Thomas Edison, the cofounder of the General Electric Company and the inventor of the light bulb, phonograph, and motion picture camera once said “the value of an idea lies in the using of it.” Understanding the basics of starting a small business helps get your business up, running, and growing. Your priorities as you begin this journey will be planning, making key financial decisions, and completing a series of legal activities.
MAKING KEY FINANCIAL DECISIONS
1. The Employer Identification Number (EIN) and Your New Business - An EIN also known as a federal tax identification number is used to identify a company. The requirement to solicit an EIN is based on the form or structure of your business. Sole proprietorships and general partnerships do not require an EIN. All other entities including an LLC, business corporations, and benefit corporations require an EIN.
2. Startup Costs and Capital - Understanding your budget for startup costs and capital is key to your success. Know your costs, expenses, income and projected income.
COMPLETING A SERIES OF LEGAL ACTIVITIES1. Naming Your Business -“What’s in a name?” was the question Juliet asked Romeo when she learned he was from the Montague house in the Shakespearean tragedy Romeo and Juliet. A name, like Juliet learned carries a great deal of baggage with the potential to thrust your company forward or hold it back because it is confusing. There are two main camps when it comes time to naming your business: those that believe names should be abstract and others that think names should be informative. An abstract name is a word or symbol that does not mean anything, such as Google or a word unrelated to the company like Apple or Alphabet. An informative name immediately tells customer what your business is, like Auto Care Express or Butter Cafe. When choosing a name, keep the following tips in mind:
- Choose a name that appeals to customers
- Avoid long and confusing names
- Don’t use Inc. after the name of the business unless you are a corporation
- Don’t use someone else’s name
- Conduct a name search in Virginia to make sure the name you desire is available here.
2. Obtaining Licenses and Permits to Start Your Business - All businesses operating in the Commonwealth of Virginia need to register with the Virginia State Corporation Commission. This requirement does not apply to sole proprietorships. Certain occupations or trades require a license to offer the service in the state. They are:
- Home inspectors
- Medical Doctors
- Real Estate Brokers and Agents
Businesses that sell alcoholic beverages need a license and additional permits to provide alcohol related products. For example, in Virginia, a bar will need a liquor license and a permit to sell kegs.
3. Commercial Transactions - Once the business is up and running, the new business will interact with other business and customers. These types of interactions are called commercial transactions, whereby goods or services or something of value is exchanged for remuneration or money. These transitions are governed by law and include the following:
- Truthful representation
- Contract provisions
- Documents of title (i.e. bill of lading)
- Obligations of the seller or buyer or mutual parties
- Negotiable instruments (i.e. checks, IOUs)
- Letter of credit
- Loans (secured and unsecured loans)
- Failure to pay or repayment on transaction
If you're just getting started in entrepreneurship your Suffolk Business Attorneys; Ferguson, Rawls and Raines, have some tips for you! Get a free download "Starting a Business? 10 Simple Steps to Get you Going."
Choose a printable PDF ebook or and editable PowerPoint presentation!
You may also be interested in: