5 Simple Tips To Make Your Small Business Official
Starting your own business is an exciting time, but it can also be challenging and complicated.
Having a great idea is one thing. Even researching your target market and the viability of your product is easy for many entrepreneurs.
The hardest part is often where you must make the business official, cross all the legal t’s and dot the i’s.
This step is significant as it will set you up legally to start trading and give you real credibility in the eyes of the consumer.
If you’ve never done it before, making a small business official can seem daunting as there are a lot of legal elements to put in place.
This part of the process is also the least exciting, and you may need to hit the brakes for a moment while you read the fine print and ensure you’re signing the proper forms.
So, before you go live with your website or send out invites to your launch event, ensure you have covered your bases legally.
Following these five tips will ensure your business is legal and official from the very beginning.
1 – Check The Availability Of Your Business Name
The name of your business is an essential element.
This is what your entire brand identity will revolve around.
It needs to tell customers who you are and what you do without being complicated or overly wordy.
It should also be easy to pronounce and not need to be explained to a customer.
It also shouldn’t be too similar to a competitor or brand, as you don’t want confusion over who’s who.
Plus, your chosen name needs to work well with your branding and be easily incorporated into a recognisable logo.
On top of all this, the name also needs to be legally available.
If another company (even one that has nothing to do with your industry) uses the name you want and has trademarked it, you could get into big trouble.
You could be opening yourself up to a trademark infringement lawsuit.
Start by doing a quick Google search for your desired company name and see what comes up.
If nothing, move on to a business name search tool (there are many free ones on the internet) to see if there is anything in your region.
Finally, do a trademark search to ensure that your name – in any form – has not been taken already.
Once you’re happy that another entity hasn’t used your name, it’s a good idea to get in quickly and trademark the name.
Then you can go ahead and buy the URL for your website and get cracking on creating your branded marketing material.
Checking the availability of your business name is an essential step when starting an enterprise. It helps avoid conflicts and ensures your branding and marketing efforts are effective.
When you have a similar business name to others, your SEO efforts will go to waste. It’s better to thoroughly check for similar ones before planning.
2 – Create A Legal Entity
Registering your business as a legal entity is the next step.
There are several different options here, and it’s crucial to pick the right one based on the structure you’re planning for your company.
A sole trader is the most basic option suitable for freelancers or those who run their operations independently.
Then, there are a few partnership agreements – general, limited and limited liability.
These are suitable for people who want to run a business together or if you have investors who have become partners, but you are the one responsible for the day-to-day running.
The final option is to register as a company – private limited, public limited or unlimited.
In these options, the company is separate from the people who founded and ran it.
The difference between private and public is whether or not shares in the company can be traded publicly.
If you are uncertain which option is correct, it’s a good idea to get legal advice before you move forward.
Remember, if you wish to register as a company, you must fully comply with the company structure requirements in appointing directors and shareholders.
Additionally, if you’re registering a company, you must be thorough and meticulous so you don’t miss out on essential things that could impact your operations in the future. Even the tiniest detail can bear debilitating losses once they are overlooked.
3 – Get The Permits You Need
Not every type of business or every industry requires you to have permits or licences to operate.
However, you must know what you need and ensure that you have it before opening up and operating.
For the most part, physical spaces like retail stores and restaurants will need permits to trade.
You will also need health and safety permits to ensure that you are not putting staff or customers at risk.
You may also need specific insurance to cover your entity against damage or liabilities.
If you are moving products to or from another country, take the time to read up on the import and export licences that you may need.
Apply for any necessary permits in good time and do not operate without them.
You also need the policy to protect your customers if you collect their details for any reason.
With all the proper permits in place, you can opt to advertise that your business is licensed and regulated if you think this will improve your standing and add value to your brand.
4 – Talk To A Tax Practitioner
Personal and business tax is quite different, and having an expert in the field will be a significant source of assistance.
They will help you to understand the different implications that the various business types have when it comes to paying taxes.
It’s a good idea to talk to your tax practitioner before deciding which type of business you should register as.
The next step will then be to register for a tax number.
You will need to pay tax on all business profits, minus allowances in your region.
Limited companies will also need to register for and pay Corporation Tax.
There is also VAT that will need to be paid if you earn over the annual threshold for turnover.
You are responsible for keeping accurate records of all your income and expenses.
This is often best done by hiring a bookkeeper or accountant.
This way, you don’t have to learn the ins and outs of the accounting world on top of launching a brand-new enterprise, and you can rest assured that a professional is taking care of your requirements in this department.
You never know when you might be audited after submitting your tax return, and it’s best to have everything in order at all times rather than try to scramble to get your book up to date when the auditors come knocking.
If you want to hire a tax practitioner, ensure you get one qualified, preferably a CPA or an experienced one in tax planning and preparation.
Before you meet with the practitioner, gathering all the relevant documents and information you will need is a good idea. This might include financial statements, receipts, and other records that will help the practitioner understand your business.
Don’t be afraid to ask questions during the conversation because a good practitioner will be happy to explain things in a way you can understand.
5 – Open A Business Bank Account
A separate business bank account isn’t strictly necessary for sole traders or partnership agreements.
However, they’re a must for all limited companies.
They’re also highly recommended for any other entity because they help you keep your finances separate.
You can accept payments made to your business name with a dedicated business bank account.
It’s also much easier to keep track of your income and expenses as they are the only transactions coming through this account.
Even if you are a sole trader, going for a separate bank account will allow you to pay yourself a salary for personal use and use the account for all business expenses.
This will make sorting out your tax a lot simpler in the long run.
It will also give you legitimacy with customers as they will receive an invoice to pay a business rather than an individual.
This can impact how people see you professionally and improve their opinion of what you have to offer.
Having a business bank account will also make life easier if you apply for a loan or a line of credit for your company.
You won’t rely on your credit rating or banking activities to impact a reasonable interest rate or overall loan amount.
Legally Sorted And Ready To Open
By the time you are ready to open up, you should have completed the following:
- A thorough business plan
- Any funding pitches you may have needed to make
- Proper research on your target market
- The creation of a complete brand identity – including research on your company name
- Spoken to tax practitioners and business insiders on the best way to register your entity
- Ensured you have the legal permits or licences required
- Opened a business bank account and hired a professional bookkeeper or accountant
Once you have completed these steps and made sure that you understand their implications in full, your business will indeed be ready to open.
Now comes the fun part of boosting your brand awareness and marketing your operation to bring customers in through the door.
With all the official documents signed and sealed, you can confidently focus on getting off the ground and establishing yourself in the marketplace.