Starting A Company (Part 2)

Complete Governance Organization of New Company

Do not make the mistake of forming a legal entity at the state level and then not doing anything with it. A new entity is just a shell.

First it needs to have owners. For a corporation, these are shareholders and for limited liability companies, these are members.

There must be an official legal document establishing the owners and their rights and obligations.

Further, it needs to adopt a personality.

That means that it needs to be attached to a set of rules, procedures, and other guiding principles that determine how it will act to conduct business.

Certain roles such as directors, officers and managers need to be established. All of the major governance requirements are typically set forth in Bylaws or an LLC Operating Agreement.

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Obtain Tax Clearance and Open a Bank Account

Another important legal aspect of starting a company is to make sure you keep the finances separate from your personal money and accounts.

The best way to do this is to open a bank account right from the start for the business.

As part of this process you will likely need to obtain an Tax Certificate for the corporate. This is obtained through the Internal Revenue Service.

Business License and Other Licenses. It is safe to say that most any new business will be required to obtain a business license in the locality where the principal business office is located (even if this is your home).

Each locality differs so call the business license office of your local county or city to determine the specific requirements. Also, depending on the nature of your business, you may need to obtain other licenses or permits for your company.

For example, if you are rendering a service that is regulated by the state (e.g., engineering, medicine), you need to check with the relevant regulating state agency to determine if you company needs to file for anything additional.

Another example is if you plan on selling products. In those cases, you will likely need a sales tax permit and will be required to collect and transmit sales tax.

Creating and Adopting a Business Plan. This is not a legally mandated requirement but is such an important start up matter. There is this saying that those who fail to plan, plan to fail.

It is a given that any new company will face challenges and twists and turns. In fact, a majority of businesses go out of business within the first 2 years.

The ones that are prepared to adjust and keep moving toward well defined business goals are the ones that will survive and then prosper.