When starting a legitimate business, the last thing you want to do is give an unprofessional impression. In order to ensure your business is legitimate, you need to demonstrate your trustworthiness to potential customers. Concentrate on these legal, regulatory, and insurance matters, and you will be able to do so.
Pick a Name for Your Business
Make sure your business name is legally available before deciding on it. Perform an internet search to see if the name is already being used as a domain or a social media account, and then consider conducting a trademark search to avoid any legal issues later on. If your company’s name is too similar to another, you may be unable to register it when you form a legal entity.
Establish Your Business Entity
Although it may be tempting to try your hand at being a sole proprietor, you could be taking an unnecessary risk. If your company gets into legal trouble, your personal assets could be at risk. Furthermore, the right entity—for instance, LLC or S or C Corporation—may provide tax benefits.
Creating a separate legal entity also makes it much easier to establish business credit and obtain small business financing.
Get Your Employer Identification Number (EIN)
EINs, also known as Federal Tax Identification Numbers, are used to identify a legal business entity. According to the IRS, generally, businesses need one, and you can request one online for free.
Obtain Business Permits and Licenses
Clients will notice approval stamps in the form of business permits and licenses. Check with the federal, state, county, and local governments to see if your company needs this authorization. If a federal agency regulates your kind of business activity, then you will require a federal license or permit. In general, states license more broadly, ranging from restaurants and retail to construction.
Set Up a Business Bank Account
Do not merge your personal and business bank accounts. It’s a good idea to keep your personal and business finances separate to make it easier to track company expenses and income.
Checking, savings, credit card, and merchant services accounts are available, allowing you to accept credit and debit card transactions. Additionally, business accounts help your company establish a credit history and provide limited liability protection for you and your customers.
Insurance for Your Business
Protect yourself and your personal finances with insurance. In the worst case scenario — property damage, liability, or an injured employee — insurance has you covered. It should be noted that workers’ compensation laws and regulations vary by state.
Small businesses should also consider purchasing a business owner’s policy, which combines property, liability, and income insurance. This will compensate for lost income if your company is unable to operate during a loss.
If you have these structures in place, your business will be more solidified, and you will be able to assure customers that you are legitimate.