How to break through the red tape and start your own business
You have a great business idea. You have the money and motivation. You are ready to start your own business.
What are the legal and registration requirements to get started?
Step 1: Decide on the type of business structure
Deciding on your organization’s structure is key to formulating your business before you do anything else if for no other reason than that it is required on all of the other forms you must complete. Your small business structure choices include being a sole proprietorship, partnership, limited liability company (LLC) or corporation. Today’s go-to answer is probably to organize as an LLC or a Sub Chapter S Corporation, a special form of corporation. Both offer some protection against personal liabilities from your business operations. In addition, your business structure determines how you are paid as an owner. This decision may best be made with an attorney and accountant.
Step 2: Register your business name
Of course, first you have to pick a business name. This can be tricky and complicated. Make sure you explore all the potential implications of your selection. Then, check to see if someone else owns the business name by researching if the name is trademarked. Register your business name with the Missouri Secretary of State’s office, too. For sole proprietors and partnerships, you must file a fictitious name registration. For LLCs and corporations, the business name is typically registered when the formation paperwork is completed and filed.
Although separate from the legal registration process above, you will still want to research what website names are available for your new business. Website name availability, called domains, can be acquired through several sites. GoDaddy.com is one of the most popular.
Step 3: Determine your taxes, license and other requirements
You will have to pay personal taxes, both federal and state, on any salary or profits you receive from your business. If you have employees, each individual must complete an IRS form W-4, Missouri form W-4 and an I-9 to verify employment eligibility. Additionally, you will need to withhold both federal and state taxes and match their FICA (Social Security and Medicare) contributions. You will further be liable for federal and state unemployment taxes. Many small businesses use QuickBooks accounting software to make these calculations and track payments.
There is no general state business license, although some types of businesses in Missouri require state authorization, such as a license to sell liquor. Business license requirements vary from city to county. Check with the city or county government in which you operate.
If you sell a product rather than a service, you will need a Missouri sales or use a tax number from the Missouri Department of Revenue.
The state of Missouri also requires any company with five employees or more to carry workers’ compensation insurance, unless the company is in construction. Construction industry companies are required to carry workers’ compensation insurance when they have one or more employees.
Make sure you understand the new regulations surrounding the Affordable Care Act (ACA), too. Generally, any business with fewer than 25 employees is not required to offer healthcare insurance, but may be eligible for tax credits if they choose to offer coverage. Get more information on the ACA.
Step 4: Get a federal employer identification number (EIN)
You only need an EIN if you have employees or business partners or are forming an LLC or corporation. That being said, your bank may require that you have one to open a business account. If you have employees, you will also need a Missouri employer withholding tax number to deposit your employees’ state income tax withholdings.
Deciding to start your own small business can be one of the most exciting and rewarding decisions you will ever make. But legal and registration requirements are inevitable. Knowing what is officially required is one of your first steps to being a successful small business owner.
Check out MissouriBusiness.net for additional information, forms, publications and where and how to get assistance for your new business.– Contributed by Rayanna Anderson, entrepreneurship coordinator and community liaison for MSU’s College of Business and former director of the MSU SBTDC. Anderson writes about issues she regularly sees consulting with small businesses in Springfield and in the state of Missouri.
This article first appeared in the Springfield News-Leader and News-Leader.com. Used with permission.
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