There are many things that need to be accomplished in order to start a business correctly. It can be very confusing if you have never done it before and some items can easily be forgotten. Often, these items resurface in the future and cause trouble for you.

Please note: this article is not professional legal or accounting advice. I, therefore, highly recommended that you consult with an attorney and accountant to ensure you are following all of the requirements for your state, county and city.

Below is a summary of mandatory items that must be accomplished, plus a secondary list of suggested items to complete.

First Things First

  • Choose a name for your business:
    • Before selecting and finalizing your business name, it is HIGHLY recommended that you spend some time on Facebook and Google searching for that particular business name to see if it already exists. If it exists in another state you can still use it, although, I would recommend that you do not. However, if the business name is already being used in the state that you are operating in, then you should choose another name.
  • Choose and purchase a domain name for your business:
    • You might be surprised that this is listed so early in the process. Here is the reason: I always suggest that finding your future website domain should be part of choosing a business name. It ensures that you have an easy-to- remember domain name and that no one else takes it. If you do not have marketing knowledge, here is an excellent article to read before choosing your domain:https://websitesetup.org/choose-domain-name/

      Although there are several domain name-purchasing services you can use, I always use www.godaddy.com. I do not purchase any of the extra add-ons they offer and have never had a problem. It will cost you about $15 per year. I suggest you set it up on auto-renewal.
  • Appoint a registered agent for the business:
    • You will need to do this before you go online to register your business. This is the person who will receive any correspondence regarding the entity and who can officially submit documentation to the Secretary of State to update the business records. It is, also, whose name will be listed in government records as associated with the business entity. It does NOT affect tax status or who is responsible for claiming the business income on their taxes. Think of it as the point of contact for the business. If there is any reason that you would not want your name to readily show up with this business, finding someone else (e.g., your attorney) to use as the registered agent helps ensure this does not happen. For most people, this will not be a big deal and you can list yourself.
  • Choose a proper business entity:
    • There are many business entity types that you can use when forming your business. They all are treated differently for tax purposes and offer the owner-- you, different levels of protection. In order to have the government honor those levels of protection, called the corporate veil, there are different requirements of the business based on the different business entity type chosen.

      Many people push forward with a Limited Liability Corporation structure without ever consulting an accountant. This may be alright if you are pinching pennies. But, if you do, then set a reminder for yourself to consult with your accountant within about nine months. There are certain abilities of changing how your entity is taxed that terminate after one year of formation. You will certainly want an accountant’s advice before you lose that ability. Ultimately, the best thing to do is to consult with an accountant before setting up the entity.
  • Register your business with the state that you are operating in and receive your Articles of Organization. (This step actually forms your new business.):
    • In the state of Tennessee, when you have completed registering your business through the website, you are provided with the Articles of Organization of your business. Admittedly, I am not positive that every state creates Articles of Organization and delivers them to you through the registration process of your entity.

      If you are required to provide your own Articles of Organization during the process, then you will want to consult with an attorney and have the attorney draw up Articles of Organization for your company prior to starting the online registration process.

      Regardless, you should be able to find where to register your business with your state’s Secretary of State website by searching Google with: “How to register a new business in [STATE]”. You should find a helpful link to the appropriate place to register your business.
  • Register your business with the federal government and receive your Employer Identification Number (EIN):
  • Register with the county that your business is located within to secure your Resellers Sales and Use Tax Permit:
    • This permit is what allows you to collect and remit sales tax on your sales to the local government. Many people try to conduct business without getting one of these permits. You probably can operate for a short term while you are small and getting started, but you will not be able to grow to much size without it. Also, you are running a risk by doing so. If you get audited, the government can hold you liable for all unpaid sales tax in the past. This can add up to be a significant amount over a year.

      If you plan on selling out of state, for every state in which you exceed the economic threshold, you are required to file and pay sales tax to those states as well. Be sure to seek proper professional advice to ensure you are not in violation.

      Also, understand that just because you may have paid sales tax when you purchased the product from your supplier, if you resell the item, you are required to collect sales tax and remit that to the local county government. You are not relieved of the sales tax obligation.

      Lastly, without one of these permits, many of the larger, more legitimate sellers will not sell to you. For example, my company BuyLow Warehouse, only sells to resellers that have a Resellers Sales & Use Tax Certificate. This ensures we are never found to owe thousands of dollars in unpaid sales and use taxes and ensures we do not have to report sales tax to each state and county that we sell into.

      For a more in-depth look at Reselling permits, check out our other articles:
      Article 1 Link
      Article 2 Link
  • Check with your state’s Department of Revenue to see if you need to register for anything else:
    • Most likely you will have a couple of other things to register for. For example; in Tennessee, I have to also register for “Business Tax” and “Franchise and Excise Tax.”

      Simply perform a Google search for: “How to set up a business in [STATE].” You should find a website that explains this for you.
  • Set up a business checking account:
    • Once everything above is completed, you are prepared to set up a business checking account. You will need to bring much of the above documentation with you. You may want to call your bank to verify which information you will need to bring.
  • If selling in online marketplaces (eBay, Amazon, Shopify, etc), set up your accounts with each marketplace, plus the accounts with online payment methods you will use to collect money (Paypal, ApplePay, Credit Card Processor, etc)

  • Set up a business credit or debit card:
    • If using a debit card, set up a second business checking account and have the debit card attached to that account. Transfer money into the second account when the debit card needs to be used. Never attach a debit card to your primary business checking account. If the card gets stolen and the money withdrawn, you could be out of business before you get your money back! It is not worth the risk.

      If you are going to set up a business credit card, make sure to get one with proper reward benefits. I recommend a specific card because you get 3x points on shipping charges. If you want to know which card, send me a message and I will send you a referral link.

