How to Legally Start a Business - 8 Steps

Summary

Highlights

• Jim shares his top eight legal steps to kickstart your business journey. 🌟
• First step? Name your business! It's the foundation of your brand. 🔑
• Register your business name as a DBA to secure it for future use. 🏷️
• Consider filing an 'intent to use' application with the USPTO to reserve your business name. 📝
• Setting up a business bank account is a must-do for financial clarity. 💸
• Incorporate your business once you start making money and explore different legal entity options. 🏦
• Check for local licenses that might be required for your specific business type. 📋
• Jim stresses the importance of solid contracts for clients and contractors alike. 📄
• Insurance isn’t just a good idea; it's essential for safeguarding your enterprise. 🔐
• Build your dream team to help manage and grow your business. 🤝

Key Takeaways

• Starting a business involves several key legal steps, such as picking a business name and registering it. ⚖️
• Ensure your business name is unique by checking Google, USPTO, social media platforms, and state databases. 💻
• Open a business bank account to track expenses and separate personal finances from business finances. 💰
• Consider incorporating your business once it starts generating revenue and get proper legal advice if needed. 🏢
• Ensure compliance with local laws by acquiring necessary permits and licenses for your business. 📜
• Having solid contracts in place is crucial if you're working with clients or hiring contractors. 📝
• Don't forget about purchasing adequate insurance to protect your business assets. 🛡️
• Start building a professional team to manage operations and marketing as your business grows. 👥

Overview

Chapters

• 00:00 - 00:30: Introduction: 8 Things to Start a Business In this introductory chapter, Jim Hart, the founding attorney at Hawthorn Law, shares insights into the eight essential steps needed when starting a business. Whether it's a home-based business or another type, these steps are crucial for launching your venture. Jim highlights his experience in creating content focused on the legal and business aspects of starting and building an online business, setting the stage for more detailed discussions on each step.
• 00:30 - 01:30: Understanding LLCs and Business Naming The chapter discusses the importance of LLCs (Limited Liability Companies) and the steps to take when starting a business. It emphasizes that many people starting home-based businesses lack proper setup, such as considering whether to establish an LLC. It aims to guide individuals on the appropriateness and timing of starting an LLC.
• 01:30 - 02:00: Debunking Home-based Business Myths The chapter titled 'Debunking Home-based Business Myths' addresses common misconceptions related to starting and running a home-based business. It offers insights into various business types such as e-commerce, blogging, YouTube channels, and consulting. The focus is on transforming business ideas into viable income-generating ventures, particularly for individuals transitioning from traditional employment to home-based entrepreneurship.
• 02:00 - 03:30: Legal Considerations for Business Ideas The chapter discusses the legal measures necessary to protect a business idea and how to develop it into a successful venture that can provide financial stability, potentially allowing one to leave a conventional nine-to-five job. References personal use of a Keurig machine purchase as part of a business context.
• 03:30 - 05:30: Importance of Choosing a Business Name The chapter emphasizes the importance of choosing a distinctive and memorable business name as a foundational step in starting a business. The chapter suggests a thoughtful approach to naming, highlighting the example of Spanx, a well-known brand, to illustrate the impact of a good name. It also mentions the necessity of protecting the business name legally before launching it publicly.
