5 Basic Legal Steps Entrepreneurs Should Take When Launching a New Business

Richard Banta

The knowledge and skills it takes to dream, build, and launch a startup are admirable. You had an idea, designed every aspect of it, built it exactly how you want it, and now it’s time to launch, raise money, or start selling.

What do you do next? I’ve got five steps to help you get going in the right direction when launching your new business: 

1.     Make a clear separation between you (and your assets) and your business, this will come in handy during tax time. You'll be able to write off business expenses and lower your tax bill.

2.     Setup a legal entity for your new company.  In Colorado, this will normally be a Limited Liability Company. As your business grows you can consider other types of entities. This decision is more than anything driven by tax considerations. A great breakdown of the types of business to launch can be found by clicking here.

3.     Obtain from the Internal Revenue Service a separate tax identification number for your new business - the process takes just a few minutes and can be completed here: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online

4.      Open a separate bank account in the LLC’s name and under the new tax identification number, keeping your company's money separate from your personal account. 

5.     Get everything writing. This includes vendor agreements, supplier agreements, independent contractor agreements, lease agreements, and other business agreements.  The agreements do not need to be complicated or lengthy, especially when you are just opening the doors.  If it is in writing there is less chance for problems to arise if disagreements come up.

Find an attorney with whom you are comfortable and consult with them about the specific steps set out above.  Be wary of the DIYS approach to setting up your million-dollar business.  Think your startup is the next unicorn? It's worth a small investment to get your ducks in a row before it's too late. 

Have questions? I'm always here to help. Contact me today at richardbantalaw.com!

 

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