Starting a business can be a daunting task. Not only do you have to worry about sales revenue and spending expenditures, but you have legal steps you have to take before you can start your business. And unfortunately, there are not a lot of concise resources out there to help you with it. These are some critical steps you need to take when you start a new business:
1. Write a Business Plan
This might seem like a step that is tempting to bypass, but having a written plan is critical. It gives you vision for your business, and lamp that will guide your path. It will give your business idea validation, or might open your eyes to the pitfalls you are about to jump into. There are plenty of business plan templates online that you can choose from. The SBA has a decent template that is very thorough, and you can find that HERE. I would recommend giving your local Small Business Development Center a call for free help with business planning and financial projections.
2. Select a Business Name and Legal Entity
A business name is a very important part of a business startup. If you are operating as a Sole Proprietor and want to be called something different than your own name, you can file an Assumed Name certificate (also called a Doing Business As, or Fictitious Name certificate). If you are an LLC or a Corporation, you will reserve your business name when you go through the legal process of registering your business with the Secretary of State. If you are an LLC or Corporation, you need to register your business with the Secretary of State through the OneStop Kentucky Business Portal. If you are a Sole Proprietor, you do not need to register your business through the Secretary of State.
3. Register Your Taxes
No matter what legal structure you are (Sole Proprietor or LLC), you need to register for your tax accounts with the appropriate sources. There are 3 main places you will need to go to register for your taxes: State Department of Revenue (State Tax), County Clerk (County Tax), and City Clerk (City Tax). You will also have to pay Federal taxes, but your tax account can figure that out when you file your annual taxes. You need to go to the County and City Clerks offices to register for the taxes, but the state taxes can be done through the OneStop Business Portal (this applies to both Sole Proprietorships and LLC/Corporations).
4. Obtain Business License
This is a common myth: there is no standard business license a business has to get in Kentucky. That being said, specific businesses must have certain licenses, such as general contractors. To see if your business category needs to obtain a specific state license, go to the OneStop Business Portal. Depending on what county and city you live in, there might be a business license you need to receive. But most times, a city or county "business license" is just referring to the local tax account. It is always recommended to visit your local county and city clerks whenever you start a business.
5. Obtain an EIN (Employer Identification Number) from the IRS.
This might not apply to everyone. If you are wanting to open a bank account, the financial institution might ask for an EIN. Also, if you plan on hiring any employees (full, part, or contract workers) you need an EIN. Good news is that they are free and can be registered for online at the IRS website.
6. Register any Trademarks or Service Marks with the Secretary of State
Most businesses will not need to worry about trademarks or service marks, but in the event that you are national company that is starting to make a name for yourself, you might want to look into it. Read my article HERE about trademarks if you want to learn more about them. You will want to get a lawyer to help you out with this process.
7. Visit Planning and Zoning for Any Storefront Businesses
Before you purchase a building or rent a building, you will need to visit your local Planning and Zoning department. You do not want to sign a contract for a building or lease, and them come to find out you cannot operate business in that space.
8. Complete Forms for Employees
If you have employees, you need to complete certain federal and state documents. A list of what you need to do before you hire an employee can be found on another article HERE.