There are all kinds of things a new entrepreneur must learn and do, lest they fall into legal issues later. Contracts, legalese, and business agreements abound when you’re setting up. The question boils down to the same thing though, reading the fine print.
When a new business forms, it involves filing paperwork with the state. Fun fact, owners are not required to incorporate their companies in their state of residence. Filing websites typically include a disclaimer about how all of the filings are final without filing another form (and paying more money!). Of course, right?
After filing incorporation paperwork, there’s filing for an EIN. While most people don’t need an EIN per se, it’s necessary if you want to start up a business bank account or not pass out your SSN like candy. The business bank account is useful for expense tracking. Plus, the IRS loves easy paper trails.
The EIN can also serve in place of a Social Security Number on W-9. If you’re freelancing and going back to the same clients, they will request you fill out a W-9 so they can give you a form 1099 come tax time. The W-9 has the option of using either the owner’s SSN or the businesses EIN. Guess which one is less useful to identity thieves?
The next step is to investigate relevant licenses. States, counties, and cities may require additional licensing depending on what type of business is running. In my case, the city had licenses I needed to apply for, but not the county. State, on the other hand, requires me to file for a license to do my own withholding, but not much else (digital products aren’t eligible for sales tax in all states).
Long story short, lots of steps go into starting a business. Most of them involve traversing dire warnings and lots of fine print. No matter how rushed, no matter how insensible it seems, always read that fine print. It may save a lot of time later.
Obligatory Disclaimer: I am not a lawyer. What is presented here is a personal experience and should not be taken as legal advice. Please consult a certified legal expert.