• 05:30 - 07:30: Registering Business Name and Trademarks The chapter discusses the importance of selecting and registering a unique business name and trademarks. It emphasizes the need for conducting thorough searches across various online platforms to ensure that the name is not already in use by someone else. The suggested platforms for conducting these searches include Google, the US Patent and Trademark Office website, Facebook, and other social media platforms. Additionally, the chapter advises checking the availability of the name in each U.S. state to claim all related online properties effectively.
• 07:30 - 10:00: Opening a Business Bank Account The chapter discusses the importance of checking with the state-level Secretary of State before opening a business or choosing a business name. It highlights that each state has its own Secretary who manages corporate records and stresses the necessity of ensuring that the business name you want to use is not already taken. The recommendation includes searching through the online database provided by the Secretary of State's website, applicable to the state where you live or plan to operate your business.
• 10:00 - 11:30: Incorporating Your Business The chapter discusses the initial steps to take when incorporating a business, starting with ensuring that your desired business name is available. It advises registering a 'Doing Business As' (DBA) name in your state to reserve the name for future use, such as forming an LLC or a corporation. Additionally, it suggests filing an 'intent to use' application with the U.S. Trademark Office, even though an actual trademark can't be obtained until the name or logo is used in commerce.
• 11:30 - 14:30: Licensing and Permits The chapter 'Licensing and Permits' discusses the importance of trademark registration during the exploratory stage of a business. It emphasizes considering trademarking a great business name with the US Patent and Trademark Office by filing an 'intent to use' application, which serves to reserve the name for future commercial use. Additionally, it suggests another crucial step of opening a business bank account.
• 14:30 - 16:00: Importance of Contracts This chapter underscores the significance of contracts in managing business essentials such as tracking expenses and income. It provides initial steps for establishing a business bank account under a DBA or as a sole proprietorship without needing to form an LLC or corporation immediately. The chapter advises on depositing personal funds into this account to begin financial operations, emphasizing the importance of these preliminary financial arrangements even before securing an employer identification number from the IRS.
• 16:00 - 18:00: Getting Adequate Insurance This chapter discusses setting up a bank account and obtaining a debit card for managing business finances. It highlights the importance of investing personally in your business to cover startup costs and using the account for receiving affiliate sales, such as those from ShareASale or Amazon affiliates. The focus is on effectively managing and utilizing business financial resources.
• 18:00 - 19:30: Building a Professional Team The chapter titled 'Building a Professional Team' emphasizes the importance of incorporating your business once you have validated your idea and started earning revenue. It is crucial to formalize your business structure through incorporation to protect your ventures and facilitate future growth. The chapter suggests that one should conduct thorough research to understand the differences between various legal entities before making a decision. The author also mentions having a detailed video that explains the pros and cons of different corporate structures such as LLCs, corporations, and partnerships, and recommends watching it for further clarity.
• 19:30 - 21:00: Conclusion and Call to Action This chapter emphasizes the importance of checking local requirements for business operation licenses. It advises entrepreneurs to ensure compliance with state or local laws, which may require obtaining a privileged or business license. This is particularly crucial for home-based businesses, which may have additional registration requirements with local tax authorities.

