporation taxation structure or pass-through taxation. Once you’ve decided on the type of business entity, get your federal taxation ID (or employer identification number).
Remember that It’s not compulsory to get an EIN if you’re registering a corporation, an LLC, or a partnership or if you’re not going to have any employees—but business experts say that you should get one nonetheless, as it gives your business an identity in taxation records.
Get the required licenses and permits
Apply for a business license and any required permits with the local authority. The type of license you will be issued depends on the nature of your business, the type of product or service you offer or intend to offer and any local restrictions that may apply on the sale of those items.
This is also the right time to open a business account at a local bank so that all financial transactions related to your business can be moved from your personal bank account to the business account.
Outsource the hard work
The truth is, you need not really get into the nitty gritty of how to form an LLC—you can entrust the entire process to an agency that will complete all the paperwork for you, perform a name check, apply for a federal tax ID on your behalf, file the LLC incorporation fee with the state department, ensure error-free application and form submission, and offer expert advice—all of this for a small fee.
By entrusting the administrative work to an experienced incorporation agency, you can use the saved time to brainstorm on how to make your newly formed business a resounding success on a budget.