Are you brainstorming an idea for a new business? Great! Before you start operations, make sure to do these five things to protect your business from legal and financial obstacles.
1. Get Insured
Get your business properly insured. Minimally, you will need liability insurance, commercial property insurance, and workers’ compensation insurance. If your business involves the operation of vehicles, you will also need commercial auto insurance.
2. Apply for an EIN
An Employer Identification Number, or EIN, is an identifying nine-digit number assigned by the Internal Revenue Service (IRS). Without an EIN, you will not be able to hire employees, apply for licenses, file your taxes, and more. Some states require businesses to have other identifying numbers, too. Check with your state government to ensure that all your bases are covered.
3. Register Your Name
There are four names you must register after you establish your business: your trademark name, your entity name, your domain name, and your “doing business as” (DBA) name. Your trademark name will protect your business at a federal level, your entity name will protect your business at a state level, your domain name will protect your business website address, and your DBA name will protect your pseudonym if you use one.
4. Obtain Permits and Licenses
The permits and licenses you will need will vary greatly depending on the industry you work in and where your business is located. Check with your local, state, and federal government to see which permits and licenses apply to your business.
5. Open a Bank Account
Your business bank account should always be separate from your personal bank account. A business bank account will help establish your credibility as a business entity, will make filing your taxes much easier, and will facilitate the process of selling your business if you ever choose to do so.
Dealing with legalities may not be the most thrilling aspect of starting a business, but it is an extremely important one. Get these five things done as soon as possible so you can get back to what is important – running your business.