How to Start a Small Business
My name is Samuel Cohen and this is how I single-handedly designed, developed, and launched a website where you can customize a die and have it 3D printed in 30 days. Below is a business update post. If you wish to read more about the project, the landing page is here.
When I started this project I knew that I wanted to turn it into an actual business, but I didn’t know exactly how to go about creating one. I have had some previous experience in startups, but I had joined after initial creation. So, I began the process of learning how to start a business.
Below is a video showcasing my process and overview for starting a business. If you want a more in-depth look into starting a business, continue reading.
Starting a Business Overview
Starting A Business
Incorporation
Incorporation: The process of constituting a company, city, or other organization as a legal corporation.
When you start a business you must incorporate it with the governing body of your state or country. In my case, it is in the state of Ohio in the United States. There is usually a government site that handles all business filings, with the option to use mail if you want.
Besides confirming your identity, the most important part of this step is ensuring that another business doesn’t exist with the same name and choosing your company type.
Here are the two most popular of the multitude of options presented:
For-Profit Corporation
A for-Profit Corporation is a company that operates with a board of directors in which the owners of the company are considered shareholders. The profits and losses for the corporation are not tied directly to the owners. Finally, the pay structure in relation to taxes is different as the shareholders are not counted as self-employed.
Limited Liability Company (LLC)
A limited liability company (LLC) is a company that operates with an “operating agreement” in which owners have a percentage of equity in the business. The profits and losses for the LLC is tied directly to the owners. Finally, the pay structure and taxes follow the rules of a self-employed individual.
I chose an LLC because I am a one-person team and don’t plan on adding another person for some time.
Once you choose the type of company you can choose the name. There is a system that alerts you if your name is taken, so that is pretty straightforward.
Now that you have chosen a name you move into the specifics. The first section details the “official” name of your company. This name will appear on tax documents. Note that if you are creating an LLC, you must put a tag at the end that denotes an LLC such as “Limited, limited liability company, LLC, or ltd”.
Then you choose an “effective date” which is the day you want the company to begin functioning.
Period of existence is a time limit that you can set before the company has to be restarted; If you don’t enter anything the time is set to perpetual.
Finally, the purpose clause acts as a descriptor for the company in question. You can put whatever your company is going to do here.
Moving on to the next page, you will assign an agent
An agent is a person who handles the official documentation for the company. An agent can be either a person or another corporation.
The agent must accept this designation for it to go into effect.
Moving on to the next page, you are asked if you have any attachments to add. You might need attachments if your business is in a certain field like healthcare.
If you don’t have any attachments you can move on.
Finally, the authorization stage gives you the option of adding people authorized to make changes to the business. If you had a co-founder, then you would add both of your names to this list.
The final stage includes review and payment options. It costs $99 to file an LLC or Corporation in Ohio, but costs vary by state.
Once this is complete you have to wait up to one month to receive approval for your business. I received mine in two days, so it depends on how busy their office is.
Certificate of Good Standing
A certificate of good standing is a document that is required to do business in a state; Once your business is officially created, you can obtain one for $5. In Ohio, there is a page dedicated to obtaining the certificate.
Taxes
Federal
Once your business is created you must apply for an EIN or Employer-Identification-Number from the IRS. The EIN is the formal recognition of your company by the federal government. The process for applying for an EIN is simple and takes approximately five minutes. Once the application is complete, you will receive a document with the EIN. The EIN is required to open a bank account or conduct business.
State
Since you already registered your business with the state, you just have to confirm your business status and file any necessary documents. Depending on the type of business there might be several documents, but in my case, there was only one required.
Conclusion
Once you are set up with taxes, you are ready to conduct business. I was able to complete the process in about two weeks total. Now that the business was created I moved on to my second tutorial, which is creating a store in WooCommerce.
Check Out the Website at www.dicedesigner.com.
