Most of us have had a dream about starting a business. Some of us have even produced a great product or service that we think the world needs, but not everyone has been able to see their ideas come to fruition just yet. The most common reason for this is simply because they don’t know what steps they need to take. Here are some tips.
1. You Need Legal Entity Identifier (LEI) Registration
LEI number is a unique identifier that provides certain companies and organizations with a special code that’s necessary for business. These include banks, credit bureaus, financial institutions, and more. In order to do business legally, you need this number. The registration process is simple, but if you have any difficulties getting the LEI code, you may want to consider getting legal help. This identifier is compulsory for all businesses, so if you don’t have one, the consequences can be severe. Having this will also help you in the future if someone wants to sue your business for whatever reason.
2. Register Your Company
The very first thing business owners need to do is register their company with the relevant local authority — be it federal or state government office. The kind of registration you need will depend on what type of business you’re running and where your main market is, but most companies use general business registration. You’ll also need to get an employer identification number (EIN) which is more than just a tax ID number, it’s used by several agencies that require employees’ personal information like the census bureau and administration on veterans affairs. Registration is very simple and can be done online. Depending on where you live, the process may take only a few minutes.
3. Get An Accountant And A Lawyer
These are both services you’ll need in order to keep your business running properly and not fall into any legal traps. There are many ways to legally start a company, but before settling on one, it’s important to get advice from professionals. If you’re looking for accountants that specialize in small businesses, the internet is the place to look. There are many reviews there, and you will be able to find just the person for the job. As soon as the paperwork is complete and taxes paid, it’s time for you to decide which accounting method will work best for your particular business: cash or accrual basis. It depends on how you take payments and whether income is generated immediately or after certain conditions have been met.
4. Taxes And Ownership
As far as taxation goes, there are three kinds that affect small businesses: income tax, employment tax and excise taxes. The first one refers to net earnings, which means after all expenses (including labor) have been deducted from the revenue generated. This is the type of taxes small businesses pay and while some states make it easy to file, some force business owners to do everything on their own. The two main types of business entities are sole proprietorship and limited liability companies (LLC). Each has its advantages and disadvantages, but they both share the same goal: protect your personal assets from company debts or potential lawsuits.
Starting a company is not easy, but it’s something you should do if you have a great idea and the drive to make it work. Just remember, without the proper legal and financial help, your company may not last long. If you aren’t sure where to start, try these tips and your business will have a great head start.