Here is my to do list that I created for myself to make sure I had all the correct paperwork filed. Since my business is home based and I live in an unincorporated area of Los Angeles county, my business does not need a Business License since its Internet Based. This may not be the case for most so the best thing to do would be to check with your Local City hall and see if you will need a Business License for your type of Business.
1. Business License - Check with City Hall to see if need one. File first as a Sole Proprietor and then change to Corporation or LLC after you have incorporated. For my first business attempt, my partners and I had decided to get incorporated first before filing for a business license. BIG MISTAKE. By the time we were incorporated the City had enacted new laws that made giving out Business licenses in our industry much harder. We had to wait while notices were sent to residents within a 5 mile radius of our business location and see if anyone would object to our business. It would have taken 1-2 years to get our license IF nobody objected. Luckily we had a clause within our lease and were able to get out of it. We lost around $30,000 in renovating costs that we had already done to the building. That was a nightmare.
2. Get Incorporated - LLC’s cost only $70 to file with the California Secretary of State (SOS). Cost will differ from State to State. The one page form can be downloaded from the Secretary of State’s website and mailed back. Due to a backlog of LLC applications in California, if you mail out your application expect a 4-6 week wait before your application is finally file. You can call there Customer Service number to find out what dates have already been completed to get a good idea on how much longer it will take before they get to yours, or you can just wait till they mail back a copy of your application with there official stamp.
Now if you are in a hurry like most Entrepreneurs are then you can higher an agent that lives local to Sacramento and have them take care of the paperwork for you. The advantage to this is since they live local they can take the application in person to the Secretary of State and have it expedited. Besides the cost of paying for the local agents service, and the cost of expediting your app with the SOS, you should have your LLC application back within a week or two. You can find available agents on the SOS website, just make sure there address is located in Sacramento since agents in other parts of the State end up hiring another agent in Sacramento to take care of the application.
3. EIN (SSN for a business) - You may need to check with your accountant to see if you need this. If your a one man operation you may not need to file for an EIN and maybe able to use your SSN. Check with your accountant. I filed for an EIN thinking it would be easier to separate income streams between Business and personal. Hopefully this proves to be the case. Usually EIN is required if you plan on having employees.
4. Operating Agreement - Very essential if you have partners. Your operating agreement states what shares of the company are owned which partners, what is required by each partner, as well as how long the LLC will be in existence. Also should one partner have an untimely death, the Operating Agreement will specify how the LLC will continue. Very important. The Bank may require you to show an Operating Agreement if you open up a Business Checking Account. This was the case with Washington Mutual.
5. Create Business Bank account (need Operating agree and Article of Organization #) - You will want a business bank account to conduct your transaction. Its free at larger bank establishments which may require a small deposit. Mixing income from your Business into your personal bank account is asking for trouble if you get sued.
6. Fictitious name - If you want to go by a different name then your original corporation name then you’ll need to file a Fictitious name. LA county actually has a website that you do a search on for existing Fictitious names. Its $23 for the first name and $4 for any name there after.
7. Sellers Permit - You’ll need a sellers permit if you selling an tangible items or services. If your looking to buy items wholesale form suppliers usually they’ll ask you for a sellers permit. The benefit is you should be able to buy it tax free.
This was a quick list and if anyone has any suggestions or corrections please let me know. Some other items you might want to consider.
1. Trademarks
2. Business Plan
3. Copyrights - US Copyright office
4. Patents - US Patent Office - expensive
5. Business Insurance