9 Steps How to Start a Company or a Small Business

1. Pick a Name for Your New Business

   Descriptive names, such as "Finest Coffee and Tea Shop" tell the customers what products or services your business offers, may entice customers, and will make your business easier to find if its website domain name also contains these keywords. However, if you would like to later apply for a Federal Trademark (®), a merely descriptive name will most likely be rejected, and unique names are favored for trademark registration, such as "Nike". It is usually not necessary to have a registered trademark, but a trademark facilitates legal recourse against copy-cat competitors who might try to pass off their product as your brand. Your choice of the name will depend on what names are available. Before you start anything, check all of these for name availability:

   • Website Domain Name Availability - also check similar names. Avoid names for which .com .org domains are taken because someone who remembers your business name but not the URL, is likely to try visiting .com version first. Some people also consider other domain endings as sub par (.us, .biz, etc).
   • TESS database of registered trademarks - Generally don't pick a name that is the same or very similar to another trademark. However, if someone else's trademark is in a different product/service category, there is a chance that you may still be able to use it in your product category. Consult trademark documentation.
   • Your State's online database of businesses - Search "New York Entity Search" or similar for your state. It's usually best to form the business in the state where it will have workers, offices, or perform work, otherwise you not be protected by limited liability, or you may have to pay extra fees to Foreign-File your business in your state.
   • Check if the business name that you are considering has an undesirable meaning in foreign language(s) that some of your customers may speak. For example, Google "Your-Company-Name Spanish"

2. Register a Website Domain for your Company

   Do this before you register your business with the state or incorporate, because crooks tend to monitor states' online list of newly formed businesses, and will try to steal the corresponding domain name, with the intent of re-selling it back to you for a much higher price. Normally, a domain name should cost about $10. Majority of businesses will need a website.

   • Get Website Domain Name.
   • Get a Hosting Account.

3. Choose LLC (Limited Liability Company), Corporation, or other

   Understand that there are 2 different concepts that are often confused: Legal Entity and Taxation Status.

   1. Legal Entity - Terminology such as: Limited Liability Company (LLC) vs. Corporation vs. Sole Proprietorship vs. Partnership. Note that S-Corp is not considered a Legal Entity, but rather a Taxation status, which is explained below.
      • Sole Proprietorship:
        • Cons: you are personally liable for your businesses' liabilities.
        • Pros: filing DBA (Doing business as) is often less expensive than forming LLC or Corporation.
      • Corporation:
        • Offers liability protection to its owners.
        • Owners are called Stockholders or Shareholders.
        • Generally more formalities, such as annual shareholder meetings, usually require corporate officer(s) such as CEO or President.
        • Bylaws: Articles of Incorporation.
      • Limited Liability Company (LLC):
        • Offers liability protection to its owners.
        • Owners are called Members.
        • Generally fewer formalities.
        • Bylaws: Operating Agreement.
      • Special Cases:
        • Several states have "Professional" variants of LLC and Corporation, abbreviated PLLC and PC. These only apply to businesses conducting activities for which an individual person needs to have a state license, such as physicians or attorneys forming a business to conduct their profession. If applicable, some states require PLLC/PC instead of LLC/Corp, while other states make it optional. Check your state regulations.
        • Series LLC
          • Pros: this allows you to form multiple separate companies, each having its own separate protection from liability of the activities of the other companies in the series. For example, if you own 2 stores, and own a rental property, you could form a Series LLC containing 3 components: "XYZ store of Wilmington", "XYZ store of New Castle", "Finest Rental Properties", and assign operations and assets into these separate cells. If one of these components incurs a liability, the other components would be protected. A new business can be easily added to the series, in most states by amending the operating agreement rather than filing with the state.
          • Cons: if you are engaging in a business in a state that does not recognize Series LLC, a court in that state could consider all components of the entire series as one single entity, therefore eliminating the liability protection barrier between components.
          • Available only in several states: Alabama, Delaware, District of Columbia, Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Montana, Nevada, North Dakota, Oklahoma, Tennessee, Texas, Utah, Wisconsin, Puerto Rico
   2. Taxation Status - Terminology such as: S-corporation, C-corporation, disregarded entity, partnership, pass-through. Your business can request to be taxed by the IRS and state as one of the these. However, some Legal Entities such as LLC are more flexible and can choose one among several the taxation statuses; an LLC can be taxed as s-corp, c-corp, disregarded entity, partnership. Other Legal entities may not be eligible to chose some of the taxation statuses.

   Legal Entity	Liability Protection	Taxation Status
   		Disregarded Entity	Partnership	S-Corp	C-Corp
   		Single Owner	2 or more owners	1 - 75 Owners Owners must be citizens or USA residents Owners can't be Companies, except if Q-Sub	Double-Taxation No restrictions on number or type of owners
   Sole Proprietorship	✘	✓	✘	✘	✘
   Partnership	✘	✘	✓	✘	✘
   LLC	✓	✓	✓	✓	✓
   Corporation	✓	✘	✘	✓	✓

   Table explaining Steps needed How to Start a Company, LLC vs. S-Corp, vs. PLLC vs. PC vs. Taxation Status.

4. File Your Company with the State

   Generally it is best to register in the state in which the company will have its office, or where it will operate. The cheapest option is to directly file with the state, and it is not difficult. Search for "New York State incorporate", or similar for your state to find the state governement website. Multiple companies exist that will charge you additional fee to file with the state.
   

5. Get a Corporate Kit with Documents

   Consider fastkit.com for a good, inexpensive kit for any state. This will have many useful templates, such as LLC Operating Agreement, or Articles of Corporation, Stock Certificates, and similar.

6. Obtain EIN (Employer Identification Number)

   EIN number is recommended. It will be needed to open bank accounts or hire workers.

   • Get EIN Number Online.
   • EIN Paper Application.

7. Choose Taxation Status

   If you would like your Business to be taxed as S-Corporation, file Form-2553

8. Open a Bank Account for your LLC, S-Corp, C-Corp, or Proprietorship

   You will need the EIN number from a prior step. For a Corporation, you will need Articles of Incorporation. For LLC, you will need Operating Agreement.

9. Consider Finding a Partner, or Getting Funding

   A good partner can help you with any of the following:

   • Shoulder some of the start-up expenses that may be needed to build your business, lease workspace, buy properties, hire workers, and to advertise. You generally don't have to pay back partners or business co-owners, other than sharing the ownership of the company with them, and sharing any future profits with them. By becoming a co-owner, they take on the risks of the business failing or losing money.
   • Partners can bring their own skills and expertise which you may not have. They can also utilize their existing business for mutually beneficial arrangement. For example, a partner may have experience or an existing business that has a database of customers who are likely to also be interested in your products.
   • Partners can provide another set of hands to help in the business.
   • Offering someone a share of your company in exchange for services can decrease your costs, and decrease your investement risks, but you will have to share the subsequent profits with them.
   • A loan from a bank or another person is another option, but you will likely have to personally guarantee that you will pay it back. If the new business fails, you will still have to pay back that money.
   • Funding or partners can help you grow the business quicker, or to a larger scale. With funding, you can receive a salary for the effort that you put in, even if the business ends up failing in the end.

   
   Please email us at inquiry_4dce8c0d@how-to-start-a-company.com if you would like us to become your business partner. Please explain your business plan, and what contribution from us you are hoping to obtain. We are predominantly interested in good investement options which would benefit from our guidance and synergy with our other businesses.