How to Legally Start a Business - 8 Steps Transcription

• 00:00 - 00:30 hey Jim Hart back at you here from our own lawn today I want to talk to you about the eight things that you need to do when you're just first starting out with your business now this might be a home-based business that might be something else but these are the eight things that you need to do so pay attention let's get to the quick disclaimer so my name is Jim Hart I'm the founding attorney here at Hawthorn law and I've been putting out videos for the past several years on all things related to starting and building an online business and we've done
• 00:30 - 01:00 everything from LLC's to trademarks to other ways to protect your intellectual property to stupid videos about myself you can check them out anyway today what I want to talk to you about are the eight things that you need to do if you're versed just starting out in business so you you know maybe you came to this channel cuz you're worried about an LLC but but today I want to talk about is this the time to start an LLC we're gonna get right into that here right now all right so there's so many people that are out there starting home-based businesses these days and a lot of them frankly you're probably doing it wrong and so today I want to
• 01:00 - 01:30 kind of debunk some of the things that you need to think about if you're first starting out with your home-based business this might be everything from an e-commerce business to you know a blog to a YouTube channel you're starting and hoping to make money from to a consulting business - you know maybe you were working for a company and then you decided to stop working and you went home and and you're trying to figure something else something else that you want to do to make money whatever it is today I want to talk to you about taking that idea that you have for that business and and what you need
• 01:30 - 02:00 to do legally to protect that idea and how to build it into something truly special that can help earn an income for you and your family and and so that hopefully you don't have to go back to that night into five job because if you're watching this video chances are you probably don't want to be at that nine-to-five job if you're already there am I right about that all right so hold on a second coffee break I got a Keurig machine from my business I don't have a home-based business I've got a law firm I love this thing I got it on sale Black Friday boom alright so first thing you need to do when you're starting out your
• 02:00 - 02:30 business is you have to and this is gonna sound stupid but you have to pick a name for your business this is the the most important thing when you're just getting started if you're trying to build a brand you might want to come up with something unique or different I've used this example before but the woman that started Spanx she came up with that name she did all the things that she needed to do to protect that business name before she actually launches the public so first thing you got to do before you start protecting the name is you got to come up with a thing so that's number one and when you're starting to think about coming up
• 02:30 - 03:00 for a name one of the things you may want to think about doing is is doing a search of all the online platforms to make sure that nobody else is using that name and so you're gonna want to search Google you're going to search the US Patent and Trademark Office website you want to do a search on Facebook you want to search on all the social media platforms are out there and you want to make sure that the name that you're choosing for your business is actually available so that you can use that name and then you can start claiming all those properties as well all those online properties the other great place you want to check is every state has a
• 03:00 - 03:30 Secretary of State I know you shouldn't be confusing this with the Secretary of State the United States on a federal level every state has a Secretary of State and the then Secretary of State is typically responsible for managing the corporate records for that state and so you want to check their their website they usually have an online database regardless of what state you're in and make sure that the name you're choosing is not already taken in that state in the state where you live or in the state where you're going to be doing your business if you're overseas or something
• 03:30 - 04:00 assuming that your name is available you want to go ahead and register as a DBA that's a doing business as in your state and the reason we want to do that is so that when it comes time to actually form an LLC or a corporation or something else that you want to do that name will be reserved and nobody else would have come in and taking it other thing you may want to think about doing is filing what's called an intent to use application with the you a trademark office now you can't actually get a trademark until you're actually using the name or the logo or whatever it is in commerce in other
• 04:00 - 04:30 words that you're selling products with that name you can't register a trademark and how you're doing that so if at this point since you're only in the exploratory stage and you're just coming up with a name you may want to think about if you came up with something that's really great you want to go ahead and register that with the US Patent and Trademark Office and you're gonna file what's called an intent to use application that it's going to tell them that you intend to use this name in commerce in the future and you're basically reserving that name number two you want to go ahead and open up your business bank account this is
• 04:30 - 05:00 really important because this is how you're going to keep track of all your business expenses and any income you may earn at this point you don't need to go ahead and apply for an employer identification number with the IRS just yet you can open up this business bank account in your name with the DBA that you're using and just use your own personal Social Security card or just tell the bank you're opening up as a sole proprietorship so you can go ahead and do that now before you've actually formed an LLC or corporate int and then what you want to do is you want to deposit some of your own personal money into that bank account and you can use
• 05:00 - 05:30 that bank account then you can get a debit card and you can use that to pay for all the supplies web properties get your blog started whatever you need to do you can you can invest in the business personally and then you can use that money to basically pay for all your startup costs whatever those might be you can also use that account to start receiving things like affiliate sales from you know ShareASale or Amazon affiliate or wherever you might be getting affiliate sales from you can deposit that money into that account so that's a great way to do that number
