You have a business idea and you’ve taken the steps to fully vet and assess your idea. You have a plan to go forward in your entrepreneurial journey.
You aren’t quite at the point where you are able to start having fun with those Instagram memes, but we are getting close.
In this post, I will share with you what exactly you need to do to set up your business. After setting up your business, you are free to go make a million dollars!
7 Steps to Set Up Your Business
There are 7 basic steps you will need to perform to set up your business. There are a few other tasks and things to consider, which I will get into later in the post, but these 7 steps will make your business official.
1. Register Your Business With the State
Before you do anything, you need to make sure your business name hasn’t been taken by someone else in your state.
It would not be good if you couldn’t use the name you wanted to.
In the State of Minnesota, this is called an Assumed Name or Doing Business As (DBA) name.
Check with your state online to see what this entails.
2. Register Your Domain and Create Email Addresses for Business
Every business needs a website. To get started on your website, you need a domain, such as themastermindwithin.com or google.com.
There are many options here, GoDaddy, Namecheap, AWS, Bluehost, and the list goes on and on.
I’ve personally used Namecheap, AWS, and Bluehost – do you own research and figure out which one makes most sense for you.
Next, you should create email addresses for your business.
3. Set-up Your Corporate Entity
There are many different corporate entities to choose from and it really depends on what you are going to be doing with your business.
For example, you can have an LLC, LLP, a general partnership or a sole proprietorship to name a few, and then when it comes to tax treatment C-Corp and S-Corp. There are many posts on this out there on the internet – I’m not going to get into it here.
When setting up your corporate entity, you will have to determine the following:
- Who has ownership of the new business?
- What percentage does each owner own?
- How are profits allocated?
- How are voting rights determined for the company?
The final document, often called a partnership agreement for partnerships and an operating agreement for your LLC’s, is incredibly important. This document needs to be signed by all parties, and have the details around termination of the company, as well as many other clauses for operating your business.
I can’t stress this point enough…
4. Apply for an EIN
Just like a Social Security number, your business needs a tax ID to pay it’s taxes.
An EIN (Tax Identification Number) is a business’s tax number. Getting an EIN is easy and will take about 5 minutes: IRS website.
5. Open a Business Bank Account and Get a Corporate Credit Card
This is an overlooked step for many people. Opening a business bank account is FREE and very simple.
I’ve done this multiple times now, and all you need is an EIN and your documentation (for a sole proprietorship, it’s even easier, just an EIN!)
Why open a bank account? First, it’s easier for tax purposes. Second, if you have an multi member LLC and things are being paid for by individuals, the accounting can get messy, and since the business and the individuals are separate entities, there’s potential for trouble.
Next, get a corporate credit card. Again, this is free and the amount of credit extended will be based on the founder’s credit.
I was approved for a $10,000 corporate credit card and now use it for my business expenses. Even if you don’t want to use it, it’s still a good idea for accounting purposes (otherwise, just use a debit card).
6. Open a Merchant Account to Accept Payments
Most transactions are captured online these days and as a result, you will need a way to capture payments from your customers or clients.
For my business, I’ve used Stripe and Paypal. There are many other merchant solutions and you’ll have to figure out which one is the best for you.
7. Start Developing Your Website, Brand, Product, Service, etc.!
At this point, you have all the pieces necessary for your new business! Congrats!
Now you can go out and starting building your website, showcasing your brand on social media, and creating the best product and service you can!
Other Things to Consider When Setting Up Your Business
First, think about where you want to establish your business address. Depending on comfort level, this could be your current place of residence. Otherwise, many people use a P.O. Box.
Second, think about getting a company phone number. You can get a virtual phone number for your business for very low cost.
Third, start thinking about which social media platforms (Twitter, Pinterest, Facebook, Google+, etc.) you are going to want to be on and start setting up those accounts with your company email and login.
With every post in this Wantrepreneur to Entrepreneur series, I will be providing you with a task for you to think about after finishing this post up.
For your idea, if you are serious about it and want to start taking action, go through the steps above.
The steps above, outside of creating the documentation for your business and corporate entity, shouldn’t take more than 3 hours.
These steps to set up your business aren’t too difficult, but are overlooked many times because of the want to post silly things on Instagram for your business.
At the very least, you need to have documentation for your business entity, a tax ID, and you should set up a bank account.
In the next post in the Wantrepreneur to Entrepreneur series, we are finally ready to start talking about the fun stuff! The next post will be hitting on some things you should know about branding and your business.
Readers: could you set up a business? Is there anything needing more clarification? would you add anything to this list which I missed?
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