Things You'll Need:
- Some start-up cash
- Access to a computer
- Reliable free business advice service such as SCORE
-
Step 1
Don't try to go it alone, especially when there is excellent free advice and counseling out there! If you make an appointment with SCORE (Senior Core of Retired Executives, also called Service Corps of Retired Executives) their volunteers will help you to be sure you have covered all the legal requirements of getting your business started, and they will help you keep your business focused and on track through its early years. This valuable free service is offered through the Small Business Administration.
-
Step 2
One of the first things you will need to decide is which business structure is right for your individual business. Working as a sole proprietor is the simplest. You can operate under your own social security number and name so it is easy to get started quickly. If you work as a sole proprietor, however, you will need excellent insurance because you are personally liable for any accidents that happen while you are conducting business. Becoming an LLC eliminates some of the liability issues, and is still a fairly simple way to conduct business. To operate as an LLC, you'll need to get an EIN (employer identification number) and all the income for the business is reported under that number rather than your social security number. An LLC also needs to be registered in the state where the business is located. Both EIN and business registration can be easily completed online and fees paid with your credit card. Be sure to use official government websites so you will not be charged additional unnecessary fees. Operating as a corporation is much more complicated and often involves large corporation taxes. This type of operation is usually better suited to larger companies. Any SCORE volunteer can give you the appropriate government websites to register a business for your state.
-
Step 3
If you have a business partner or partners, you will need an operating agreement. This doesn't have to be formal or complicated, and you don't need a lawyer. Simply type up a statement explaining the nature of your business and partnership. Be sure to include who gets what percentage of the profits and whether any assets are company owned, or remain the property of one of the partners. Your SCORE advisor can help you to compose your operating agreement. To make it official, you'll need to have it notarized.
-
Step 4
It is very important for every small business to have a bank account. This gives you a way to cash your checks, and also helps you keep track of business finances. Most banks offer free no-interest checking accounts to small businesses. All that is required for a business account is a copy of your business registration certificate, your EIN number and your operating agreement. Signatures will be required of all partners who will have access to this account.
-
Step 5
If your products or services are taxable in your state of business, you will need to collect and pay sales tax to keep your business legal. You can contact your state government for the required forms. Forms are filed quarterly and can either be done yourself or through an accountant.
-
Step 6
Keep excellent records, and when it is time to file tax returns be sure any expenses or losses deducted are legal. Tax laws are complicated and change periodically so it is important to read up and stay aware. Using a good and ethical accountant or working with reputable tax software will help insure that all your reporting is accurate and legal.
