How to Start Your Own Business, Part 1

Transcript

Hi, I'm Regina Campbell. I'm from The Campbell Law Group, and we're coming to you very excited about a new series that we're going to start, called the How-To Series. So first, today we're going to start off with how to start a business.

Okay, step one: you determine what state you're going to incorporate your company in. This requires you to consider different elements, or different state laws, and what might be more favorable for your business, which is why it's really important to employ a lawyer to help you answer those questions and make sure you're in the right state.

Step two is basically determining what type of entity works for your company, whether it's an LLC, a partnership or a corporation. A lot of thought is to be given to these different types of entities, and also conversations with your lawyers about the pros and cons of which type of entity would better suit your type of business, your corporate governance structure, and what makes more sense for you. And then also from a tax point of view, let's not forget. It's really, really important to make sure you plan ahead with taxes. There are some tax benefits and liabilities with LLCs that don't normally exist with corporations.

In some respects, there are also partnerships. Depending on the structure, whether it's a real estate holding or not, it might be beneficial to become a partnership, whether it's general partners mixed with limited partners. But in either case, it's important to consult a lawyer to decide which entity works for you.

Step three: very important to talk to Uncle Sam, as they like to say. You do have to register your company and get a tax ID. You will likely also have to get an identification number for the state in which you're operating. Whether you pay sales tax and/or state income tax will depend on the state that you're in. But it's very, very important to make sure you register with Uncle Sam, and Uncle Sam's cousin, which is the state, basically. However you want to look at it, taxes have to be paid, unfortunately, but that is a reality.

Number four: it's also important to make sure that you get state, city and county level business licenses and permissions to be able to operate your business in that location. This is separate from what might be called a certificate of occupancy, if you decide to build somewhere or something related to construction. This is actually where you're allowed to have a license for that specific business in the county.

Step five: very, very important also to consider trademarks and copyrights to protect whatever you are building. That is something you want to discuss with an attorney, preferably a trademark attorney or an intellectual property attorney, who might be helpful for you.

And number six: not to forget, also talking to an accountant about how you are going to plan income and revenue, how you're going to put it on the books, what your expenses will be, and using the cash or accrual method. Although that is a little bit beyond my expertise, that is more for an accountant, it's very important to know that you need to do that.

And of course, also on this step, it's important from a legal point of view to make sure that you have all the documents you need: agreements, and understanding the liabilities and risks that go along with the types of agreements and relationships you're going to be creating on the business level. One of the first ones to consider, and I'll talk about this in another How-To Series, is going to be an operating agreement. But for now, I'll leave you with that. Hopefully that is helpful. Thank you so much.