As a San Diego business attorney, I am frequently asked: “What does it take to start a business?” Generally, there are six steps to take into account when starting a business:
- Decide on a location for your business;
- Determine the appropriate business structure;
- File your tax and employer identification documents;
- Obtain the necessary permits, licenses and registrations;
- Create a business plan;
- Comply with annual reporting requirements.
- DECIDE ON A LOCATION FOR YOUR BUSINESS
When deciding on a location for your business, certain factors need to be taken into consideration such as liabilities, taxes, incorporation costs and fees; where you want to do business; foreign entity doing business; raising capital; and reporting requirements. The decision to incorporate the entity in another state should only be made after weighing the advantages against the disadvantages. These factors should be discussed with your business attorney before you decide on a location for your business.
- DETERMINE THE APPROPRIATE BUSINESS STRUCTURE
There are several business structures that are used in setting up a business. Some of the most common entities are:
- FILE YOUR TAX AND EMPLOYER IDENTIFICATION DOCUMENTS
Like any individual, an incorporated entity must have its own social security number. This number is called the Employer Identification Number (EIN). This number will allow the incorporated entity to act as a sole and separate entity and allow it to pay taxes and open bank accounts. This number may be obtained through your business attorney or going online to the IRS web site.
- OBTAIN THE NECESSARY PERMITS, LICENSES AND REGISTRATIONS
Some of these permits, licenses, and registrations may include:
- CREATE A BUSINESS PLAN
It has been said that the most important step in running a business is the creation of your business plan. A business plan is a detailed description of your business which allows you and others to evaluate your business. Business plans generally include the following:
- COMPLY WITH ANNUAL REPORTING REQUIREMENTS
Your business will need to conduct annual reporting in the state of its incorporation and in any state in which the business has qualified to do business, as well as on the federal level, such as the IRS and/or the SEC.
Disclaimer: This information is made available by Bagla Law Firm, APC for educational purposes only as well as to give you general information and a general understanding of the law, and not to provide specific legal advice. This information should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.