12.01.2014

Your Business Startup Checklist

You have a vision in mind, the talent to make it work and the capital to start the next thing you need to know are the steps to make it happen. Below is an overview of the steps you should take to ensure your business starts on the right footing. These steps overlap so even though they are laid out in order this list doesn't require you to do them one step at a time. 

  • Choose a Name
    • Put some thought into the name of your business and make sure it makes sense within the type of industry you work in as well as helps your business stand out. Before buying domain names and marketing your business name, search the web and city/state records to ensure another business is not operating under that name already.
  • Choose a Location
    • You have heard that the survival and eventual success of a business depends on location, location, LOCATION! Even in the age of the internet and the global marketplace, a good location is vital. Even if you are operating from home, make sure you are in compliance with local zoning requirements.
  • Choose a Business Entity
    • Deciding on whether to set up an LLC, a partnership, a C-Corp or an S-Corp will depend on the nature of your business, whether you seek investors or not, inherent business risks and other factors. Once you have decided, choose the state where you seek to form your entity and go through the proper procedures to register.
  • Draft and Sign a Shareholder / Buy-Sell Agreement
    • Any start-up with more than one owner should draft a shareholder / buy-sell agreement to address how you and your partner(s) will work with each other throughout the life of the business. You might think it's not worth the hassle because everyone is excited and gets along greatly or because you don't want to discuss potentially contentious issues like what to pay partners or shareholders who retire from the business but believe me it is better to discuss it before the business starts then after.
  • Get a Federal Employer Identification Number
    • Apply for one via the IRS website or by calling the IRS at 1800.829.4933.
  • Open a Business Bank Account
    • With your EIN and your business's certified corporate charter / articles of incorporation (corporations), articles of organization (LLCs), partnership agreement (general partnerships), certificate of limited partnership (limited partnerships), certificate of assumed name (as required by sole proprietorships in some states) or a government-issued business license, you can go to a local bank and open up your account. 
  • Draft the Contracts Necessary for Your Business 
    • While the life-blood of your business is the cash flow that runs your company, its heart is the sum of all the contracts you execute. While there are some contracts that are ubiquitous in all types of business, each area of business has its unique types of agreements and contracts native to its particular concerns. Many of the contracts you sign will already have been drafted by the other party (ex. vendor agreements) but you should have a file with contracts that your company drafts (ex. independent contractor agreements). An attorney can help you draft agreements that meet your business needs and protect you from liability.
  • Sign the Real Property Lease
    • This is a very important document since it will constitute an agreement you have to commit to for a number of years whether business is booming or not. The good news is that you have some leverage to modify the lease to your benefit. Unlike most residential landlords, a commercial property landlord is willing to make concessions to lease you their space.  Think long and hard about the pros and cons of the space you are considering before you do so. Don't hesitate to contact a lawyer to help you here.
  • Familiarize Yourself with Employer Laws
    • Whether you hire independent contractors or employees, as soon as you hire even 1 worker, you need to make sure that you are complying with federal and state labor laws.  Talk with an attorney to help you navigate this area.
  • Familiarize Yourself with Intellectual Property Laws
    • You would be surprised how many businesses create and own intellectual property and are not even aware of it. In addition, workers for a business create intellectual property that might or might not be owned by the business. Talk with an attorney about protecting your IP and how to monetize your IP.
  • Register Your Copyright, Trademark and/or Patent
    • Depending on the nature of your business you will need to copyright, trademark or patent a number of things. Even if at the moment your business does not to register any intellectual property, think long and hard about what could be potential intellectual property your company may end up creating, possessing or acquiring in the long run and develop a strategy for handling them (which should include registration).
  • Register a Fictitious Business Name
    • If you are using a different name for your business then register the name in your county. 
  • Get State and Local Business Licenses
    • Depending on the type of business you conduct, you may first need to get permission from the state, city or municipality you operate in. Contact your state's appropriate agencies to make sure that you get the licenses and permits you need to be in compliance.
  • Employer Filings and Withholding
    • Classify the worker as an independent contractor or an employee. If the worker is an employee then withhold, deposit, report and pay employment taxes. 
  • Worker's Compensation and Other Insurance
    • Worker's compensation insurance is required by law if you have employees. You also may want to obtain property, errors and omissions, liability and up to 10 other types of insurance that your business might need.
  • Keep Your Records Straight
    • File and store all the agreements you've drafted and signed and the permits, licenses and official documents you've received in a safe but accessible place. Also, store all the important job-related documents in regards to hiring, training, keeping and firing employees in an employees personnel file. Maintain proper accounting records, understand your contract terms and ensure that you track the dates for renewing the leases, permits and licenses to keep your business running smoothly.

This overview is intended to give you a grand perspective of your business's start-up process. Hopefully, this will give you the knowledge to know what you need. If you'd like more help with any of these steps or with any other steps more specific to your business, then feel free to contact me.

~~ Danny Jiminian, a New York-based attorney, representing and advising clients in the areas of business law, intellectual property, sports/entertainment and non-profits. For more information, visit: www.djimlaw.com.

Disclaimer: This article is for informational purposes only and does not constitute legal advice nor create an attorney-client relationship. You are urged to seek the advice of an attorney who can provide counsel with respect to your corporate, business, labor, contract, intellectual property, taxation and other law matters.

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