Wednesday, March 25, 2009

How to start a company in 5 steps (legal & admin stuff)

Where starting Personforce, I was overwhelmed by all the legal and administrative tasks required to start a business. I thought it might be helpful for folks looking to start a business to have a little checklist of the things you have to do. This is the order we did things and is not legal advice.

How to start business in 5 steps - the legal and adminstrative stuff you need to do

1. Incorporate

Choose legal structure and name. Are you going to be a C-corp (good for startups seeking funding), S-Corp (good for cash flow positive businesses), LLC, or sole proprietorship. There are lots of good websites you can use to get this. You need this to get a certificate of incorporate

2. Apply for an Employer Identification Number (EIN)

3. Get a bank account

You need an EIN before you can open a business bank account.

4. Elect a board of directors

File the documentation about who is on your board of directors with your registered agent (the entity that helped you Incorporate.

5. Allocate founders' shares through share purchase agreement.

Basically, someone has to own the company. Allocate share that the founders need to purchase. Set a vesting schedule for the shares.

Bam, 5 easy steps to start you business. Once you raise money, start making money, or have a payroll things get a little more complicated, but that's basically all you need to do in the beginning.

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