Do you have an amazing business idea but feel overwhelmed with all the legal information online? It’s no wonder so many people don’t start their businesses because of the information that can create overwhelm, hassle, or put the fire out in our creativity.
However, starting and maintaining a legal business shouldn’t be overwhelming when you know what you need. This is why this post is one of the best guides to making sure your creative business is legal. I’m going to walk you through, step-by-step, what you need and potential situations to consider.
The first thing you need to decide is your business name. Do you want to use your personal name? Or maybe there’s a memorable name that relates really well to the product you’re wanting to create and sell?
When in doubt, keep it simple.
Once you take the time to think about your business name, you want to register for your own domain and hosting. There are free platforms to use, such as Blogger.com and WordPress.com.
Usually though, that’s for beginners. Established businesses have their own paid domain, and you should try to get one ASAP.
In case you don’t know, it stands for “doing business as”. A DBA is primarily for sole proprietors but can also be used for LLCs depending on your state. A DBA is required in order to open a bank account and receive payments in the name of your business.
Some states require a DBA to be made for the protection of your consumers, but for me, I just wanted to use a different business name that wasn’t just my first and last name. So if you do just want to use your name, you don’t have to register. Woo hoo!
Whether you’re selling a physical or digital product, you’ll need to apply for a business license in your city. This is required whether your business is subject to taxation or not within the city. I’ve seen some cities that don’t have requirements for a license, but most likely, you’ll have to in your city.
To do this, just go to your city’s website and you can either do it online or in person. Make sure you plan ahead of time. Since it’s a government building, sometimes it takes forever. (I had to wait 2 months this time around, and the last city I was in processed it the same day.)
An EIN is free and available to register from the IRS. I highly recommend get an EIN (Employer Identification Number) if you don’t want to use your social security number for everything. You’ll need an EIN when you pay anyone more than $600 from your business to report on taxes. It’s also nice to have when you’re filing out things like W-9’s for clients.
You can find out more information about how to apply for an EIN and why it’s vital to your businesses success on the IRS website here.
If you are selling products and need to collect sales tax, then you’ll need to apply for a seller’s permit. Sellers permits vary according to the state you live in. Do some research with your state’s Department of Revenue in how to get a seller’s permit in your state. I got mine online pretty instantly.
If like most entrepreneurs, you’re working from home and don’t want people knowing where you live, then sign up for a P.O. Box. That’s probably the cheapest option. UPS and other local mail services will have addresses that look like a physical address in case you don’t like the “P.O. Box” in there.
Another option is to find a local coworking space, because they also have virtual office packages. You’ll pay a monthly rate for an address, they handle your mail, and a lot of them include a certain amount of hours a month you can work there.
If not, don’t panic just yet.
Yes, you need all of these things to make your business legal, but it’s not as difficult as you might think.
As you set your business up for success by deciding on your name, registering for a DBA and EIN, securing a business license and sellers permit, and making your website legal, you’ll begin to make sure your creative business is legal.
If you have other questions, please contact a business attorney or try Legal Zoom. They will know way more than I will, especially because I’m not an attorney, but just a business owner who’s had to do all these things!
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