Business Essentials: Everything You Need to Get Your Business up and Running
Everything you need to get your business up and running, from an EIN, bank account, business license and business insurance
Your business is formed. Great. If you havn't form your business yet, read our guide on how to form your business. But formation is only one step in the process to getting your business up and running. This guide will help you to understand the other important elements that you will still need after your business has been formed with your Secretary of State’s office.
Get Your Employer Identification Number (EIN)
Some quick facts about Employer Identification Numbers:
- You can get an EIN for free on the IRS website
- Corporations are required to have an EIN
- Some LLCs may not need an EIN (most do)
- You will need a Social Security Number (or Individual Tax Identification Number: ITIN)
- If you intend to hire employees, you are required to get an EIN
An Employer Identification Number (EIN) is obtained through the IRS. The IRS uses an EIN to identify a particular business for federal tax purposes. When processing payroll, for example, your EIN is linked to the federal withholdings such as Medicare and Social Security that are kept out of each employee paycheck.
Nearly every business will need an EIN. Corporations, which are required to file federal taxes each year, must obtain an EIN (you cannot file your company’s federal taxes without one). Most LLCs will need one, although there are a few exceptions.
For example, an LLC that is designed as a holding company (a company that does not actual business and has no employees) to own intellectual copyrights would not necessarily need an EIN. But for most business owners, an EIN will be a necessity.
How Do I Get an EIN?
You can obtain an EIN through the IRS website. The process is free and relatively painless. Applications generally take less than ten minutes.
Alternately, you can hire someone to get an EIN for you. This is usually part of a professional business formation service package, although most services charge between $50 and $100 to get you an EIN.
Open a Business Bank AccountQuick facts about opening a business bank account:
- You’ll need an EIN to open a business account
- Most banks will want to see your formation documents and Operating Agreement or Bylaws
- You may need to specify in your Operating Agreement or Bylaws who has the authority to open a business account and apply for lines of credit
Your new business will need a bank account. Don’t make the mistake of processing debits and credits through your personal banking account. This can get you into some hot water down the road. To keep your business and personal finances separate, you will need to open a business account.
Most banks will need a copy of your company’s formation document, the Certificate of Formation or Articles of Incorporation that you filed with the Secretary of State. In addition, banks generally want to see copies of your Operating Agreement or Bylaws. This is to document that you do indeed own your business and have the authority to open accounts for your company and apply for lines of credit.
It will be necessary to have your EIN. A bank will need an EIN to associate with the account, and no reputable bank will open an account without one.
Every bank has their own particular requirements for opening accounts. It’s a good idea to contact your bank in advance and ask specifically what documents they will need. Additionally, you may want to shop around to different banks, as some banks simply have far fewer requirements and are more business-friendly than others.
Get Your Business License
Business licensing can be a little complicated. There are a variety of different types of business licenses, and it’s not always clear when you need one. Some states require a state-level license for any and all businesses, while other states require licenses of only specific types of businesses. Certain industries and professions require licenses, as do various counties and municipalities.
It can be a bit maddening to navigate. Unfortunately, most business formation services will not obtain all of the business licenses you need. You’re likely to end up having to file the paperwork yourself.
States That Require a Business License
Every state has some level of business licensing, but only a few states have a state-level license that any and every business must obtain:
- Alaska: Division of Corporations, Business and Professional Licensing
- Delaware: Delaware Department of Revenue
- DC: Department of Consumer and Regulatory Affairs
- Hawaii: Hawaii Department of Taxation
- Nevada: Nevada Secretary of State
- Washington: State of Washington Business Licensing Service
- West Virginia: West Virginia State Tax Department
Additionally, some states require business licenses but those licenses are not issued through the state, they are issued at the county or city level. These states include: Alabama, California, Florida and Utah.
City and County Business Licensing
To find out if you need a business license at the county or municipal level, you will need to reach out to the offices at those levels.
- Check city and county websites for business licensing and permits
- Call city and county clerk’s offices
- Contact the local city or county tax office
If you cannot find the information you need on a city or county website, or if the information you do find is in any way unclear, it is best to call and talk to someone in city and county administration. They can point you in the right direction and fill you in on all the specific requirements.
What Do I Need to Get My Business License?
The details will differ depending on what kind of license you are applying for and with which agency. However, the following details are pretty standard:
- Business Name and Contact Information
- Business Location
- Business Type (LLC, Corporation, etc.)
- Formation Details (Date of Formation, Registered Agent, etc.)
- Date Your Business Began Operating in the Area
- State Tax ID (If Applicable)
- Social Security Number
- Names and Contact Information of Management and Ownership
- Number of Employees
Getting Business Insurance
Your business is a valuable asset. Furthermore, doing business puts you and your company at risk. No matter what kind of business you run, there is always the possibility of accidents, natural disasters and lawsuits. Insurance can’t stop these things from happening, but it can provide a safety net when they do.
Standard Types of Business Insurance
General liability protects against financial losses associated with bodily injury, property damage, medical expenses, and lawsuits and judgements against your company. Depending upon the nature of your business, the amount of general liability necessary will vary.
If your business manufactures goods, distribute goods through wholesalers and eventually retail those goods, then product liability is necessary to protect against losses and damages that result from your product being defective and causing injury to consumers.
If your business provides a professional service (doctors, lawyers, accountants, etc.), then professional liability protects against losses and damages in the event of malpractice, negligence, or other kinds of errors.
Commercial Property Insurance
Just as you have homeowner’s insurance, you should have commercial property insurance to protect against damages and losses to your commercial property. These can happen as a result of vandalism, natural disaster, fire, smoke, wind, and even civil disobedience.
Home-Based Business Insurance
Are you running your business from home? Then you should consider an additional insurance that can be added to homeowner’s insurance and will protect against damages to business equipment as well as liability for any injuries to third-parties.
Business Owner’s Policy
Small business owners can often bundle an array of insurance types into a single policy, thus making it easier to manage. Talk to your insurance agent about the best combination of coverages to see what is right for your business.
Assess Your Risk and Shop Around
When considering business insurance options, be honest with yourself about all the different risks involved with your business. Research what kinds of lawsuits have been brought against other businesses in your industry. Plan for worst case scenarios.
Many business owners think that they will never get sued because their business doesn’t do anything controversial. But the reality is that small businesses get sued every day, and many of those lawsuits are frivolous. Frivolous or not, they will cost you money.
Once you’ve estimated your risks, shop around. Going with the first or second insurance company you find may result in you spending a lot more money than you need to. This is your business. Don’t be afraid to ask for deals and specials, and by all means force agents to compete.
There you have it. You’ve got an EIN, opened a business bank account, applied for the right licenses and setup insurance. You’re well on your way now to running a successful business.
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