So, you want to start your own business. Maybe you already have a few ideas swirling around, or maybe it just seems appealing for you to be your own boss. Regardless, you’re curious how to make this thing happen.
If you ask me, entrepreneurs are the best kind of people. They’re smart and resourceful and always down to try something new. It can be scary to dive into the world of entrepreneurship since there’s a good deal of risk and unknown involved. But I’m hoping to help take some of that unknown out of the equation today.
When I started my first company in 2016, I knew nothing about starting or running my own business. I just knew I couldn’t keep ignoring the passion burning deep within to use my skills and talents to help other businesses. So I spent a lot of time researching and learning. Life, of course, took a few twists and turns since then. But let me tell you, I’m so grateful for this knowledge now that I’m thrown back into the entrepreneurship world since everything went down last year.
Here’s what I know about getting started.
How to start a business
Getting Legal:
You need to determine which legal structure is best for your business: Sole Proprietorship, Partnership, Limited Liability Company, corporation, S-corp.
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Sole Proprietorship: the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and the owner. You are entitled to all profits and are responsible for all your business’s debts, losses and liabilities.
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Partnership: a single business where two or more people share ownership. Each partner contributes to all aspects of the business, including money, property, labor or skill. In return, each partner shares in the profits and losses of the business.
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Limited Liability Company: a corporate structure whereby the members of the company cannot be held personally liable for the company’s debts or liabilities. Limited liability companies are essentially hybrid entities that combine the characteristics of a corporation and a partnership or sole proprietorship.
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Corporation: (sometimes referred to as a C corporation) is an independent legal entity owned by shareholders. This means that the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs.
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S-corp: is a special type of corporation created by an IRS tax election. An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation.
I chose to go with an LLC. If you’re in NC (like me), it’s $125 to file. You can find more information on that here. The annual fee in NC is $300.
Want to hold off on the legal filing?
If you decide to hold off on filing for the legal structure, you may want to consider at least reserving your business name. This will also help you ensure that no one else has registered the same business within the state. You can do that for $30 HERE if you’re in NC. Document titled: Application to Reserve Business Entity Name.
Apply for an EIN (Employer Identification Number)
You can do that HERE. There’s no fee for this application!
Establish business banking
There are plenty of business banking options available. So many, in fact, it can feel overwhelming. But this is not something you’ll want to skip. It’s imperative that you keep your business banking separate from your personal banking for so many reasons. Choosing the right bank for your business boils down to finding one that offers the right combination of features, benefits and cost. Depending on the type of business you’re running, you might even find it best to work with a specialty merchant services provider.
I still have a lot to learn when it comes to running a business, especially because so much has changed since my time in the entrepreneurial world back in 2016. But this information is what I find myself sharing the most with friends when they come to me wanting to talk shop!
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