7 Tips for Forming a Business Entity

By: Esqueda Law PLLC

Step by step tips on forming your business 

As an entrepreneur, you spend hours preparing and planning the details of what your future success will look like. You are ready and willing to take the necessary risks. You have outlined exactly what you hope to achieve in terms of products or services, target clientele, and income, and how much you have to invest to get off the ground. You feel like you’ve thought of it all. But as clear as this picture is painted, the first steps can seem pretty daunting. There are legal aspects, finances, and human resources to consider, and so much more. You genuinely ask yourself, “How do I get started?” 

The following are 7 step by step tips on how to get started with forming a business entity: 

  1. Name your business. A name represents, encompasses, and defines. It identifies and distinguishes you from another. Select a name that has meaning and impact in your field. However, be careful not to infringe upon others’ rights. Ensure that you research any trademarked names in your area as well as those registered names.  
  2.  Determine the physical structure of your business. Consider whether the majority of your business is in a physical location or online. Different states have different laws, and you should consider this when you open your business. Also, the start-up costs for operation, rental space, or hardware purchases are more extensive than starting up a business online. 
  3.  Identify the legal structure or entity that is most suitable for you. Are you an individual, looking for a sole proprietorship, do you have a partnership, or are you looking to form a larger corporation? For help on choosing the right entity for you, check out my blog Choosing the right form of entity 
  4.  Appoint someone to represent your legal affairs. Hire a Registered Agent, who may be a member of your team or a third-party employee such as a lawyer or accountant. This person will be responsible for receiving and handling any legal documents to come to and leave your business.  
  5.  Register business and file all necessary paperwork, Each state requires a certificate of organization. This may vary by name across different states but mostly serve to identify the name address and purpose of the business. 
  6.  Set up your business bank account and organize taxes. Create separate accounts for business and personal income. Pay any necessary licenses for employers and employees. Remember that taxes have to be filed annually, and depend on the type of entity you have selected. 
  7.  Draft up an operating agreement. This is not mandatory in sole proprietorship or partnerships but it is helpful to outline how the business will be run, to whom profits will be assigned, voting, and continuity or dissolution protocols. The default state rules will apply if these are not in place. Corporations are governed by the articles of incorporation filed with the state. 

Following these tips will surely help you start your business. This venture is not meant to be undertaken alone and you should always consult a professional along the process. My name is Liza Ann Esqueda and I am here to help. 

Need to strategize? Schedule a free constellation TODAY. Book a free 15-minute call: HERE Liza Ann Esqueda is a trademark & small business attorney specializing in trademarks, copyrights, and contract templates. Liza Ann runs a virtual attorney, serving clients nationwide. Visit: LawyerLizaAnn.com for business tips, free downloads, and course information.  

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