A lot of people started new businesses, or took the risks and jumped in the entrepreneurship world during the pandemic of Covid-19. A lot has happened since then. A lot of people don't really know the basics of taxes, or how to properly do bookkeeping or what they need to do after their Business is officially filed with their state. To some people they get right back to working on their dream. But before you get back to work there are a few things you need to get started on 1st. In this blog we will break it down to you.
Step 1: Get an Employer Identification Number (EIN) from the IRS.
An Employer Identification Number, commonly called an EIN, is a unique 9-digit number assigned by the IRS to identify your business. You'll need an EIN to open a bank account, apply for a business license or any other business tax-related purpose. Any corporation or LLC needs its own EIN from the IRS. This is true whether you plan on hiring any employees or not. The EIN, much like a Social Security Number for individuals, is how the IRS tracks your business's activities.
Tip: If you already had an EIN for your business when it was operating as a sole proprietorship or partnership, you’ll need to get a new ID number for your corporation. You can’t transfer the number from one business entity to another.
Step 2: Open up a Bank Account!
This allows you to accept checks and payments in your business's name. In addition, you're legally required to keep your personal and business finances separated once you incorporate or form an LLC.
Step 3: File a Doing Business As (DBA).
The DBA is a business’s equivalent of a name change. It lets the public know that you are operating under an assumed name and prevents any confusion that may occur as a result. For example, let's say your official company name is "Example Company, Inc.", but you usually use a less formal name like "Example Company." You'll need to file a DBA for "Example Company."
Step 4: Trademark
When you form a corporation or LLC, your name is protected by state law. For some businesses, this is enough brand protection. However, if your business intends to conduct interstate commerce, offers goods and services on a national level, or intends to go public someday, it’s important to also register your corporate name as a trademark in order to protect it in all 50 states. Registering your corporate name as a federal trademark makes it clear to consumers that they are dealing with a legitimate business enterprise.
Step 5: Understand what you need to do to stay compliant.
One of the chief reasons to incorporate or form an LLC is to limit your personal liability. However, if you fail to keep your business in good standing, then you can lose this liability protection. Make sure you understand exactly what’s needed to keep your business compliant each year. Typically, this involves filing an annual report with your state each year, keeping up with your business federal and state taxes, and keeping your personal and business finances separate.
As new business owners, we often find ourselves with unanswered questions. It's easy to get caught up by the steps of incorporating your business or forming an LLC and forget about the details. Don't get bogged down in the specifics of what needs to be done, and remember that it's ok to ask for help!
Thank You for Reading!