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A Comprehensive Guide On Starting A Business
Are you looking to start a business? If so, what type of company are you looking to start? There are different rules and regulations that you’ll need to adhere to when you start a business. Therefore, you need to do your due diligence when choosing the type of company to start. Here is a comprehensive guide that you can follow to start a new business to ensure you do everything properly.
Starting A Limited Liability Company (LLC)
Choosing an LLC as a business structure has become increasingly popular over the years. This is especially true for smaller businesses primarily because it offers a good amount of flexibility and personal liability protection. While starting other types of businesses may be more difficult, starting an LLC isn’t. It’s much easier to start than some of the other existing types of businesses. Here are some of the steps that you will need to take if you’re interested in starting an LLC.
1. Get The File Articles Of Your State
First and foremost, you will need to get the file articles of your state. This is information that is easily obtained on the Secretary of State‘s website. When you make contact with the office, you will want to figure out whether or not you need to post a notice within your local paper. Likewise, you want to ask whether or not there are any special rules and regulations to follow regarding your business name.
2. Pick a Name
When you are starting a company, you’re going to need to choose a name. The name needs to adhere to all of the state regulations and rules. As mentioned, these rules can differ from state to state. Therefore, you want to ensure you are following them to a tee. Some of the rules may require:
– The name of your company ending with Limited Liability Company, Limited Company, or another abbreviated form.
– Your business name isn’t the same as another business that is registered within your state.
You can typically pay a fee to get your company’s name reserved until you have completed the rest of the steps that you need to do to get your business officially recognized.
3. Complete The Articles Of Organization Document
This is something that should be relatively simple for everyone. There are certain things that you need to inform the state about your new business. One, you need to tell them about the initial members within your business. Two, you need to tell them about the purpose of your business. Three, you need to register an agent to acquire the legal documents. And lastly, you need to dictate your principal office address. During this step, you don’t dictate your ownership distribution nor your management structure.
Once completed, you will send the form to your Secretary of State, and included will be all of the fees to start a company within your respective state. Typically, you will find the fee to sit anywhere between $40 to $900. This fee can vary widely from state to state.
4. Choose a Registered Agent
When you are starting up a new LLC, you will need to choose and select a registered agent for it. This person or company will be the one that receives all of the legal documents for the company. Therefore, if someone sues your company, they will be the one receiving the documents. Because of the importance of this role, you want to ensure that the agent you choose to represent your business has a physical street address that exists in the same state you are doing the registration.
5. Figure Out Your Management
Typically, you will find a Limited Liability Company has various members managing the company. However, you can also have someone that is outside of your company doing the managing. This process can be very similar to choosing a board of directors that works on behalf of the company to run it. Any of the managers of the LLC are fully responsible for making the important decisions involved with running the business. These decisions can include but aren’t limited to pivoting strategies, taking out a financial loan, or even purchasing real estate.
6. Read and Understand The Agreement
It is always a good idea to craft an agreement no matter what. Not all states require it. However, it’s always a good idea to do because it will dictate how your LLC is going to be run and how all of the members of management should work together. From there, the state’s law will dictate how your LLC is supposed to operate if you don’t have an agreement in place.
7. Understand And Adhere To The Regulatory Requirements
This is a very important part of starting your LLC. You want to ensure that you obtain your Employer Identification Number as quickly as possible when you are starting your business. You can do this by filling out and submitting an EIN application. This is a form that you can complete by visiting the IRS site.
Along with getting your EIN, you need to acquire all of the different licenses that you will need to conduct business within your respective state. You will find that this can vary depending on what type of business you are starting. Because of this, you need to research to see what your business needs to get started. You can find this on the state’s website.
Likewise, you don’t want to forget to get your company registered for both sales and employer taxes. You want to visit your state’s taxing authority site and get all of the information you need to figure out tax regulations for your LLC.
8. File Annual Reports
You will need to file reports annually before the accounting year is over. Likewise, you need to pay a filing fee when you do it. You will find the fee will vary depending on where you are operating and registered.
9. Select Out Of State LLC Registration
Are you aiming to do business in a different state from which you registered? If so, you are going to need to register with the state that you are looking to operate in. You also need to get a separate registered agent that will be responsible for being delivered all of the requisite legal documents needed.
As soon as you are done with all of the steps above, you are ready to begin your LLC.
Starting an S Corporation
Starting An S corp is much more time-consuming and difficult than starting an LLC. Along with this, it’s also more costly. That being said, an S Corp is a good option for those that are planning on growing. An S Corp can deliver you a lot of favorable tax treatments and it can help to provide many limited liability facilities along with it. Here is a comprehensive overview of what needs to be done to get one started.
1. Choose a Name
The first thing you will need to do is choose a name. This is the first step in the process and you want your name to be unique. It cannot be the same as any other registered business within your state.
2. Choose and Name The Company Directors
When you are looking to start your S Corp, you will need to ensure that you are choosing a board of directors. Both the IRS and state law dictate that every S Corp needs to define their directors. All of the directors chosen for the company should follow the various rules for conducting business within an S Corp. This means they need to meet every year according to individual company guidelines and keep minutes for all of the meetings that are held. You want to choose the directors that you feel will offer the most value to your business and those that are willing to take time out of their schedule to meet consistently.
3. Decide On Stock
Every company that is registered as an S Corp will need to issue stock. This can be either preferred or common stock. There are different things to be aware of when you are choosing between preferred and common that should be noted before choosing.
