Create a Company: Everything You Need to Know
In order to create a company, you need to have a business concept and plan, arrange for finances, company name, and get necessary licenses and permits.3 min read
In order to create a company, you will need to have a business concept, make a plan, arrange for finances, register your company name, and get necessary licenses and permits.
Small businesses account for 99.7 percent of all businesses in the United States. A small business gives you the opportunity to be financially independent. It also gives you a fulfilling experience. However, every small business is not successful. Only about half of small businesses with employees survive beyond five years.
If you are planning to start your own business, be prepared to handle the stress and work with full dedication. Following all the essential steps in the beginning builds a strong foundation.
Come up With a Concept
Find something you are passionate about that can be converted into a business concept. The product or service you come up with should add value to people's lives. Validate your business idea to make sure it's possible to carry out at a commercial level.
Try to formulate an idea as unique as possible so as to eliminate competition. You must aim to solve a problem or offer something that fulfills a need for which a market exists. You can identify a need through different methods like market research, survey, studying the behavior of certain groups of people, or even trial and error.
Ask yourself the following questions:
- Do people need the product or service you are planning to come up with?
- Who would be the target customers?
- Which other companies currently offer similar products or services?
- How tough is the competition?
- What advantages will you have in the market?
Make an Execution Plan
Having a business plan will help you set up and grow the business in a smooth manner. You may also need it for raising funds from potential investors. You should include the following information in your business plan:
- Mission statement of your business
- Company summary
- Product offerings
- Target market
- Financial estimations
- Operational costs
Arrange the Finances
Although you may not need a huge amount of money, setting up a small business would require you to make an initial investment and pay for some operational expenses before you start making a profit.
Make an estimation of all the startup costs like licenses, equipment, research, legal fees, property leasing, etc. Also, put down all the anticipated cost required to keep the business running for at least a year; this may include rent, utilities, travel, salary, supplies, marketing, and other expenses.
You can procure funds from various sources including:
- Capital market
- Bank loans
- Friends and relatives
- Government grants and subsidies
- Venture capital
Choose the Right Business Structure
You can choose to start out as a sole proprietorship business, a partnership firm, an LLC (limited liability company), or a corporation. You may want to consult a CPA or an attorney to make the right choice.
Register Your Business Name
- Choose a suitable name for your business after considering all aspects and implications.
- Conduct a name search to make sure your preferred business name is not trademarked or being used by someone else.
- If you are starting a sole proprietorship business, you must register your business name with your state, or in some counties, with your county clerk.
- In the case of LLCs, limited partnerships, and corporations, you must register the business name at the time of filing your formation papers.
- Make sure you also register the relevant domain name for your business.
Get Necessary Licenses
- Apply for all the necessary state licenses.
- Get a tax registration certificate from your local authority.
- Find out whether you also need to obtain local permits like a zoning variance.
Set up Equipment and Infrastructure
- Get an office space in a location suitable for your business.
- Purchase all the tools and equipment including computers, telephone, and office stationery to get started.
Choose an Accounting System
An accounting system will help you plan your budget, issue invoices, manage inventory, and file your taxes, among others.
Build Your Team
- If you will need employees, start hiring them.
- If you are looking to have independent contractors instead of regular employees, prepare a contractor agreement in consultation with an attorney and start searching for your workforce.
- If you are to run the business as a solopreneur, you may still need some support members like a mentor, business coach, or your very own family members.
Promote Your Business
You can make use of the following channels to promote your business:
- Marketing and PR
- Free samples
- Business networking
- Website and digital marketing
If you need help to create a company, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.