As Women’s History Month comes to a close, let’s consider the importance of women entrepreneurs and their small businesses. Women entrepreneurs must conduct due diligence. Taking necessary legal steps, including the following steps behind, allow them to protect their small businesses and intellectual property.
This is one of the basic, first steps women entrepreneurs take to protect their small businesses. An incorporated business receives liability protection. This allows personal and professional assets to remain separate from each other. It also ensures personal assets, like houses and cars, are protected in the event of an unforeseen circumstance.
Women entrepreneurs may choose to incorporate as one of several types of business structures. Here’s a look at some of the most popular options:
- Limited liability company (LLC): This flexible entity may be run as a single-member LLC, member-managed LLC, or manager-managed LLC, depending on the number of members in the company. Forming an LLC confers liability protection. It gives you the ability to choose if you would like to be taxed as a partnership or corporation.
- Corporation: This entity provides liability protection but is less flexible than an LLC. The formal structure of a corporation allows the company to issue shares and accept capital from potential investors.
- General partnership: Many small businesses incorporate as a general partnership, which allows two (or more) partners to run a company. All profits, management duties, and liabilities are divided equally between the partners. When the partnership agreement is being drafted, it’s strongly recommended the agreement outlines everyone’s role in the company.
2. File For Trademark Registration
Chances are your small business has a creative word, phrase, logo, or design. This mark is likely used to emphasize the uniqueness of your business to the world. However, if it has not been registered as a trademark, a competitor may plagiarize it and pass the mark off as their own.
The easiest way to prevent this is to file for trademark registration. Conduct a name search first to ensure your mark’s application is available and is not pending registration. Then, file a trademark application. Once it has been registered, you alone have exclusive rights to the mark.
3. Obtain Business Licenses
A business license ensures you may operate your business legally. Once you have registered, your business license tracks the activities of your company for tax purposes. It also ensures the business has met the minimum requirements necessary to protect the public health and notifies citizens of activities which may impact the public.
Every business is different. Some may require business licenses and/or permits which are specific to its industry. Check with your local Secretary of State to see which licenses and permits your business is required to have. Then, obtain the paperwork to begin the filing process.
4. Apply for an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is a nine-digit number which acts as your federal tax ID. It helps identify and track employer tax accounts after women entrepreneurs incorporate their businesses.
Many entrepreneurs assume it’s only necessary to obtain an EIN when you’re ready to hire employees. It’s true you need an EIN before you may hire and pay employees at your business. However, an EIN does much more than ensure you can hire talent. You must also file for an EIN if you’d like to open a business bank account. Additionally, EINs may be used to identify your business on important documents. Typically, women entrepreneurs use their Social Security number (SSN). An EIN is less sensitive than an SSN. You may use it when filling out payroll reports and paying federal taxes.
5. Choose Your Registered Agent
A registered agent (RA) acts as the point of contact between the business and the state. They accept important documents from the state on your behalf, organize the paperwork, and deliver it to the business owner in a timely manner.
Who can be a registered agent? Women entrepreneurs may act as their own RA. They may also enlist the help of a third-party service for assistance. You must meet the following requirements if you decide to be your own RA:
- The RA must have a physical street address location. This address must be in the same state as the company’s formation. A P.O. box is not an acceptable form of address.
- A registered agent must be a resident of the state where business is conducted.
- RAs must be available to receive process during general business hours. Typically, this means Monday through Friday from 8 a.m. until 5 p.m.
It’s perfectly okay if you find you are unable to meet these requirements. Consider designating a trusted third-party service to act as the registered agent for your business.
6. File Compliance Paperwork
You successfully incorporated your business, registered trademarks, obtained business licenses and EINs, and designated a registered agent. Remember to pay renewal fees and file annual reports.
Annual reports are easy to fill out. These reports document changes made within your LLC or corporation, such as an address change. You may also need to pay renewal fees throughout the year, and you will also need to update any operating agreements or bylaws associated with your LLC or corporation. This keeps everyone updated on changes within your organization and allows you to stay in compliance with the state.
Ready to start a small business alongside some of your favorite local spots? Let us help you incorporate or form an LLC. Visit us at mycorporation.com or call us at 877-692-6772.