Business Technicalities You Need to Learn About Before Starting a Company

Starting and running a business so that one can be their own boss is certainly "the dream" for a lot of people. And while it can sometimes look easy on the outside, owning a company does come with a lot of details and technicalities.

That's why it's important to do proper research first before venturing out in the business world. Make yourself aware of the different options that you have, read up on the latest policies, and consult legal or financial professionals if you have to.

In order to get you started, below are a few basic business technicalities that you need to be aware of before building your company:

Business structure

First things first. Decide on the type of structure that your company will have. Will it be a sole proprietorship? Are you entering a partnership? Or will you be establishing a Limited Liability Company or Corporation? Each type of business has its own benefits and disadvantages, and the type of business that you decide to set up will depend on what you're selling, the size of your company, and more.

For instance, if you're starting a graphic design business that's owned, operated, and run by you, then a sole proprietorship may be the option. This is the simplest type of business and it's the easiest one to set up. The downside of a sole proprietorship though is that it doesn't protect you from personal liability. In other words, in the event that a lawsuit takes place, or if your business defaults on its debts, creditors will have the right to go after your personal assets (such as your house).

This is where the other business structures come in. If you're planning to set up a more complicated type of business, one that has some liability issues, or if you're not the only owner of the company, then a Corporation or LLC should be considered. These types of businesses entities shield the owners from certain liabilities, so their assets are protected.

Taxes

Different types of businesses are taxed differently, so be sure to consult a professional when filing taxes for yourself and your business. The forms that you need to submit to the IRS will depend on your business entity and regulations may also vary from one state to the next.

There are also additional taxes that you need to pay, depending on the products or services that you're selling. You may be liable for income tax, self-employment tax, estimated tax, social security and Medicare taxes, Federal unemployment tax, Excise taxes, and more. Again, the amount and types of taxes that you would have to pay will depend on the business structure that you have.

Licenses and Permits

Depending on what kind of business that you have and what state, county, or city you operate in, you may be required to obtain certain licenses and permits in order to legally do business. Examples of such permits and licenses include business licenses, state and federal licenses, sales tax license, health permits, fire department permits, county permits, air and water pollution permits, sign permits, and more.

It's best to sort these out with your local business offices to ensure that you're complying with all legal requirements.

Resources

To really dive into the technicalities of setting up and running a business, be sure to check out the following resources for further reading and research:

Starting a Business - IRS - Links to federal tax information for people who are starting or running a business.

Thinking About Starting a Business? - SBA.gov - Articles about starting a business from the Small Business Administration

Starting a Business - SOS.ca.gov - Step by step guide about starting a business, from California Secretary of State Debra Bowen

Starting / Buying a Business - Various articles about businesses from MyMoney.gov

How to start a business - Helpful articles for setting up a company

Starting a Business Methodology - A recording of procedures commonly done by entrepreneurs when starting out

How to Start a Business - A compilation of Shopify blog posts about starting a business online

National Small Business Association - Official website of the NSBA, America's small business advocate

SCORE - Official website of SCORE, a non profit association that aims to help small businesses get off the ground

Startup Nation - A site that's filled with tips and resources about building a startup

National Federation of Independent Business - The official website of the NFIB, the voice of small businesses

Entrepreneurs Organization - Official website of EO, an organization that fuels the entrepreneurial engine

ChamberOfCommerce.com - The largest Chamber of Commerce Directory online that allows you to browse through over 7,500 listed chambers.

Image credit: Colin_K on Flickr

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