4 Steps to Starting Your Own Business
By Melisha Daniels - March 24, 2021I don't know who needs to hear this. Start that business.
The decision to start your own business can be one of the most rewarding and exciting moments of your life. However, for many first-time entrepreneurs, the process of starting the business can be filled with unexpected twists and turns. The uncertainty of when to file what and where can seem like obstacles to those looking to start a business for the first time.
To relieve this barrier, JustasIam.Careers has created this list of 4 Steps to Starting Your Own Business.
Step 1 - Decide the type of Business Structure
The first thing you should do is decide what type of corporate structure is appropriate for your business. The type of corporate structure will determine how the income from your business will be taxed.
While there are many different types of corporate structures, these are 4 types of business organizations that first-time business owners normally consider.
- Sole Proprietor:
A sole proprietor is a business owned and operated by 1 person. This type of business structure is popular with Freelancers and Independent Contractors - Limited Liability Company:
A Limited Liability Company is a corporate structure organized where the owner or owners are not personally liable for the debts or liabilities of the company. The LLC can be a single-member or an organization made up of multiple partners. - Corporation:
A Corporation is a business structure where a person or group of people become shareholders in the company. In exchange for providing capital equity in the form of cash, property, equipment or services, shareholders receive stock in the company. - NonProfit/Exempt:
Nonprofit organizations provide charitable, religious, educational or other social services to the community. Companies operating as nonprofit organizations are normally granted tax-exempt status. To qualify for tax-exempt status, the nonprofit must be organized as a corporation, community chest fund or foundation.
Step 2 - Get a Federal Employment Identification Number (FEIN)
Now that you've decided how you want your business to be structured, your next step is obtaining an FEIN or Federal Employment Identification Number from the IRS website. The FEIN is free to obtain and identifies your business for federal tax purposes. The elections you make when completing the FEIN online application tool tell the IRS what federal tax accounts your business will need.
Depending on the state, Sole Proprietors may not need an FEIN.
Step 3 - Incorporate Your Business
Once you've obtained your FEIN, you have what you need to incorporate your business.
The process of incorporation includes filing the necessary information with the Secretary of State. Once this process is complete, your company is considered a legal business entity.
Step 4 - Licenses, Permits and Bonds
Once you've officially incorporated your business, you need to check with you state and local business tax agencies to:
- Establish any needed business tax accounts, and;
- Determine if any additional licenses, permits or bonds are required to legally operate.
This article is not a complete list of everything you will encounter when starting your own business. It does provide you with the information to get you started in the right direction.
Best wishes to you and much success in your new business.
