Expect to set aside three weeks, plus or minus a few days, to legally formalize your business and get it ready to operate. While each step is usually simple, each requires careful attention.
Filing with the government is the step that gives your business legal status to operate. The paperwork in setting up a business can seem daunting, but it’s essential; it’s how you see that your personal liability for business accidents and business mistakes is eliminated or at least minimized.
Filing with the state is the step that often takes the longest time, simply because the government must approve the formation. To form a business in Utah, you or your attorney must file your paperwork with the Utah Department of Commerce. Once you complete and submit your paperwork, it will most likely take two to three weeks for approval.
An operating agreement for an LLC, a shareholder agreement for a corporation, and a partnership agreement for a partnership are required by many states, including Utah. They are the binding agreements between owners about managerial and financial responsibilities. They define the duties that each owner will assume to make the business successful. Most disagreements between owners can be resolved up-front with a written agreement.
Often, businesses are started by married couples or by friends or acquaintances who want to turn an idea into a business; that’s only natural. But later, differences of opinion, or forgotten promises, divorce or loss of friendships can become stumbling blocks for business success. A well-thought-out agreement when starting the business will lessen the chance for later disagreements.
An effective written agreement takes little time if all owners agree on the basics and make the agreement their priority.
An Employer Identification Number, or EIN for short, is a number the IRS assigns to your business. It’s also known as a Tax ID number — think of it as a Social Security Number for your business. Getting an EIN is an essential step; you need one to open a bank account, run payroll, or provide a W-9 form to your clients if you run a services-based business.
Any owner can get an EIN online at irs.gov, or your attorney can do it for you.
If you organized your business under one name, but you want to do business under another name, file your business name – or “fictitious name” – with the Utah Department of Commerce. This is commonly called a DBA or “Doing Business As”. It’s a simple but valuable step to take.
If your company’s name is Fay Jones Inc., but you want to do business as “Fay’s Fashions”, have your corporation file a DBA for “Fay’s Fashions”; that way, no other business in Utah can use the name Fay’s Fashions in their business.
Insurance protects you and your business from natural disasters, accidents, and potential lawsuits from employees and customers. Spend a day researching and applying for insurance with an insurance broker you trust.
Yes, insurance is one more business expense, but in today’s litigious society, the peace of mind a good insurance policy brings is well worth its cost.
I hope this short summary helps you better understand the steps to starting a new business.
–Robert A. Youngberg
