The idea of starting a new business can be a daunting challenge for many of us looking to take the plunge into entrepreneurship. What type of business should I start? How much revenue can I conceivably bring in within the first few years? Should I take out a loan to finance my business during the start-up phase? These are all questions we may be asking ourselves as we ponder the thought of making the jump from our current jobs and lifestyle into the unknown. For many, business related backgrounds can help ease the transition seamlessly from corporate to running a day-to-day business. However, for the remaining few, preparing oneself to run an effective business beforehand can reduce the stress of starting a business from scratch.
Finding the right name to fit your vision
What are you passionate about? What do you love to do? Have you asked yourself this question? Find the right business name to fit the vision of your company. A clear and concise name for your business is what sets your brand apart from competitors in the same industry. For example, business names should not exceed five or six words. Rather, names should be short and easy to remember for customers who may have a hard time remembering the name of a business when it is time to make a purchase. In the event your business name exceeds five or six words, consider using an acronym (ex. MAC stands for Make-Up, Art, and Cosmetics) to identify your business making it easier for customers to identify.
Although the process of coming up with the right name for your business can be time consuming, take time to brainstorm all of the different possibilities of differentiating your brand. While consulting the opinions of others may not be a bad idea, brainstorming often times require some time alone jotting down every thought that comes to mind prior to making a final decision. Finally, begin the process of elimination by trimming words and phrases until the name you desire has become clear to you. You are now ready to proceed to the next step.
Name search and reservation with local Secretary of State
Before filing the necessary legal paperwork to start your company, calling your local Secretary of State to conduct a name search is simple, easy, and in some states free. When speaking with a representative, make sure the business name is spelled correctly to prevent potential name matches with companies from other industries. In the event your business name matches one or more businesses in other industries, it may be in your best interest to add or subtract a word within your name or start over with a new name altogether. If no name matches are found, proceed by reserving your business name with the Secretary of State. Fees associated with filing a name reservation with your Secretary of State’s office are relatively cheap and may range from $15 to $40 dollars depending on the state of filing. Name reservations do not last forever. Typically, reservations are limited to a specific number of days (check with your state guidelines) and the filing fee is non-refundable so get it done as quickly as possible.
Choosing the right business structure
Sole Proprietorship? General Partnership? Limited Liability Company? Corporation (S Corp or C Corp)? Which structure is best suited for the needs of your business? Carefully researching and considering the benefits of each for-profit business structure can be the difference between running a profitable brand or failing to get your company off the ground. Before coming to a final decision on what structure best suits your business, a good idea would be to ask yourself the following questions to avoid potential hassles down the road:
- Do I want the simplicity of tax filing and operating my business as a sole owner?
- Do I feel best with sharing ownership and daily business decisions with a partner?
- Should I protect my assets under an umbrella in the event my business faces litigation?
As a business owner, these are all valid questions you should ask yourself prior to filing the necessary paperwork to begin your journey as a business owner. And as we look into the different types of business structure, be aware of the advantages and disadvantages of each type. In addition, know the type of person you are as a business owner and what type of structure fits you best.
Next: Sole Proprietorship
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