When starting a business, it is essential to ensure you are doing everything by the book. This means setting up your business properly and ensuring that all of your ducks are in a row. This blog post will discuss five steps you need to take to make sure that your business is legitimate.
1. Choose the proper business structure:
When you are setting up your business, you need to choose the right legal structure. This will determine things like how you are taxed and what kind of liability protection you have. There are four main types of business structures globally: sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. You must pick the one that makes the most sense for your business.
2. Get a business license:
Depending on the type of business you are running, you may need to get a license. This is usually required for businesses that sell goods or services, offer professional advice, or operate in certain industries. You will need to check with your local government to see what licenses you need and how to get them. You will also need to get a sales tax permit if you sell products. This will allow you to collect sales tax from your customers and remit it to the government.
Failure to get the proper licenses and permits can result in hefty fines, so it is essential to research and ensure everything is in order before you start operating your business.
3. Register your business:
Once you have chosen your business structure and obtained the necessary licenses and permits, you must register your business. This usually involves filing some paperwork with your state or local government. You will also need to choose a name for your business and make sure it is available to use. Once everything is registered, you will be issued a tax identification number (TIN). This number is used for tax purposes and will be required when you file your taxes.
You can usually register your business online, but it may be easier to go through an attorney or accountant who can help ensure that everything is done correctly.
4. Get an LEI code:
If your business is going to be operating internationally, you will need to get an LEI code. This code stands for legal entity identifier and is used to identify businesses that are operating in multiple countries. You can apply for an LEI code through the Global Legal Entity Identifier Foundation (GLEIF).
The process of getting an LEI code can be complicated, so it is essential to consult with a professional before starting the application process.
5. Open a business bank account:
Once your business is up and running, you need to open a business bank account. This will help you keep track of your finances and make it easier to do things like paying your taxes. In addition, it is vital to use a separate account for your business expenses to easily see how much your business is bringing in and what kind of expenses you are incurring.
You can usually open a business bank account online or at your local branch. However, most banks will require that you have your TIN or EIN before they open an account for you.
In conclusion, these are five important steps that you need to take to make sure your business is legitimate. By following these steps, you can avoid any legal issues and ensure that your business is on the right track!