This case was not handled by our firm. However, if you have any questions regarding this case, or any employment or business matter, please contact Joseph Maya at 203-221-3100 or by email at JMaya@MayaLaw.com.
Business creation means taking care of a lot of details including, writing a business plan, registering your business with the state, and applying for licenses or permits. Before long, you will find yourself drafting business contracts, forming partnerships, and hiring an accountant or mastering the art of bookkeeping. And, like any other daring venture, you will need a good set of guidelines to keep you one step ahead.
Make a Business Plan:
Include goals and a timeline for how you will create your business, finance it, market it, and deliver your products or services. Many new business owners also use their plans to solicit investments or financing for the company. Resources for developing business plans are provided by the Small Business Administration.
Choose a Business Structure:
- Sole Proprietorship: can work if you are the only owner of your business and if business is done under your personal name. That being said, you should only consider this form if you are self-employed, if you do not expect to hire employees, and if you are not too concerned about personal liability.
- Partnerships: formed by two or more people and can take several forms depending on the goals of the partnership. Partners are responsible for taxes on profits and losses, and are personally liable for legal actions taken against the business.
- Limited Liability Companies: can have one or more owners, pass tax liability for business profits and losses through the business directly to the owners, and establish some protections for the owners from liability for company activities.
- Corporations: can have one or more owners, who are usually called shareholders. When starting a corporation, often the only shareholders are the founders of the company. There are also two main types of corporations: the S corporation and the C corporation. They each have different tax structures and sets of benefits.
It is important to understand the tax and legal ramifications of your business structure. So, do your due diligence and consult a lawyer if you have any questions.
To start your new business in the legal sense, you must register it with a state government. If you are obtaining funding, buying supplies, hiring employees, or renting an office or storefront, it is time to register. In most states, the secretary of state manages business registrations. Depending on your business structure and the state in which you file, your registration document may be called the Articles of Organization, Certificate of Registration, Articles of Incorporation, or some variation of these names. You must register in every state in which you do business (and the definition of “doing business” itself can vary). Registration in states after the first registration is called “foreign registration.”
Starting a business in a new location has many ramifications and considerations: business licensing, incentives for new businesses, negotiating a contract, determining the cost of the space and needed improvements, and more. Consider your business plan, advice from the Small Business Administration, and other resources when making a decision.
Once you register with the state, you may need to obtain separate business licenses at the city or state level. Businesses providing professional services like cosmetology or plumbing must comply with additional regulations and licensing requirements.
Track any money you receive, earn, or spend in the course of business activities. Hold onto your receipts, invoices, bills, bank statements, and other financial documents. Keeping up with accounting from the beginning will make tax time a lot easier. While sole proprietors and other small businesses may want to handle accounting themselves, many people prefer to delegate the work to an accountant and focus on running the company.
If your company has employees, is a corporation or a partnership, or meets one of a few other standards, you must obtain an Employer Identification Number (EIN) or a Federal Tax Identification Number (TIN). This number is used for numerous tax purposes, including annual tax returns, quarterly estimated tax returns, employee tax withholding, and more. Even if you understand the federal tax requirements for your business structure, it is important to know the tax requirements at the state level as well. Consult your state’s department of revenue or other tax agency for details.
If you hire employees when you start a new business, consult your state and local labor departments. You may need to register for tax withholding, workers’ compensation insurance, and local employment taxes or fees.
For questions regarding a Trade Name Certificate, or for any other business law questions, contactour business law group at Maya Murphy, P.C. for a free consultation at (203) 221-3100 or at JMaya@Mayalaw.com.