If you’re considering a business startup, you face considerable challenges, from market competition to customer satisfaction. You must also deal with legal requirements, including the steps needed to form a business entity and business contract matters. Here’s what you’ll need to do before jumping into a business.
How to Form Your Own Business
1. Register Your Business Name
Before you can operate a business, it needs an official name. That way, federal and state authorities can keep track of who you are, what you’re doing, and how much you owe them. You can choose a legal name or assign a DBA—”doing business as”—name, but you must first search New York State’s business entity database to see if your choice is available. Next, apply for a Business Certificate, or a certificate of an assumed name, at your local county clerk’s office. Also, if you are going to incorporate or form an entity for the business, you’ll want to do that in a manner that works with the name you have chosen. We can advise you about this.
2. Apply for Employer Identification Number
If you’re going to operate as a corporation or as a sole proprietorship with employees, you need to satisfy federal and state tax requirements. The first step is to apply for an Employer Identification Number (EIN). It is similar to a social security number for your business and allows you to open a business banking account and file taxes.
3. Decide on a Structure
You must also decide on the business structure. Most businesses are sole proprietorships, meaning there’s one legal owner and no legal distinction between the business and the person. A partnership involves more than one owner, and all partners assume joint liability and responsibility for the company’s debts and business contract matters. In a corporation, the business becomes a legal entity apart from the owners. This guards the owner against liability for the corporation’s debts and actions IF the business is run and debt is incurred in accordance with some specific guidelines, but the money the owners earn through a corporation is taxed twice—once as corporate earnings and again when the owners receive a paycheck. Therefore, you need to file corporate tax returns in addition to your own. There is also the possibility of a Subchapter “S” corporation, where the tax passes through to the individuals and avoids the double taxation issue—if the business qualifies as a Subchapter S.
If you need help with choosing a corporate entity type or arranging business contract matters while setting up your business, contact Pirrello, Personte & Feder, PLLC, Attorney at Law in Rochester, NY. They serve businesses and individuals in and around Monroe County. In addition to startup legalities and business contract matters, they can also assist you with issues concerning real estate law, personal bankruptcy, trusts and estates, and personal injury law. Visit their website to message them online or call (585) 544-7090 to make an appointment.