Beyond Business Formation: Next Steps for Startups
So you’ve taken the plunge and started your own business. That’s great! As a startup ourselves we sincerely congratulate you on jumping in with both feet. There’s a lot to think about when your company is brand new, and it can all be kind of overwhelming! Make sure you take care of the basics first, though, and you’ll save yourself a ton of headaches down the road. Here are the four next steps you need to take right away.
1. Get Organized
Our CEO wrote an entire blog on this topic — check it out here. No matter what kind of business you’ve started, there are a few documents and records you’ll need to get together. Exactly which documents those are will depend on whether you’ve formed your business as an LLC or a corporation. For LLCs, you’ll want to put together an operating agreement to set forth the “ground rules” for the way you’ll do business. Some states require that you publish notice of the formation of your LLC in the newspaper. The form is often quite simple, like this one for New York, and you will likely be able to tackle it without the help of an attorney. For corporations, consider a set of bylaws to explain how your startup will operate. You’ll also want to create a binder for important notices and records. Requirements differ by state, so check with the Secretary of State’s office to make sure you’re doing all the right things throughout the year. This list of annual reporting requirements is a good place to start.
2. Register for an Employer Identification Number (EIN)
The Internal Revenue Service uses EINs to keep track of and identify businesses. Think of this number like your business’s Social Security Number. The application is free and easy to complete online here. Even better, you’ll receive your EIN as soon as you submit your application. Note: don’t pay extra for this! Any company that tries to charge you for this service should be ashamed.
3. Register with Your State
It may come as a surprise to you that in addition to obtaining an EIN you are also required to register your business with the tax agency in your state. The state needs to know that you’re doing business in their state so they can assess relevant taxes — incomes, sales, employment, etc. We know, not anyone’s idea of a good time. The good news is the application can be completed online in many states. Contact your state’s tax agency for more information.
Also review your state’s resale permit requirements. This permit lets you sell items and collect sales tax on them while protecting your from having to pay taxes on products you purchase from wholesalers. Note: if you do business in multiple states, you may need to obtain a permit for each. Your state’s tax agency can help you with this as well.
4. Learn About Local Business Licenses
Another permit?! Maybe, depending on what type of business you operate and where it is located. You may find you need a business license from your city or county. Your local government representatives can tell you which permits apply to you, how to obtain them, and if any local taxes apply.
Taking care of these four things right away when you launch your startup will save you lots of time and money down the road. Plus, you’ll enjoy the peace of mind that comes when you know your business is operating legally and all its books are in order!
PS — If you need help with your business documents, reach out to us here. We’re happy to help!
PPS — Here’s an awesome startup podcast featuring our CEO.
PPPS — Ready to kick things up a notch? If you think your startup has what it takes to be the next big thing, apply to the Y Combinator Fellowship program here.
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Originally published at nextgenjustice.com on January 29, 2016.