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Practical Steps to New Business Registration and Startup

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  • Practical Steps to New Business Registration and Startup
Practical Steps to New Business Registration and Startup
  • admin BY: admin
  • July 11, 2023
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Below are the steps and documents required before you can register your business (specifically a Limited Liability Company “LLC”)

 

  1. Select your Preferred State of Incorporation – selecting the right state for your business is dependent on numerous factors all of which must be considered before you register your company business. Most people register their business in the state they reside or plan to conduct business in, but this is not mandatory.

 

  1. Business Entity Name – this is an important next step after selecting the state of incorporation. The entity name must be available in your state of registration. Conduct some research on the state’s website to ensure that your entity name is available for registration in your filing state. In addition, it is also advised to do a trademark name clearance to ensure that your selected entity name is not used by another entity in another state that could cause confusion. For e.g., if your business, Stock A manufactures goods A and is registered in State A and another business, Stock A provides a similar good A but is registered in State B. While you may be able to register that entity name in your state, you may not want to if the existing entity has an active presence, and you think customers may be confused between both businesses. Again, there are a few things to consider but always make sure to do some research when choosing an entity name.

 

  1. Business Purpose – before registering a company, you should determine what services or goods will be provided by the business. Some states require this information when registering your business and some states do not. E.g., consulting services, real estate, professional services. Some states require certain companies providing professional services e.g., doctor, attorney, lawyers to register their LLC as a professional LLC (PLLC) which may trigger additional requirements.

 

  1. Get a Registered Agent – most states require an entity to have a registered agent and does not allow you to be your own registered agent however in some states, you can act as your own registered agent. Do some research on your state’s rules to know what is applicable for that state. Please note that the registered agent’s name and address (must be a physical address) will be public record so if you are acting as your own agent using your home address, then your home address can become public information. This is one of the reasons it is advisable to use an actual registered agent. Another reason to use a registered agent rather than your home address is in case you move homes, you won’t have to update your registration information. If you conduct business in a state other than your state of incorporation, you will need to have a registered agent for each of those foreign states.

 

  1. Have a business address – to register a business, you will be required to provide an address for your business. This can either be a physical or virtual address. There are a lot of companies now that offer virtual addresses and this is again beneficial rather than using your home address because this is public information and if you move homes, you will not have to update your registration information.

 

  1. Determine how the LLC will be managed – this is one of the questions you will have to answer i.e., if the LLC will be managed by the members or a manager. The single member usually manages most single member LLCs, but this is not always the case. Ultimately deciding how the LLC will be managed must be decided before registration.

 

  1. Business Filing/Registration – when you have completed the aforementioned steps, you are now ready to register your business. Go to your secretary of state’s website to find information on business registration for your state. Be prepared with your filing fee as all states require a filing fee to complete the business registration. This fee differs for each state. Once approved, you will receive a certificate of incorporation or approval notice of your registration.

 

  1. Employer Identification Number (EIN) – After your business is registered and you have received a certificate of incorporation, you can now apply for an EIN. An EIN is a business’s unique identification number similar to an individual’s social security number. This number is useful for many purposes including opening a business bank account and filing taxes.

 

  1. Operating Agreement – an operating agreement is a written document outlining how the LLC will be operated and managed by the members. While this is not required to operate your business, it is highly recommended especially when there is more than one member of the LLC. This document should outline responsibilities of the members, managers, and any other information on how the business will be organized, managed, and dissolved.

 

  1. Business Account – this is usually the last step after you have obtained your EIN and is critical. A bank will require your EIN amongst other things to open a business account. Having a business account is advisable as comingling business funds with personal funds is one of the easiest ways to pierce the corporate veil of protection and make an owner liable for the actions of the business. Having a business account is also the best way to build business credit which is useful for obtaining business loans.
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