A neighbor had been talking about starting a business for at least six months. Whenever I saw him, that’s all he talked about. Eventually, I got tired of it.
“What the heck are you waiting for?” I finally asked.
It turns out, he thought the process of starting a business was really complicated. “I don’t want to go through all that stuff,” he said, “unless I’m absolutely sure my idea is perfect.” Like a lot of would-be entrepreneurs, he was stalling because he was intimidated by the apparent complexity of the administrative and legal tasks involved in starting a business.
So I bet him lunch that we could take care of all that in less than three hours.
Keep in mind, I’m only talking about setting yourself up to do business: I’m not talking about writing a business plan (although if that’s what you want to do, here’s a comprehensive guide to writing a business plan, sourcing financing, developing a marketing plan, etc.
The goal is to get off square one and get on to the fun stuff.
1. Get over the company-name thing.
Many people agonize endlessly over dreaming up the perfect company name. Don’t. If you’re waiting until you come up with the perfect name, you’re also waiting to start making money.
Instead, at least for now, forget branding and unique selling propositions and all the business-identity stuff. And don’t worry about finding the perfect URL or website design or promotional literature. You’re putting those carts way before your business horse, too.
Just pick a name so you can get the administrative ball rolling.
Remember, your business can operate under a different name than your company name. (A “doing business as” form takes minutes to complete.) And you can change your company name later, if you like.
2. Get your Employer Identification number (EIN).
An EIN is the federal tax number used to identify your business. You don’t need an EIN unless you will have employees or plan to form a partnership, LLC, or corporation.
But even if you don’t need an EIN, get one anyway: It’s free, takes minutes, and you can keep your Social Security number private and reduce the chance of identity theft, because if you don’t have an EIN, your SSN identifies your business for tax purposes.
Note: If you’re using an online legal service to set up an LLC or corporation, don’t use it to get your EIN. Instead, apply online at the IRS website. You’ll have your EIN in minutes.
Now it’s time to head to your locality’s administrative offices.
3. Register your trade name.
If you won’t operate under your own name, your locality may require you to register a trade name. In most cases, you’ll get approved on the spot.
4. Get your business license.
Your county or city will require a business license. The form takes minutes to fill out. Use your EIN instead of your Social Security number to identify your business (for privacy reasons if nothing else).