Set up simple systems so you can deliver reliably. Staying on top of tax and legal basics will help protect your business as it grows.
Before you file any paperwork, you need to decide how your business will be structured legally and lock it in with your state government.
A. Choose your structure: Decide between a Sole Proprietorship (simplest, but you are personally liable for debts), an LLC (Limited Liability Company, which protects your personal assets), or a Corporation (best for seeking venture capital). For most small businesses and startups, an LLC offers the best balance of asset protection and tax flexibility.
B. File with your State: Visit your local Secretary of State website to officially register your business entity. You will need to file “Articles of Organization” for an LLC or “Articles of Incorporation” for a corporation, and pay the state filing fee (typically ranging from $50 to $500 depending on your location).
C. Name your business: Ensure your desired name is available by running a quick search on your state’s business registry database before submitting your filing. If you plan to operate under a name different from your legal entity name, you will also need to register a DBA (“Doing Business As”).
Once your state recognizes your business, you need to establish its identity with the federal government and separate your corporate funds from your personal money.
A. Get an EIN: Apply for an Employer Identification Number (EIN) directly on the IRS website. It is completely free, takes less than ten minutes to complete online, and acts like a Social Security number for your business.
B. Gather your formation documents: Before heading to the bank, collect your approved state filing documents, your new EIN confirmation letter, and a government-issued ID. Banks require these official documents to prove your business is legally allowed to operate.
C. Open a business bank account: Walk into a bank or sign up for an online business banking platform to open a dedicated checking account. Never mix personal and business funds, as co-mingling money can void the liability protections provided by an LLC or corporation.
A. Research federal, state, and local tax requirements for your business type. Visit IRS.gov and your state’s revenue department website to see which taxes apply to your business. Make a checklist of what you’ll need to file and when.
B. Set calendar reminders for all tax deadlines. Add key dates to your digital or paper calendar as soon as you know them. Include reminders a week or two in advance to avoid last-minute stress.
C. Consult an accountant or use software to stay compliant. Schedule a meeting with a small business accountant or research reputable accounting software. Use their guidance to set up your recordkeeping and reporting from the start.
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