How to Start a Small Business: Legal Formation Information

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If you’re thinking of Starting a Small Business, you’re not alone.  Researchers predict that 40% of Americans will be self-employed by 2020.  With the increasing globalization of work, and convenience of doing many kinds of work with just a phone and internet connection, it’s not surprising that many Americans are Starting Small Business.

In order to formalize your Home Business, the first thing you need to do is register and name it with the proper government entities.  Here’s a guide to provide information on How to Start a Small Business, including choosing a business structure and name for your business.


Choose a Business Structure

To make your new Small Business official, you need to register it with the appropriate county, state, or federal government entities.  There are several business structures you can choose, depending on your business’s needs and goals.

If you’re interested in getting a Home Business started, knowing the appropriate business structure you need is a very important part of learning How to Start a Small Business.  If you will have a one-person freelance business and have no plans to hire employees, then a Sole Proprietorship might work for you.  Becoming a formal Sole Proprietor is usually a simple process that involves registering with the local government.  If your freelance business includes two or more people, you’ll want to file a Partnership instead, and keep additional records such as meetings and profit-sharing.  Sole Proprietorships and Partnerships put you at the greatest personal liability.  If a client sues you, your personal assets aren’t protected.


Business Builders

Forming a Limited Liability Company (LLC) gives you personal asset protection and allows you to hire employees.  LLCs can be formed as Sole Proprietorships or Partnerships, and gives the owners many of the benefits and protections of corporations with fewer complexities.  LLCs are more expensive to form and maintain than Sole Proprietorships, and require additional paperwork.  For example, you’ll need to file an annual company tax return and maintain certain records, such as meeting Minutes.

Finally, a Corporation is a great option for a Small Business making a solid income that plans to hire employees.  Corporations offer similar protection to LLCs, but Corporation owners must pay themselves a reasonable salary, like they would pay an employee.  Corporations are the most expensive company structure to form and maintain.  They also have more operating requirements than LLCs, like requiring company bylines and a company board.

Successful Business WordsNaming Your Business

You need to choose a name for your business to register it.  Deciding on the right name is a critical choice, as it’s your client’s first impression of your Small Business.

If you work as a Sole Proprietor, you can legally work under your own name, but business experts still recommend creating a DBA (Doing Business As) name.  Filing a DBA gives your business brand a separate identity from your personal life.  Examples of personal DBAs include John’s Construction Services or Jane Doe Consulting.


When you choose a DBA or business name, take the following factors into account:

  • What kind of work does your Home Business Start Up do?  You want to choose a name that encompasses your company’s industry, and the brand you want to represent
  • Do you want to name the business after yourself, or base the name on your services?  Many businesses either choose a name with the founders’ first or last names, a name that describe the business’s activities, or a combination of the two.  If you plan to expand in the future, it makes sense to choose a more general name that will grow with your business.  If you plan to offer a specific, targeted service and not have that change, you can use a more directed name describing your services.
  • Is the name available?  Before registering a name, do a search in your county or state to make sure the name, or a similar one, isn’t already taken or Trademarked.  Businesses need an original name and can’t use a name another company already uses.
  • Is there a website domain for your business name?  Having a website for your business is essential, so do an additional search to see if the website domain name you like is available.  Pay attention to the price of the domain as well; some popular domain names are quite expensive to purchase.


As part of your learning How to Start a Small Business, we have a great deal of Home Business and Online Marketing education, training and powerful Online Business Systems available to you at out Blog site:  We look forward to assisting you in starting and/or growing your own Small Business efforts.


Marv Wells

Marv Wells & Logos


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