4. Create Articles Of Incorporation (AOI)
You will need to submit your Articles Of Incorporation directly to the Secretary Of State and the IRS. This is dictated by state law. The Articles Of Incorporation needs to include various things. For one, it needs to include the official name of your business. It needs to also include the contact details of your members, the share allocation of it, the total number of shares of your company, and all of the names of the board of directors. You also want to include your business’ purpose within it.
5. Create Bylaws For Your Corporation
Along with the Articles Of Incorporation, you will need to have a completely separate document that details all of the bylaws of your corporation. You want it to include a lot of intricate details about procedures that must be followed within your company. These can include procedures for:
– Changing or removing directors.
– Electing new directors.
– Processes for holding meetings.
– Selling any shares.
– What happens in the event of a death of a director or officer.
– Voting rights.
These are the most important documents when you are starting a business as an S Corp. A lot of the states will require those starting a business as an S Corporation to fill out this document detailing all of the above along with the Articles Of Incorporation.
6. Procedure Your Certificate Of Incorporation
Soon after you send in your AOI and the bylaws of your company, the Secretary of State will send you the certificate of incorporation for your business. The total time this can take can vary based on how efficient your state is at getting it done. Typically, you can expect it to take anywhere from as little as 3 days to as long as 2 weeks.
7. Filing The Paperwork
Once that’s done, you will want to file the Election by a Small Business Corporation document. This is a document that you will find directly on the IRS site. This is a document that is known as “Form 2553” on the site. Much like the other documents you’ve just submitted, this one will effectively declare that your company is an S Corp.
8. Choose a Registered Agent
Much like an LLC, you want to choose an agent that will represent your business. This registered agent will be selected to receive all of your company’s legal documents. These documents can include all state documents and federal documents related to summons and subpoenas. Because of this, you want to ensure that the person you choose as a registered agent has a physical address in the same state that you are registering.
As soon as you’ve finalized the registered agent and informed the state of their details, you will be ready to begin your business activities the following day.
Starting a Nonprofit
Firstly, congratulations on doing the beautiful work of starting an organization for the betterment of society. A nonprofit can do wonderful things for people from all walks of life. However, starting one is easier said than done. It can be an especially challenging task with a lot of different steps that have to be adhered to. Luckily, this guide will break down all of the steps you’ll need to take to start one.
1. Define The Mission For Your Nonprofit
The first thing you need to do is define your mission. This should answer the “why” about your business. You want to have a mission statement that expresses your reasoning for starting it. Within the statement, you should focus on the work you will be doing, how you plan on developing the organization, the purpose of it, and where you plan on getting the funding.
2. Build Out a Team
From there, you will want to start building out a team that will be helping you on your journey. You want a team of leaders that will be there for your organization no matter what. You will want to include the founding participants and have roles for the executive director, the members of the board, and volunteers. Don’t worry because you can always add more team members as you continue to grow your non-profit organization.
3. Incorporate It
You want to draft out your official charter or AOI. This will define your organization as a whole. This incorporation document needs to include everything from the name of your organization to the location of it and all of its members. Each of those on the board needs to sign the AOI document. This document will then be submitted directly to the state’s office for incorporation.
4. File The 501(c)(3) To Gain Tax Exemption Status
When you are starting your non-profit organization, you will want to file the 501(c)(3) form. This is a form that allows you to apply for tax exemption status. Every non-profit can apply for this. While you will have to pay a fee, you will gain tax exemption if approved. The fee will typically vary from $275 to as much as $600. This will depend based on your application. This can be one of the hardest and most time-consuming aspects of starting a non-profit. The IRS may even take as long as 12 months just to get back to you. They will ask you a lot of questions including the purpose of your organization and work. Ensure that you are filling out the application accurately to gain tax exemption from your state.
5. Write Down Your Bylaws
Much like an S Corp, you will need to have a set of bylaws governing your organization. You want bylaws that dictate how your organization functions and the culture you foster. You want the bylaws to include staff roles, your mission statement, membership programs, donation protocols, procedures to amend bylaws, and details involving financial reporting protocols.
Every state has someone responsible for overseeing nonprofit organizations. This person is the attorney general for your state. Because of this, you will need to register with the state’s office. If you are looking to solicit contributions in different states, you’re going to need to register with their offices, as well.
Along with registering for your state, you need to ensure that you are reporting annually. Each state has requirements for its nonprofits to file annually before the end of the accounting year. If you’ve already gone ahead and applied for tax-exempt status, you will need to file a Form 990 with the IRS. This is a document that will showcase the activities surrounding your organization, your finances, directors, and even the governance processes.
Depending on your state, you may also have more renewal requirements you have to adhere to. You can figure out all of the things you are responsible for by contacting your Secretary of State’s office and asking. Ensure that you are accurately and routinely noting down your nonprofit’s activities and finances to ensure that you can file your annual reports easily.
7. Secure Funding
A nonprofit will require funding to get started much like any other business. Because of this, you will need to figure out where you will be getting this funding. You can get this funding from a private foundation, corporation, or directly from the government. The best way to acquire the funding you need is by actively promoting your mission and cause.
Now that you are completely aware of all of the steps involved with starting various types of businesses, you will want to figure out which one makes the most sense for your situation. Utilize the various steps above when you are starting one. Otherwise, you may find yourself dealing with hurdles that could have been easily avoided. Always weigh the advantages and disadvantages when you are choosing the right business structure for your business so you can make the best decision for your future.