If you have a go-getter attitude, an independent spirit, and an entrepreneurial mindset, starting a small business may be one of your goals. If that sounds like you, before you get started, here are several steps to maintain compliance with the law and avoid unnecessary headaches later on. 

Apply for the appropriate paperwork

When starting a small business, you need specific papers filed with the federal government to ensure you conduct business per the guidelines. The most crucial paperwork to fill out is the IRS Form SS-4.

This form will provide your business with an official federal EIN Tax ID Number.- also known as an Employer Identification Number. It is essentially a Social Security Number for your business and how the government will track and identify your company. 

The EIN is used for everything you need to conduct business, including applying for a business bank account, hiring and paying employees, paying federal taxes, and applying for business permits and licenses. The EIN will be attached to your business from its inception and beyond, so you need to apply for this number at the outset of your business creation efforts.

Register your business

Registering your business with state and local government helps add credibility to your new company. You are showing legitimacy by securing your business’ name and place in the business world. Since you are starting as a small business, you may not think that registering your entity is necessary, and indeed, you can operate for a while within the legal guidelines by not registering; but, when your company begins to see greater profits and growth, it is time to step in and take action.

Since your business plan outlines steps you intend to take toward growth and expansion, you should register your business as part of your start-up efforts. Once accomplished, you will not have to worry about it later. If you are handling these tasks in person, use this opportunity to make good connections with those in the government offices, which can help you later when you need to renew licenses or have questions.

Secure funding from outside sources

Where you obtain funding for your business can be a fraught question for any small business entrepreneur. You can certainly dig into your personal savings accounts and investments and apply for a second mortgage on your home. But what happens if your company is unsuccessful due to factors beyond your control? Extenuating circumstances may cause you to lose money regardless of your best efforts.

When starting a small business, consider looking into a business loan to help fund the initial financial needs of your new business. Have a business plan in place and go into the conversations with the lender realistically so you do not take on more debt than your projected sales can repay. 

Watch this video for insight on how to budget when starting a small business:

Starting a small business is no small effort. It takes a lot of work and requires setting everything in motion by completing the required forms right from the start. Once you get your paperwork in order, it is time to show the world what you have.

Good luck with your new entrepreneurial journey!