Setting up a creative business can be tricky. The key is understanding the goals of your creative business. To get started begin with the following five steps:
Step 1: Write a business plan
The business plan must include your goals for the business. The goals of the business will help you make the right decisions about the legal structure, deciding if you need an EIN, what the tax year will be, financing, and so much more. I will have additional posts to address each one of these items in detail at a later date.
Step 2: Register your business
Typically you register your business name with either the state or county. The registration of your business name provides some protection (more on this later) that another business cannot use your name.
Step 3: File your business entity
To register your creative business you will need to know what form of business entity (legal structure) your creative business will take.
- Sole Proprietor
- A sole proprietorship is the most basic type of business to establish. You alone own the company and are responsible for its assets and liabilities.
- There are several different types of partnerships, which depend on the nature of the arrangement and partner responsibility for the business.
- Limited Liability Company
- An LLC is designed to provide the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.
- People form cooperatives to meet a collective need or to provide a service that benefits all member-owners.
- S Corporation
- An S corporation is similar to a C corporation but you are taxed only on the personal level.
- A corporation is more complex and generally suggested for larger, established companies with multiple employees.
Step 4: Obtain your business license
Each state, city, and county has different requirements for running a creative business in their jurisdiction. Do some research in your area by going to the State Attorney Generals Office.
Step 5: Decide on a location
Deciding on a location is one of the key success factors for a new creative business. Location, location, location…if you have never heard that before I can tell you it is very critical to do the research especially if you will have a brick and mortar creative business.
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