THE SIX THINGS YOU NEED TO LEGITIMIZE YOUR BUSINESS
In today’s society, almost everyone wants to be an entrepreneur and the term is used so loosely. While yes, anyone can start a business — from the kid on the corner selling lemonade to the guy selling clothing and electronics at the barbershop, to the savvy business owners you see online with multiple courses — it takes time, endurance, patience, and much paperwork to sustain the business.
The world of entrepreneurship can be quite tricky at times, while some only start their “side hustle” for a quick buck, most are in it for the long haul. Starting a business seems simple right? All you need is a product and/or service?! At a high-level overview, entrepreneurship sounds fun, exciting, and easy, but if you are serious about being in business, you want to be sure you have everything in place to legitimize your business.
HERE ARE SIX ESSENTIALS TO LEGITIMIZE YOUR BUSINESS:
An EIN or Employer Identification Number is a 9-digit number (similar to a social security number) which identifies a business and is issued by the IRS. Obtaining an EIN is absolutely free of charge, and the process can be completed via the IRS website.
BUSINESS BANK ACCOUNT
Commingling your personal monies and revenue/expenses from your business is a major NO-NO. One of the first things you should do is separate your banking in order to accurately track your business income and expenses. In order to open a business bank account, you may be asked for your business registration, EIN, business address, etc.
As a business owner, you want to establish a business address which is NOT your home address. If you do not have a physical business location, a suggestion would be to use a P.O. BOX which offers a street address option or a mail service/virtual office address option. Once you register your business, business information is public information, which is why you do not want your home address on record
A BUSINESS PLAN
A business plan is the roadmap for your business, if you do not have one when starting out, it’s never too late to sit down with a business consultant and plan the future for your business. A business plan maps out where your business is going, how much money you will need to move to the next step, strategizing on your marketing, competition, etc.
REGISTER YOUR BUSINESS
Whether you are a sole proprietorship, L.L.C., S-Corp, etc., you have to register your business. As a sole proprietor, you will register with your local county office and file your DBA certificate. If you filed your EIN as a L.L.C., S-Corp, or nonprofit, you will register your business with your secretary of state.
ESTABLISH BUSINESS CREDIT
As a new entrepreneur, this may be the hardest thing to do. If you are a sole proprietorship, you will only be able to open credit under your personal credit. If you established your business as an L.L.C or S-Corp, you can start a separate business profile with your EIN. You can start building business credit by opening Net 30/60/90 accounts with vendors, in which they will allow you to order supplies for your business and pay within the 30-90-day period, while reporting your payment history to the business side of the credit bureau. Once you have a steady payment history, you may try to apply for loans and credit cards for your business.