How to Make Your Business Legit: Everything You Need to Know
Do you know how to make your business legit? It is essential to understand the processes involved in giving your business a legitimate status under the law.3 min read
Do you know how to make your business legit? When starting a business, it is essential to understand the processes involved in giving your business a legitimate status under the law.
The following are vital steps you should take to make your business legitimate.
Choose a Business Name
Your business name is a vital part of your enterprise and must be given careful consideration. It has to be unique, memorable, and legally available. While it is legally permissible to use a name similar to that of other businesses, be sure that you are not infringing on any trademarks. Using a business name that is similar to that of another enterprise in your area can confuse customers. Double check social media profiles and domain names, Google your potential business name, and perform trademarks searches before choosing a particular business name to avoid potential trademark infringement lawsuits.
Choose a Business Address
You can use your home address for your business, but you can also list another address if you do not want your home address to become public information. Whatever you do, make sure to choose an address where you can send and receive official correspondences, such as tax returns.
Get a Business Phone Number
Your business needs an official telephone line through which clients and suppliers can reach you during working hours. You can hire an answering service, sign up for a virtual business telephone service, or use Google Voice assistant.
Choose a Business Structure
While a sole proprietorship is flexible and gives you total control of your enterprise, the risk is also higher. Entities such as an LLC or S corporation provide tax benefits and make raising capital easier.
Register Your Business
Most states require new businesses to register with the Secretary of State. The process requires listing a registered agent who will act as an intermediary between your company and the state.
Licenses and Permits
The license and permits you need depend on the purpose of your business and the location. If you are offering professional services, you need to obtain licenses and permits from the relevant regulatory agencies.
You may also require a sales tax license and health department inspection depending on your business. If you are sure about the requirements, consult your local Small Business Development Center (SBDC), or ask your accountant or lawyer for advice. Relevant information about permits may also be available on the website of your state of incorporation's secretary of state.
Apply for Employer Identification Number (EIN) from the IRS
An EIN, also called Federal Employer Identification Number is the business equivalent of the Social Security Number. The IRS requires businesses to obtain an EIN before they can become a legal entity. You can apply for EIN via the following methods:
- IRS website.
- Phone.
- Mail.
Open a Business Bank Account
For tax reasons and personal liability, it is advisable to separate your personal income from business income if your enterprise is incorporated. Open a dedicated business account for business transactions. Note that you will need an EIN to open a business bank account.
Business Credit Card
You may want to get a business credit card for business purchases. Getting a business credit card makes it easier to identify business purchases for tax calculations.
Business Books
Prepare your financials and start recording business income and expenses. If you do not have any experience in this area, you can hire an accountant or bookkeeper. You can also learn basic bookkeeping online or at your SBDC.
Obtain a D-U-N-S Number
Your D-U-N-S number is your business identity in the Dun & Bradstreet commercial credit database. Obtaining this number is free.
Establish Business Credit
You can establish a business credit history by obtaining credit under your business name. To do this, open accounts with businesses that allow you to buy items on a net-30 basis and report the payments to credit agencies such as Dun & Bradstreet, Experian, and other agencies that report business credits. You build a good business credit score this way by making business purchases and completing payment within 30 days.
Create a Website
It is essential to have at least a basic website to display your business and contact details to prospective clients. You may need a more comprehensive and sophisticated site if you operate an online business.
Register With Online Services
To give your business an online presence, you should consider opening social media accounts and Google accounts as well as registering with relevant review sites such as Yelp and Yellowpages.
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