Setting Up Your Small Business in 3 Simple Steps
3 Simple Steps• People new to business often don’t know what to do to start setting up their small business. – They may have a great idea, but don’t know how to make a profitable business out of it.• The steps involved in setting up a business are straightforward, but require lots of thought.• Here are the 3 simple steps you need to complete to finish setting up your small business.
#1: Get a Tax ID from the IRS• This is the first and easiest of the 3 steps you must take to setup your business. Here’s how to complete this step: – Go to www.irs.gov – Search for “Employer ID Numbers” – Find the “Apply for an EIN Online” link and click it – Another page will pop up with directions for filing online, find and click the “Apply Online Now” link near the bottom – Follow the directions from there• Once you get the EIN, you will use it in the next two steps. So you must do this step first.
#2: Establish the Legal Entity of Your Business• To start any business, the business must have a legal status.• There are many types of legal entities. Some of them are: – sole proprietorships – partnerships – LLC – corporations• Talk to a lawyer to find out what legal entity is right for your business, or look in the Resource Center to find out where to go to learn more about each type of entity.
#3: Open a Bank Account in the Name of the Business• This last step is probably the most important step, at least until your business starts making money.• For many of the legal entities listed above, the owner has to do some very specific things to keep the business in good standing with the IRS and the courts (in the event of a lawsuit).• One of these specific things is making sure you keep your personal assets and business assets separate.
#3: Open a Bank Account in the Name of the Business• Do not purchase anything for your business with a personal check or your personal credit card. – Use your small business account for all business purchases. – If you don’t have enough money in the business account, add some money from your personal account in round hundreds or thousands. – This is important because it makes the transaction look like your are generally investing in your business, rather than buying something specific and using your business as a cover.
• Once these 3 things are down, you’re ready to find customers and make a profit.• Good luck.