Congratulations on deciding to get your dream underway. The Gallinger Law team is looking forward to helping you build and protect what you start and grow. This article is a brief overview of the business formation process. I will give a broad summary of topics that that every business type will encounter including Corporations, LLCs, and nonprofits. For more specific information, please give us a call, email us, or complete the contact us form.
Name Your Business
This can be one of the most exciting parts of starting your business. You want to make sure your business name stands out, is easy to read/spell, and (most importantly) IS AVAILABLE. There are multiple reasons not to share the name of your business with another entity. It’s easy to understand that you want a business name that will bring customers to your door. Spending money on marketing and sending clients to another business just isn’t good business sense.
Another reason is infringement. Many companies choose to register their company name as a trademark. You could be facing major legal issues before your company even launches with a simple mistake. Likewise, many states have restrictions sharing business names. Generally, businesses CANNOT have the same name. Remember, “NewBiz, LLC” is different than “NewBiz, Inc.”. Some business names are abandoned and may be used with a little bit of leg work if you already have something in mind.
Keep in mind website names and availability as well. We don’t have to tell you that being an online presence is crucial for any business.
Fictitious Name Statements (Doing Business As; DBA)
If you open a business but like “Very Good Construction, Inc.” you might want to register “VGC” so that clients can write checks to VGC and your bank account can include that name. There are many other reasons to use a DBA, speak to one of our attorneys for more information.
Register Your Business
This is the first official step to registering your business. Name availability can be checked with the Secretary of State. Once you’ve chosen your business name, you must file the Articles of Incorporation or Organization. The California Secretary of State has updated their submission methods to be online.
*Note – You have 90 days to file the Statement of Information for your business once the Articles have been filed. Not filing this statement may result in your business losing its Good Status which mean you can no longer do business.
EIN Application
An Employer Identification Number (EIN) is necessary for businesses that are not sole proprietors. This is the number that the IRS will use to track taxes and banks will use to recognize your business. Think of it as a Social Security Number for your business. The IRS has implemented an online application method to speed up this process. Be sure to have YOUR SSN on hand as well as the business category.
Nonprofit corporations wanting to accept tax deductible donations must file for an EIN and then submit form 1023 providing the required information. This is a long form and process that our office has completed for many nonprofits.
Business License
You can apply for multiple different licenses depending on your business and location. In California the CA Department of Tax and Fee Administration (CDTFA) is responsible for seller’s permits and other common permits needed to conduct business.
Bylaws and Minutes
Each Corporation needs to accept and record company Bylaws and Minutes. Although these documents are rarely shared outside of your directors and shareholders, it is important that everyone understand the rules of operation. Bylaws act like a constitution for your business. These documents will be very important to investors, for opening bank accounts, for IRS applications, and other businesses activities.
Minutes and bylaws are also the written election of corporate officers. President, Secretary and Treasurer elections are recorded and must be re-elected as needed in the corporate minutes. The bylaws will dictate how stocks are purchase, traded, and sold. When opening a bank account, some banks may require that your bylaws have certain provisions. It may also be necessary to provide minutes stating which officers or employees have access to bank accounts and records.
Conclusion
Starting a business can be an exciting time. Make sure that you are doing things right the first time with our help. If you need help forming your dream business or have any questions please call our office.
Todd Gallinger is a California and New York licensed attorney experienced in Business Law. You can reach the Gallinger Law team at (888) 255-9147 or info@gallingerlaw.com.
This article is for information purposes only, and should not be construed as legal advice. For advice specific to your situation, please contact an estate planning professional qualified in the state where you live.