If you’re choosing to venture in business and quitting your job because of the paperwork you have been buried in for the last couple of decades, you should think again because starting your own company also requires a hefty amount of forms and filing that needs to be done.
But, if your mind is set on being your own boss, prepare to be buried (again) in paperwork especially during the establishment of your company. Not only is paperwork important, it is a necessary part of building your company so there is no room laziness with legal papers in this arena.
In the very beginning of your business, the first paper you need to prepare is your business plan. Putting your ideas into a concrete business plan would increase the chances of your company to be built. This requires research and thorough analysis which can be done with the help of business management consultants who can provide you in conducting a feasibility study on your desired business venture.
After accomplishing your business plan, you should already have a business name and, at least, a tentative location where your company would be erected in. Your business name should then be registered with a state or county clerk if you decide to put up a sole proprietorship type of business. In the case of corporations, partnerships and LLCs, you should be able to register your business name after the formation papers have been filed.
Federal Registration, Licenses and Tax
Following your business name registration is the filing of your business’ federal registration. This is an important paperwork especially for big companies. In the U.S., filing of federal registrations, licenses and tax can be done by filling up the Form SS-4 which can be found in the website of the Internal Revenue Service or the IRS. This would then be filed in the nearest IRS office which has jurisdiction over the business.
Here’s a tip for sole proprietors who wish to separate their business and personal affairs: Register for an Employer Identification Number in the IRS instead of using your personal social security number.
But, if you are someone who’s okay with incorporating your business taxes with your personal finances, you’re free to do so by using your social security number when registering your company. Again, this is for sole proprietorship type of businesses only.
There is also the option of incorporating some of your personal finances to your business called the S corporation. This option would allow you to flow some of your business losses to your personal finances. To register as an S corporation, make sure to use Form 2553 which, again, can be found in the IRS website.
Local Licenses and Permits
Local permits and licenses aren’t usually a huge concern when it comes to an already operating business but those who are just planning to start may have some trouble with these kinds of paperwork if not attended to immediately. If not, then you may as well prepare yourself with back taxes especially property taxes on your company’s taxable equipment and other properties that are named under your company. It is also unwise to claim ignorance when avoiding these taxes as it may worsen your situation.
Aside from federal and local tax, you should also consider complying with the required standards of some departmental agencies like the Health Department, the Police, the Fire
Department and the Building and Safety Departments.
Most businesses that require permits from the health department involve food handling, sales and preparation. These include restaurants, food factories, and other food-related establishments
Businesses which cater huge amounts of people like schools and malls need to obtain license from the police and fire department to ensure security and fire safety standards, respectively.
Meanwhile, almost every business which require renovations and erecting of buildings require permits from the Building and Safety Department to ensure the company building’s integrity and safety.