It’s that time of year again where we start trading in beach towels for school supplies. For many busy moms like myself, now is the perfect time to focus on your own goals and for those moms who are running their own business, it’s also a good time to revisit some of the legal and administrative details that may have slipped through the cracks over the past few months.
If you’re running a small business, here’s a back-to-school checklist to help you stay on top of the legal aspects of your business:
Check that you’re legally permitted to use your business name
If you’re just starting a business, everything begins with the name. But before you start printing out business cards, you need to make sure that your great new name isn’t infringing on an already existing business. You should search corporate names in your state’s secretary of state’s database, as well as conduct a Trademark search at the federal level. CorpNet.com offers both a Free Business Name Search and Free Trademark Search Tool.
Register Your Fictitious Business Name (aka DBA, “Doing Business As”): If you’re a sole proprietor or general partner, you’ll need to file a DBA registration when your company name is different than your own name. For an LLC or corporation, DBAs must be filed whenever you conduct business using a name that’s different than your official Corporation or LLC name.
Incorporate Your Business or Form an LLC
This is a critical step to protecting your personal assets (such as your personal property or your child’s college fund) from any liabilities of the company. That means that if your business should be sued, your personal property may be shielded from any judgment. Depending on your specific circumstances, you might choose among an LLC (great for small businesses that want legal protection, but minimal formality), an S Corporation (great for small businesses that can qualify), or a C Corporation (for bigger companies or companies who plan to seek funding from a VC). Unless your business is particularly complex, you should be able to incorporate or form an LLC online, without having to retain a business attorney.
Get a Federal Tax ID Number, a.k.a an “EIN” or “Employer Identification Number”
To distinguish your business as a separate legal entity, you’ll need to obtain a Federal Tax Identification Number, also referred to as an Employer Identification Number. Issued by the federal government, the tax ID number is similar to your personal social security number and allows the IRS to track your company’s transactions.
Pay your estimated taxes
When you run your own business, tax time isn’t just once a year. You need to make estimated tax payments throughout the year (it’s not required for everyone, but if you expect to owe $1,000 or more in taxes when you file your income tax return, you most likely will need to make estimated tax payments to the federal and maybe state government). Estimated tax payments are divided into four payment periods throughout the year: April 15, June 15, September 15, and January 15. For self-employed individuals and disregarded entities (i.e. single-member LLCs, partnerships, and S Corp shareholders), the IRS recommends using Form 1040-ES to calculate your individual estimated tax payments.
As you check each step off your list, find some way to reward yourself (no matter how small). As a business owner (and full-time mom), you’ve got an exiting journey ahead of you, so don’t forget to enjoy the ride!
*Editors Note: Original Content written by Nellie Akalp for the Mogul Mom.