Searching for a checklist for starting a new business? We have a good one here, developed by a local attorney. Entrepreneurship offers so many benefits and can be quite rewarding. Hopefully your new endeavor is something you are passionate about. Some of the tasks associated with starting a business – entity formation, management, accounting, finances, legal risks, etc. may not be things that get you excited. Becoming aware of your obligations and risks and managing these appropriately, can increase the chances that you business will be successful. Choosing the right attorney and CPA will help you better understand the factors involved with these items. Preparing on the front end is a lot less stressful and cost effective than trying to deal with issues when they arise.
There are many checklists available for starting a business. This checklist was developed by Kinetic Legal. Kinetic Legal, LLC is a law firm that specializes in providing cost-effective legal services to small businesses.
While this list is not all encompassing, these are some of the major issues most small business owners encounter on their journey to entrepreneurship. This checklist also includes recommendations as to whether the particular issue is something that can be managed with or without an attorney.
- Decide on a Name: You want to make sure you can use the name, no one else has rights to the name, and the name conveys who you are and what you want your business to represent. Some of the best names have come from brainstorming with your network – people you trust and respect. Once you identify a few names you like, run a google search – see if anyone has your name. Then look on the Colorado Secretary of State for similar business names and the USPTO website. Once you know whether you can use your name, logo and brand, protect it! Register it with the USPTO and your local state authorities. An attorney can be helpful with this process and likely should be utilized if there is any question whether you can register it.
- Incorporate and determine a legal structure: Setting up your legal structure is vital in protecting you and your personal assets. Determining what structure is best for you (corporation, s-corp (tax election), LLC, LP, etc.) is best done with the advice of an attorney and accountant. Check out the Kinetic blog on this issue: http://kineticlegalllc.com/entity-formation-whats-best-business/. Most small businesses we work with decide on the LLC structure due to its flexibility and straightforward structure.
- Draft good governing documents (and respect them): Depending on the legal form that you choose, you will have different governing documents. But whichever entity you choose for your business, having clear, thoughtful governing documents is essential. The important of these documents is magnified 100-fold if you have any partners in your business. You need to be able to clearly understand the allocation of ownership, rights, purposes of the business and even what happens when/if you and your partner go separate ways. Following the formal procedures set forth in your governing documents is important to maintaining the integrity of your entity and protecting your personal assets from business liabilities. Working with any attorney to develop these is recommended.
- Apply for an EIN: An Employer Identification Number (EIN) helps you separate yourself from your business. You’ll need it if you plan to incorporate your business or open a business bank account. Plus, with it you can avoid giving out your social security number (an opening to identity theft). To apply, go here: IRS
- Investigate and apply for business licenses: Depending on your business, you may need one, if not multiple licenses for your business, depending on your industry and where you are located. Most licenses are issued at the state or local level. The SBA provides many helpful tools to determine what you need/need to do to obtain a business license in your jurisdiction. Visit them here.
- Find a good accountant: Especially if you don’t have a strong business background, a good accountant can set you up to properly manage your money and avoid possible large tax consequences. For example, an accountant can work with you to determine whether to file an S-Corp election with the IRS and help you understand what types of expenses, depreciation and amortization you can take advantage of with your business. We have found that when our clients work with good accountants, they encounter a lot less stress in the long run in managing their finances.
- Open a bank account: It is vital you keep your personal and business assets separate. By doing this, you shield your personal assets from possible liability of the business. To open a bank account, you will likely need your business organizational documents and EIN, but call your bank of choice and ask what documents they require.
- Get insurance: Depending on the type of business you have, getting insurance is vital. Talk to a few brokers, get a few quotes, ask questions about coverage, and make an informed decision. It may be helpful to talk to other business owners in your industry as they may have good contacts in the insurance industry. Your local SBDC/LBDC office generally has an advisor list with at least three business insurance brokers listed. They will also have lists for attorneys and CPAs.
- Location: If your business requires a brick and mortar location, and you intend to lease space, it is highly recommended you work with an attorney on the lease. For many businesses, your location and the space you occupy and offer your customers is the most vital (and often most expensive) asset you have. Make sure you understand your lease and your rights and obligations, so there are no surprises that may compromise your ability to use the space.
- Identify Other Necessary Next Steps for Your Business: Depending on your business, you may need to hire people immediately, draft key contracts for vendors or clients like waivers or services agreements, or protect additional intellectual property of the business with copyright or patent protection. Working with an attorney on these issues, especially intellectual property issues and key contracts with a high dollar value, is recommended.
Hopefully this initial list gives you an idea of what you need to get done or gives you confirmation that you are doing things right. If you have any questions, feel free to reach out: email@example.com.
Some information in this article has been previously published on the Kinetic Legal, LLC website.