Coming up with a new business idea can be an exciting time. With new thoughts, products, marketing, and more, you are apt to get carried away planning your way to becoming the next big entrepreneur. However, before you get lost in the daydream, you’re going to need to actually form a business to ensure you’re legally compliant before beginning operations.
Forming a business means filling out lots of different legal documents, along with a range of other aspects, including choosing a business structure, creating a business plan, finding a team, and developing a brand identity.
In this article, we’re going to take a look at the steps you need to take to form your own business. Learn more below now.
When we speak of forming a business, we can infer two different meanings. The first is forming a legal entity that will operate as a business. The second, more intangible concept (and usually more fun part) is where you have an idea for a source of revenue, coming up with name ideas, logos, and more. For the best results, it’s a good idea to merge the two.
What this means is while creating templates for logos and writing up business values, you should also be thinking about the kind of business structure you want to be and how you will register your business. Below, we’ve given a breakdown of some of the steps you should take to form a business.
A business plan is a thorough and detailed document that states your business’s goals and objectives, along with the ways that the business plans to meet them. It includes everything from the basic goals, i.e., introducing your product to the market, to how you plan to finance your business.
Key elements of a business plan include the following:
● An executive summary: This details the company's mission as well as basic information like leadership, employees, and location.
● Products and services: This should be an outline of the products or services you intend to offer, their benefit for your customers, and other information, like patents, proprietary technology, and more.
● Market analysis: This should demonstrate a thorough understanding of the market you’re planning to enter and will address competitors, expected consumer demand for services, and how the company fits within the industry.
● Marketing strategy: In this part, you will need to address how you’re going to gain customers and keep them. It can include information on advertising strategies, marketing campaigns you have planned, and your brand identity.
● Financial Planning: How are you going to finance the business? This is the key question that needs to be addressed in this section.
If you’re worried about writing a business plan, have no fear; you can find many examples online to give you a rough guide of headings, outlines, and more that will make the writing process much simpler for you.
Next, you will need to decide what type of business you plan to be. There are many options that may vary depending on where you’re planning to open your business. Options in the US include Limited Liability Companies (LLCs), corporations, and partnerships. However, this list is non-exhaustive, and it is worth looking into what the common business types are within your industry.
You may be wondering why it matters what you register your business as, but doing the research can benefit you in the long run. For instance, different company structures have different tax requirements. Choosing wrong may inadvertently lead to you paying way more tax than was necessary!
Once you’ve got a business plan and a business structure, it is time to register your business. This requires some legal paperwork to be completed, and as we mentioned previously, each business structure will have different criteria that need to be met.
You will also need to choose a business name. You’ve probably already got an idea of the business name you want to use, but there are rules in place that dictate what you can name your business. In the US, state rules vary on what can and can’t be used as a business name, so it is worth checking this before deciding on a name.
In addition, we would recommend making sure that the domain name for your business name is available. A website is essential for a business in the digital age, so make sure the domain name isn’t already being used!
Last of all, to form a business, you’re going to need to make sure that you’re compliant. This may mean different things to different industries. For example, businesses that handle toxic chemicals and produce chemical waste will have to comply with environmental regulations on how to handle said waste.
Whatever industry you’re currently operating in, there will likely be licenses, permits, certifications, and more that you need to attain to ensure that all of your operations are legally compliant. You will also have specific tax and state filing requirements that change per business structure.
Make sure to do your research and ensure all operations are compliant before opening!
Forming a business can be lots of fun, but it also requires lots of documentation and legal paperwork. It is imperative that you file all required documents and ensure your business is compliant. Otherwise, you may lose your business!
Each industry and business structure will have different requirements, so use our quick breakdown as a starting point to create a list of documentation needed that is specific to you and your business.