Example: LLC for Megan’s Startup

• • Chose an LLC for personal liability protection.
  • Planning to add partners later, LLC will facilitate ownership changes.

Tips for Choosing a Structure:

• • Consult lawyers and accountants to determine optimal structure.
  • Consider future goals and plans beyond the startup phase.
  • Research options fully before deciding; changing structure later could get complicated.

Frequently Asked Questions:

• • What are the main business structures? Common options include sole proprietorship, partnership, LLC, and corporation.
  • What are the tax implications? Pass-through taxation for LLCs/partnerships; corporate taxation for corporations.
  • Can I change structure later on? Yes, but it could involve complex legal and tax processes.

Example: Megan’s Yoga Studio Name & Domain

• • Searched and registered “Zen Yoga Studio” business name in her state.
  • Purchased zenystudio.com domain name.

Tips for Registering a Business Name:

• • Research thoroughly to ensure your name doesn’t infringe on trademarks.
  • Consider filing for a federal trademark for additional protection.
  • Renew name registration periodically as required by state.

Frequently Asked Questions:

• • Do I have to register my business name? Legally required in most states for legal protections.
  • What happens if I don’t register a domain? Risk another business registering your preferred domain name.
  • Can I do business under a name without registering? In most states you need to register fictitious or “DBA” names.

Example: Licensing Megan’s Yoga Studio

• • Obtained state business license and city permit to operate.
  • Applied for instructors’ yoga teaching certifications.
  • Will renew licenses annually as needed.

Tips for Handling Licensing:

• • Allow sufficient lead time for license approvals, which can take weeks or months.
  • Post approved licenses prominently on premises as usually required.
  • Keep thorough records of application forms, approvals, renewal dates, etc.

Frequently Asked Questions:

• • What happens if I operate without licenses? Fines, shutdowns, and other penalties depending on location.
  • Do online businesses require licensing? Usually yes, depending on business activities and local laws.
  • Can I sell products immediately after obtaining licenses? Ensure all pre-operational inspections and approvals first.

Example: Obtaining EIN for Megan’s Yoga Studio

• • Submitted SS-4 online and received EIN same day.
  • Will use EIN on studio’s business bank account and tax forms.

Tips for Getting an EIN:

• • Apply early in the business formation process for prompt tax filing.
  • Save confirmation notice from IRS in important business records.
  • Set up accounting system to track use of EIN from outset.

Frequently Asked Questions:

• • Can I apply for an EIN as a sole proprietor? Yes, sole proprietors need to obtain an EIN for tax purposes.
  • What if my business structure changes? The EIN stays the same regardless of structure changes.
  • Is there a fee to obtain an EIN? No, applying and receiving an EIN is free.

Example: Megan’s Yoga Studio Business Account

• • Opened LLC business account with new EIN.
  • Using integrated accounting software and payment processing.

Tips for Opening a Business Bank Account:

• • Come prepared with required documents like EIN, business licenses, owner IDs, etc.
  • Review options to link payroll, accounting, credit card processing, etc.
  • Select features like mobile banking, wire transfers, remote check deposit, etc.

Frequently Asked Questions:

• • What banks are best for small businesses? Top picks include major national banks as well as local credit unions and community banks.
  • Should I open multiple accounts? Can be beneficial to separate funds for taxes, payroll, operating expenses, etc.
  • What is the easiest way to open a business bank account? Online applications offer a fast and convenient application process.

Example: Megan’s Accounting Setup

• • Using QuickBooks Online to manage studio finances.
  • Synced QuickBooks to business bank account and credit card.

Accounting Tips for New Businesses:

• • Implement processes early to establish good financial practices.
  • Track income and expenses separately for each business activity.
  • Consult an accountant to ensure proper setup for taxes and filings.

Frequently Asked Questions:

• • What basic accounting records are needed? Income statements, balance sheets, cash flow statements, tax documents, etc.
  • What are the top small business accounting tools? QuickBooks Online, Xero, FreshBooks, Wave, etc.
    
  • How much does accounting software cost? Starts around $10/month for basic packages.

Example: Megan’s Insurance Coverage

• • Obtained general liability insurance for the yoga studio.
  • Has professional liability insurance for instructors.

Insurance Tips for New Businesses:

• • Work with insurance agents/brokers to determine optimal coverage.
  • Compare plans from multiple providers to get the best rates.
  • Review policies annually and adjust coverages accordingly.

Frequently Asked Questions:

• • What basic insurance should every business have? General liability and property insurance at minimum.
  • How much does general business insurance cost? Can range from $500 – $2000+ annually depending on coverage.
  • Can I operate without insurance initially? Not recommended due to risks; consider minimum basic policies.

Example: Megan’s Employment Policies

• • Has employee handbook covering studio policies and guidelines.
  • Regularly consults counsel on HR compliance matters.

Tips for HR Compliance:

• • Retain experienced employment law counsel to ensure legal compliance.
  • Conduct regular training on harassment, diversity, safety procedures, etc.
  • Maintain detailed documentation on hires, pay, performance issues, terminations, etc.

Frequently Asked Questions:

• • What are the penalties and risks of non-compliance? Lawsuits, government audits, fines, criminal charges, reputation damage.
  • What HR records must be retained? Form I-9, tax forms, leave documents, payroll records, background checks, etc.
  • How often do employment laws change? Routinely, requiring diligent monitoring of legal developments.

Example: Protecting Megan’s Brand

• • Registered trademarks for name, logo, and tagline.
  • Uses copyrights for class materials and videos.

IP Protection Tips:

• • Consult IP attorneys to identify all intellectual property to protect.
  • Implement non-disclosure agreements with employees and partners.
  • Proactively monitor for infringement and take prompt legal action if needed.

Frequently Asked Questions:

• • How long does IP protection last? Trademarks can last indefinitely if renewed; copyrights last 70+ years; patents last 15-20 years.
  • What are the penalties for infringement? Injunctions, seizures, lost profits, statutory damages up to $150k per infringement.
  • Should I register IP internationally? Recommended for global brands and companies selling overseas.

Example: Megan’s Formation Docs

• • Has comprehensive LLC Operating Agreement.
  • Also maintains employee and instructor agreements.

Tips for Formation Documents:

• • Engage a business lawyer to draft customized agreements.
  • Carefully review all terms and conditions before signing.
  • Update periodically as the business evolves.

Frequently Asked Questions:

• • What documents are required for starting a business? Depends on structure – LLC Agreement, Bylaws, Partnership Agreement, etc.
  • Should I have an attorney review formation docs? Highly recommended to ensure documents comply with all applicable laws and regulations.
  • What terms should be outlined in an Agreement? Ownership, contributions, decision making, profit/loss distribution, buyout terms, dissolution, etc.