Entrepreneurs: Get Your Ducks in a Row When Establishing Your Startup
The entrepreneurial spirit will take you far when starting your first business. That creative drive will get you through the process of writing a business plan, choosing and designing the new business location, and it may even land you the critical funding you need to realize your dream of owning your own business.
However, what many people with an entrepreneurial spirit lack, is the know-how to navigate all of the tedious paperwork involved with the multi-tiered local, state and federal registration processes. Here’s a quick guide to what you’ll need to finally get your business off the ground.
Employer Identification Number (EIN)
Of all the numbers you’ll need to get in the business registration process, the Employer Identification Number (EIN) is the most important. Think of it as a social security number for your business. Obtained through the IRS, an EIN is required before you hire your first employee. Most local and state registration numbers required you to have an EIN before you register with them as well. Your businesses EIN is the number you will use to identify your business in all dealings, including when filing taxes.
After getting the EIN for your business, you must register at your local and state level as well. Your city and/or state government may require you to register for a business permit, and you will need to apply for a Business Identification Number (BIN) with your state for the purpose of filing state taxes.
Withholding Tax Records System
Business records must be kept for a minimum of four years, so having a good tax records system in place is critical. It’s also a good way for you to keep tabs on the financial health of your business. The best record keeping systems allow you to keep track of expenses and receipts, as well as prepare tax returns and financial statements.
Familiarize yourself with the federal I-9 Form and system, and keep the information handy because within three days of hiring any employee, you will be required to confirm that employee’s employment eligibility in the United States. After reviewing employee-provided documentation and completing the I-9 form, you will be required to keep the paperwork on file for at least three years. Once the form is complete, simply transfer the information to the IRS and verify employment eligibility online.
New Hire Reporting Program
Within 20 days of a new hire date, you are required to report it to your state’s new hire directory. Just as with the I-9, this is a step that cannot be missed. So, keep the new hire directory contact information for your state close by.
Every business that plans on hiring employees is required to carry workers compensation insurance. This insurance provides benefits to your employees if they become injured on the job. The benefits not only help the employee financially, but they also cover medical costs associated with the injury.
Legal compliance is a must for any business owner. It will save you time, hassle and a lot of money in fines, fees and employee lawsuits. Inform yourself about the subject of employment and labor law. The more you know about the what the laws are regarding subjects, such as safety, wages, and workplace harassment, the better prepared you’ll be to identify and properly address issues.
Starting your own business is a dream come true for many people. When you take the time to set it up right the first time around, you can prevent that dream from becoming a nightmarish endeavor.