Getting your business entity set up properly is important, but there are a few additional things that, although not required by the federal government, are highly suggested to make your life easier and organized. I have listed out many of these items below. Do not consider this an exhaustive list, but simply a list to help you get started.

Additional Suggestions

  • Create an Operating Agreement if you set up an LLC:
    • An operating agreement is a key document used by LLCs because it outlines the business' financial and functional decisions including rules, regulations and provisions. The purpose of the document is to govern the internal operations of the business in a way that suits the specific needs of the business owners. It is not a mandatory document, but is highly recommended.

      If you search Google for examples of this type of document, you will find many examples to help you create one. The Operating Agreement can be edited in the future if needed.

      The Operating Agreement is a very powerful document that helps protect your personal interests from liability depending upon how you write it.

      Explanation article on Operating Agreements:
      https://www.sba.gov/blog/basic-information-about-operating-agreements#:~:text=An%20operating%20agreement%20is%20a,needs%20of%20the%20business%20owners.
  • Create a basic template for recording and documenting meeting minutes for any time a major decision is made for the company:
    • At the very least, this should be completed annually. The template does not have to be anything special, but as described with the Operating Agreement, it helps establish a corporate veil and ensures that in a lawsuit against your company, the company has been managed properly to prevent your personal liability.

      Explanation article on Meeting Minutes:
      https://smallbusiness.chron.com/keep-minutes-single-member-llc-63260.html
  • Set up an accounting software to track your sales:
    • For a small monthly cost, you have the ability to keep track of all of your customers, customer forms, sales, vendors and accounts payable. You can use the accounting software for keeping up with as much or as little as you like.

      When we were pallet selling, we simply used a carbon copy generic receipt book that, at the end of the day, we would enter all of the daily sales into Quickbooks Online so that we could keep a record of our sales.

      In addition, come tax time, your accountant can log directly into your accounting software account to ensure your end-of-year is closed out properly. As an added bonus, if you need to borrow any money from a bank, having professional and organized financials to show are key.
  • Keep customer files for each customer:
    • The files should include any new customer onboarding agreements, reseller agreements, and copies of your customers Resellers Sales Tax Permit at a minimum. By collecting your customers Resellers Sales Tax Permit, you relieve your business of the obligation to collect and remit sales tax on any purchases made by that customer. The good news: if you have an accounting software, this can easily be done through most accounting softwares that allow you to upload and save a file to a customer’s account.
  • Wire payment instructions:
    • If you will be receiving wire payments, set up your wiring instructions on a single page of paper that accommodates all forms of wiring (international, domestic and ACH) so that you can send one sheet whenever needed to whomever is trying to pay you. Cash flow is extremely important in this business and you do not need to be the cause of delays in receiving your money.

      If using accounting software, it is recommended that you add these instructions to the standard invoice template so that the instructions are on every invoice.
  • Fill out and save a signed W-9 form in a digital version:
    • Being a new business, you will be setting up new accounts with vendors/customers regularly. Go ahead and create a filled out W-9 form and save it in a digital format so that you can easily send it whenever needed. This is a nice time saver.
  • Find and hire (as needed) an accountant, bookkeeper, insurance agent and payroll company:
    • Understand that many of these can be hired on a fractional or part-time basis to begin to free up your time to work on more important aspects of your business.
  • Other actions to add structure to your business:
    • Create a logo and color scheme for your business
      • Look professional.
    • Add company direction by defining
      • Core values
      • Mission statement
      • Annual, quarterly & weekly goals
      • Operating meeting schedule
        • This needs to occur at a defined and standard day and time. It also needs to have a consistent format that will be followed.

          If you are a single member, you may think this is crazy, but I have found it to be some of the most important time that I, and eventually our team, spends every week to reset and focus on the business’s next steps.
    • Set up profile pages for your business in all social media sites (Facebook, YouTube, Linkedin, Instagram, Snapchat, etc)

On-going Responsibilities

Some of the suggested items on the above “To Do” list will require on-going actions that you do not need to forget about doing. I would be remiss to not mention these.
  • File your annual/quarterly business taxes:
    • Depending on the revenue you do, you may be required to file quarterly business taxes. Check with your accountant on this.
  • Report your monthly sales taxes collected and remit:
    • You can do this yourself, but you can also use a bookkeeper or accountant. If you are using accounting software, make sure you are recording this for every sale so at the end of the month, you can easily pull exactly what you owe.
  • Annually, hold a meeting with all of the members of the entity and discuss any big changes/decisions that are proposed for the coming year. Record these in annual meeting minutes.
The above list looks more daunting than it really is. You should be able to accomplish all of this within a couple of days of dedicated focus. If you don’t have a lot of time to spare and you are willing to spend a few hundred dollars to get everything done for you, I would go to a service like LegalZoom where you can find an attorney who is willing to fill everything out and submit everything for you to ensure you are set up properly. Just understand that for the small price that you are paying for this service, your Operating Agreement and your Articles of Organization will be very generic. They will certainly get the job done, but if your business grows into a larger enterprise, you will want to have your attorney review and update your Operating Agreement to offer you more protection at that point.

If you do choose to spend the time setting this up yourself, I would recommend searching on Google: “How to set up a business in [STATE]”. Replace [STATE] with the state name that you will be conducting business. Once you do, you will generally find some helpful articles that, combined with this guide, should help you get everything set up properly.

One last bit of advice is to note that you will be receiving a large amount of paperwork, usernames and passwords when establishing everything above. This paperwork and login information is important to keep and file so that you can reference it in the future. Without it, you will waste hours trying to find it when you need it. Make sure to have a designated place to file this information. Make it a habit to file all of this paperwork as soon as you receive it and record the log-in information in a specific spot. You will thank yourself for doing so.

As you get started, if you have any questions, please do not hesitate to ask. We are happy to help!