Starting a small business can be a rewarding and exciting endeavor, but it can also be daunting, especially when navigating the legal requirements. If you’re an expert in your field and want to monetize your knowledge through online course creation and other educational offerings, you’ll need to know what it takes to officially form your own small business.
In this blog post, we’ll provide a general overview of the steps in starting an official small business, focusing on the legal aspects you must consider. In particular, we’ll be looking at what it takes to form an expertise-based business as an edupreneur—someone who wants to create and sell educational products and services based on their expertise.
Whether you’re a consultant, a coach, a trainer, a speaker, or any other type of subject-matter expert, this guide will help you understand what it takes to turn your expertise into a profitable small business.
From choosing a business structure to registering your business and getting the necessary licenses and permits, we’ll cover all the essential steps you need to take to get your business up and running.
So let’s get started!
What are the Legal Considerations for a Small Business?
Setting up a legal form for your small business is an essential step you can’t afford to overlook. The legal structure is a framework defining your business operations, tax methods, and its liability for any legal issues that may arise.
By setting up a legal structure for your business, you can protect yourself from personal liability and ensure your business complies with all the relevant laws and regulations in your jurisdiction. This process is fundamental if you plan to offer educational products and services that could expose you to legal risks, such as copyright infringement or negligence.
There are several legal structures that you can choose from, including:
- Sole proprietorship
- Partnership
- Limited liability company (LLC)
- Corporation
Each structure has advantages and disadvantages, and the one that’s right for you will depend on various factors, such as your business goals, tax situation, and risk tolerance.
1. How to Name Your Company
Choosing the right name for your small business is an important step that can significantly impact your brand recognition and customer perception. Your business name should be memorable, distinctive, and easy to spell and pronounce while also conveying the essence of your brand and what you offer.
Before using a business name, you’ll need to ensure it’s legally available and not already used by another business. This step is where filing a DBA (Doing Business As) or a Fictitious Business Name comes in.
A DBA is a legal document that allows you to use a trade name different from your personal or legal name for your business. A name for your business is required by state and local authorities to ensure your business is registered and operating legally.
You can file a DBA or a Fictitious Business Name with your local county clerk’s office or online through a legal filing service, such as Bizee. Bizee offers an easy and affordable way to file a DBA, with packages starting at just $39 plus state fees. They can also help you with other legal requirements, such as registering your business and obtaining necessary licenses and permits.
If you need help finding a name for your business, you can use a business name generator to generate unique ideas and inspiration. Bizee’s Business Name Generator is a free tool that allows you to enter keywords and criteria to create a list of available business names matching your preferences.
Your business name is an integral part of your brand identity, so take the time to choose a name that reflects your values, vision, and mission and resonates with your target audience. You can set your business up for success with the correct name and create a memorable brand that stands out.
2. How to Prepare and File Articles for Your Business
Once you’ve chosen a name for your small business and decided on a legal structure, it’s time to prepare and file your articles of organization or incorporation. These documents formally establish your business as a legal entity and provide essential details about its ownership, management, and operations.
The specific requirements for preparing and filing your articles will vary depending on your jurisdiction and legal structure. Generally, you’ll need to provide basic information such as your business name, address, ownership structure, management structure, and any other details required by your state or local government.
Filing your articles involves submitting them to the appropriate state agency and paying a filing fee. The process can take several weeks or even months, depending on the backlog of applications and the complexity of your business structure.
In addition to preparing and filing your articles, there are several other legal requirements you’ll need to fulfill to maintain your business’s legal status and avoid any penalties or fines. Two critical requirements you need to obtain include:
- A Certificate of Good Standing – This document verifies that your business is authorized to do business in your state and has complied with all the relevant legal requirements, such as filing your articles and paying any required fees or taxes.
- An Annual Report – It’s a document that provides vital information about your business’s activities and financial status. It’s usually due once a year and requires you to update your business’s contact information, ownership structure, and other key details.
Bizee can help you with all these legal requirements, from obtaining a Certificate of Good Standing to filing your Annual Report. Its online platform simplifies the process and provides affordable and reliable legal services to help you stay compliant and protect your business’s legal status.
3. The Different Types of Legal Structures
The legal structure you choose will have significant implications for your tax liability, legal liability, and management structure, so it’s crucial to choose the right one for your specific needs and goals.
Here’s an overview of some of the most common legal structures for small businesses:
- Sole proprietorship – A sole proprietorship is the simplest and most common type of legal structure. It’s a business owned and operated by a single individual and doesn’t require formal legal filings or registrations. However, the owner is personally liable for all debts and legal issues related to the business.
- Partnership – A partnership is a business owned and operated by two or more people. Like a sole proprietorship, it doesn’t require formal legal filings, but the partners are jointly and individually liable for all debts and legal issues related to the business.
- Limited liability company (LLC) – An LLC is a hybrid legal structure combining a corporation’s liability protection with a partnership’s tax benefits. It’s a separate legal entity from its owners, which means the owners are not personally liable for the debts and legal issues of the business.
- S-Corporation – An S-corp is a type of corporation that allows the business to avoid paying federal income taxes. Instead, the business’s income and losses are passed through to the shareholders, who report them on their individual tax returns. The business must meet certain criteria, such as having fewer than 100 shareholders and only issuing one class of stock.
- C- Corporation – A C-corp is a separate legal entity from its owners and offers liability protection, but is subject to double taxation. Double taxation means the business’s profits are taxed at the corporate level and again when distributed to shareholders as dividends. C-Corps are often used by larger companies that require more complex management structures and want to raise capital through stock sales.
If you’re feeling overwhelmed by the legal structure options and requirements, Bizee provides comprehensive information and services for each type of legal structure. Their free guides and resources are a great starting point if you want more information on a specific type of legal structure.
Get Help to Kick Off Your Small Business
Bizee provides comprehensive information and services for each type of legal structure, including free guides and resources and affordable and reliable services to help you form and maintain your business entity.
They can provide the tools and services you need to kick off your small business successfully, including;
- Entity formation
- Registered agent service
- Business compliance
- Name search
- Tax service
- License and permits
- Banking
Final Thoughts on Starting a Small Business, Legally
Starting a small business can be a thrilling yet challenging journey. As an entrepreneur, you may have a brilliant idea or a passion to turn into a profitable business. However, navigating the legal aspects of starting a business can be overwhelming, and selecting the proper legal structure is crucial to ensure the long-term success of your business.
Fortunately, there are resources available to help streamline the process of starting a small business. One such resource is Bizee, which provides comprehensive information and services to help small business owners set up their legal structure. They offer free guides and resources for each type of legal structure, and affordable and reliable services to help with filing paperwork and other legal requirements.
Jeff Cobb, Founder of Learning Revolution
Jeff Cobb is an expert in online education and the business of adult lifelong learning. Over the past 20+ years he has built a thriving career based on that expertise – as an entrepreneur, a consultant, an author, and a speaker. Learning Revolution is a place where Jeff curates tips, insights, and resources to help you build a thriving expertise-based business. Learn more about Jeff Cobb here.
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