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Starting Your Business: 3 Important Steps

Written by Live Oak Bank

Starting Your Business: 3 Important Steps

Building your savings isn’t always easy, but with a Live Oak online savings account, we’ve taken on some of the hard work.

Once you’ve taken the leap to start your small business, there are several steps you should take to get your company off the ground and protect it. Three of the most important ones are registering your business name, filing for trademarks, and separating your business finances from your personal finances. These are critical steps to properly establish your business, protect it from competitors who might try to hijack your business name and give yourself protection from financial liability.


1. Register

You will need to properly register your business with the appropriate governmental authorities— federal, state, and/or local. Your type of business structure and where you are located will decide how and where you need to register. If you are simply using your name to conduct business, you will not even need to register. However, by not registering your business, you could lose out on tax benefits,* legal benefits, protection from personal liability, and better access to banking, loans, and capital.

At the federal level, the most important step you need to take is to file for your Employee Identification Number (EIN), which is like a social security number for your business. It is required to pay federal taxes, hire employees, apply for business licenses and permits, and open a business banking account. Obtaining an EIN is recommended even for sole proprietorships so that you don’t have to use your personal social security number for business purposes. If you are registering as a sole proprietorship, partnership, limited liability company, or corporation, you might need to complete additional registrations at the federal level. For example, if you are forming an S corp, you will need to file with the IRS.

At the state level, there are additional registration requirements—especially for partnerships, LLCs, and corporations. In some states, you will need to register your “Doing Business As” (DBA) name if you are using a fictitious name for your company instead of conducting business under your own legal name. City and county agencies don’t usually require registration, but you might need to register your DBA as well as apply for permits and licenses.

Look up your state and county websites for information on how to register your business and what is required. You should also look into hiring a registered agent in your state to file paperwork and legal documents, which could save you time and prevent you from making mistakes during the registration process.


2. Trademark

To protect your business’s unique identity, it’s a smart idea to trademark your business name, brand name, and/or product name(s). Filing trademarks thwarts competitors from trying to poach your names and gives you legal recourse if that happens.

In order to receive a trademark, you will need to file with the United States Patent and Trademark Office (USPTO). You should first check the USPTO’s official trademark database to ensure that your chosen business, brand, and product names aren’t already taken to prevent yourself from committing trademark infringement.

Having a trademark will protect you at the federal level. At the state level, you can file for an entity name for further protection. An entity name is how the state distinguishes each business. Rules vary from state to state about how an entity name can be listed, including what suffixes can be used and whether or not the name must indicate the type of business it is. For the most part, registering for an entity name will protect your business name from being used by others.

For online business activities, you should also register your domain name, which is your website address or URL. Registering your domain name prevents anyone else from using it for as long as you own the name—just remember to renew it regularly. There are many accredited registrars to choose from when registering your name. You’ll want to consider reputability, price, and customer service when selecting a registrar.


3. Separate your finances

As you start your business, it is crucial that you make every effort to protect your personal assets by separating your business financial activities from your personal financial activities. One of the best ways to do this is to open a business banking account. This will help you stay organized and remain legally compliant and protected. It also offers benefits to your employees and customers.

A typical business banking account includes checking, savings, credit card and merchant services accounts. A merchant services account allows your business to accept credit card and debit card transactions.

With a business banking account, you can take advantage of benefits that your personal banking account doesn’t likely offer. Most importantly, it offers limited personal liability protection by keeping your business finances separate from your personal finances. Additionally, the merchant services account offers your customers purchase protection and keeps their personal information secure. Having a business account also adds legitimacy and professionalism to your business; you will be able to accept credit cards and checks made out to your business rather than to your personal name.

As for the financial benefits, you will likely receive a line of credit for your business, which can be used for large purchases as well as emergency situations. Obtaining a business credit card will also keep your business finances separate from your personal finances, make it easier to purchase supplies, and will help you establish a credit history for your business.

When you are ready to set up a business banking account, take into consideration what your banking needs are and then look for a bank that will be as supportive as possible to you. Search for a bank that particularly focuses on small businesses and that supports and values your success.

While there are many steps to take while getting your business up and running, these three are essential to take early in the process. Moving forward, you will want to look at taking further actions to protect yourself and your business.

* Live Oak Bank does not provide tax advice. Please consult with your accountant.

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