This article will guide you through finishing the process of setting up a company and beginning the actual operations for a new business. It follows the preliminary steps you must take, covered in The Planning Stage and Registration & Incorporation, the first two articles in the "Starting a Business" checklist series.
Business Licensing, Reporting & Operations
1. Secure an actual place of business to conduct operations.You'll need to find and obtain a place from where to conduct your business operations and it will involve a number of questions you'll need to answer:
After answering those questions and finding a property that suits your needs, which may involve the use of a real estate agent, you'll need to obtain a commercial lease for the premises. For this purpose you will certainly want to hire an experience real estate attorney since commercial leases are usually complicated and may contain numerous complicated financial terms and legal clauses.
- What business locations would be most appropriate or convenient?
- Which of those business locations are affordable?
- What are your space requirements?
- Are there any special fixtures or specific business needs you may have?
- Are there any zoning limitations for the business that you're operating?
2. Identify, file for and obtain an EIN, special licenses and permits.Before you actually begin operations and as early as possible, you'll want to obtain a federal EIN or Employment Identification Number. You can apply for an EIN using IRS Form SS-4 or apply online for an EIN. It may not be necessary (although it can be useful) if you are a sole proprietorship or a single owner and employee of a limited liability company. You'll also need to obtain a tax registration certificate (commonly referred to as a "business license") to begin operations, including potentially all of the following:
- real estate: zoning variance or use permits
- business: state seller's permit for the sale of retail goods
- state licenses: for operation of certain businesses or provision of professional services, e.g. a liquor license or plumbing license.
3. Obtain business insurance policies.There are several types of business insurance you may wish to consider as well as need in order to operate your new business. You may be frequently required to carry professional liability insurance (errors and omissions insurance or "E&O") in contractual agreements with clients and parties for whom you perform services. Some other types of insurance you may need includes the following:
- premises liability insurance for accidents that happen on your property, e.g. your storefront
- car insurance for company vehicles
- product liability insurance for the manufacture of goods
- homeowner's insurance if you have a work-at-home business, which also covers theft or damage of your business assets
- health and disability insurance coverage for yourself and employees
4. Set up financial accounting operations.Setting up your books involves some important initial decisions and you may wish to hire an accountant to discuss your options. Some of these accounting decisions include:
You'll also want to speak to your accountant to discuss tax reporting issues to determine what is the best way to conduct your business operations during the year. Being familiar with terms such as "depreciation of assets" and the types of business deductions you may be able to take are essential to the financial success of your business. The IRS also has its own set of IRS Recommended Reading for Small Businesses. You'll need to have a record keeping system and may wish to hire someone such as a bookkeeper to make book entries and who may be familiar with the use of business accounting software.
- which system of reporting to use, the cash method (where cash is recorded when actually received or paid) or the accrual method (when revenues and liabilities are recorded when earned or obligated to paid)
- whether you can use the calendar year (January 1 - December 31) or choosing a fiscal year for business operations
Wishing You Success With Your New Business!Now that you're ready to roll out operations to the street, we wish you the very best of success with your new business. Over the course of time, we welcome you to return to our legal guide to research other legal topics as they arise in the course of your day to day business operations.
- Business, Corporate & Nonprofit Law:
Starting a Business Starting a Business Checklist 3: Licensing, Reporting & Operations
By Michael M. Wechsler |
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