• 05:30 - 06:00 three is you want to go ahead and incorporate your business so now this you're gonna do after you've actually validated your idea actually after you're actually starting to earn some revenue from the business then at that point you want to go ahead and incorporate the business and now I do have an often awesome video that I will post on the differences between the various legal entities you might want to think about so check that out after you're done with this video and and that will help you figure out which corporate entity you want to use whether it's going to be an LLC or corporation or something else maybe a partnership
• 06:00 - 06:30 alright number four the next thing you want to do is you want to check and make sure you don't have to get any type of special license in your state or the locality where you're living and operating your business some states and our cities or counties or whatever may require you to get what's called a privileged license or business license or something like that or you may have to register in some other way with your local taxing authority so let them know that you're operating a business this is especially true if you're operating the business out of your home and you may in
• 06:30 - 07:00 just need to do that now chances are that's not gonna be necessary but for a lot of people it could be necessary like let's say you're doing a coaching business or you started a gym or you did something like that there could be certain health regulations that you would have to follow you know for me as a lawyer I have to apply for a privileged license each year and those are just that's just part of the cost of doing business so that's something that you need to do so you want to make sure that you comply with all the local rules and statutes and whatever where you live and make sure you're getting permits and licenses so that you can
• 07:00 - 07:30 actually lawfully run your business otherwise you can get yourself in big trouble all right I think I'm on number four or five I don't remember I'm kind of losing track here I missed number dime like my little worksheet and so the next thing you want to do is make sure that you get your contracts in place so this is especially important if you're going to be bringing on clients you want to have a client contract and you're going to be hiring independent contractors you won't have a contract for them if you're going to be doing a web-based service you want to make sure you have terms and conditions and a privacy policy on your website if you're
• 07:30 - 08:00 going to be having some sort of membership program you want to make sure you have a contract for that these are all really important things that you're going to need to incorporate into your business and so you want to make sure you have these in place hint my DIY legal program will give you access to my membership site that has examples of all these types of contracts in it and so you may want to check that out all right the next step is to purchase adequate insurance now this is something that's really important is something that's often overlooked but it's really not
• 08:00 - 08:30 that expensive when I started my law practice here I had to get insurance for that and well several types of insurance I have professional liability insurance that's the really expensive one chances are you won't need but you can also get what's called an umbrella policy or a general liability policy and I have that in place also for the building the right thing here in case something would happen in a door in case somebody would come in here and get hurt in this building I have a 1 million dollar policy it's not that expensive is somewhere between three and four hundred dollars a year really not a big deal but
• 08:30 - 09:00 if you're operating a business where you're gonna have people over to say your house or someplace else or you're going to be doing work for them you want to make sure you have some sort of liability policy in place in case you make a mistake when you hear about people that are bonded and insured that's what they mean they've got a bond they post a bond in case something bad happens and they're also insured to cover that also check and make sure if you have more than three in North Carolina if you have more than three full time employees you need to get workers comp insurance other states the requirements may vary so you want to check that - if you have full-time
• 09:00 - 09:30 employees if you just have independent contractors not a big deal but be careful because IRS does look at independent contractors very carefully and if you have somebody as an independent contractor who's actually an employee the IRS is not going to look - - happily on that so be very careful about that as well alright and the last step is start to build your professional team this is where you're going to start to hire a minister ativ assistant to help you out with the day-to-day operations of your business you may want hire a virtual assistant to help you with your website or your marketing or social media or something like that you
• 09:30 - 10:00 want to might wanna think through are hiring a local marketing assistant that can help you put on events and network with other people and do seminars and things like that to get the word about about what you do I know a lot of us start out and we really want to build this online business but chances are you have more than enough business where you are locally when you start out tapping into those local networks and doing a lot of prospecting locally is probably the best way to go about at least bring dollars in the door initially that's something I want to think about but then start to build your team as you get busier and busier you
• 10:00 - 10:30 bring out more clients you're gonna want team members to help you service those clients so that you can do more marketing and bring on even more business alright so I hope you liked that video today if you did make sure to give us a big thumbs up and hit the subscribe button down here I think hit the subscribe button and don't forget to ring that bell so you get notified whenever we're posting videos we're doing videos about once a week here it did tail off a little bit during the house holiday season but typically we do videos about once a week and that's it for today so hopefully you have a great day folks also don't forget leave a
• 10:30 - 11:00 comment below if you've got a question or something that you need more clear clarity on please feel free to leave a comment and we'd be happy to answer that I do try to respond to everybody's comments as quickly as I can so have a great week have a great day and we will talk to you next time peace out folks take care oh one other thing don't forget to download my cheat sheet go down in the description check that out also if you want to check out the DIY the leave all I think there's link down there for that too and see you next time