How to form a business – corporation or LLC

To form a business with the right legal paperwork for city and state, as well as enable your business to accept money through credit cards, there are basically three options.

• Pay a lawyer – Spend a couple thousand dollars for a lawyer to file the paperwork, with the cost depending on the scope and nature of your business
• File online with a company who wants to help you for a fee – expect to pay around $300 in addition to the state and city fees as they guide you through the process
• File yourself through the Secretary of State and Department of Revenue

How to file a business yourself with state authorities

The state is generally not very good at making it clear and easy how to start your own business. That is why online services pop up to help you along for a fee, and why lawyers can charge whatever you’ll pay them to make sure it is done right. However digging through a horribly designed government website or physically visiting your local government offices can get you on your way to operating legally. If you want to be sure, pay the lawyer, because this is not legal advice, it is just a suggestion.

• Incorporate
  Search for the Secretary of State’s office in your state. Follow their instructions. Some states may let you file online. Others may let you mail in your application. Somewhere on their website you should be able to download .pdfs that include the application and instructions. If you are close enough to the city (like the state capitol) where the Secretary of State has an office, go in. Say hi. Tell them you want to file a new corporation or LLC. Hand them the completed paperwork. You may need cash, check or money order to pay the fee. Smile as they stamp it. You now have an LLC or corporation, on paper.
• Apply for a Tax ID number
  Apply for a federal tax ID or Employer Identification Number (EIN) through the IRS at this link about applying for an EIN on irs.gov.
• Apply for State reseller’s license
  So far you have told the state and the federal government that you are conducting a business. Now you need to tell the State’s tax collection department that you will be selling products or services. They will want you to charge your customers just a little bit extra and pass it along to them. Sales tax. Collect it, pay your sales tax on the schedule the state gives to you. Be thankful that they allow you the privilege conducting business in their jurisdiction. Some countries don’t, you know.
• Start a bank account
  Go to a bank, set up a business account. They want your business, so they will probably guide you to the services they want you to use. Order checks. Sign up for the business account that sounds best to you.
• Apply for a merchant account
  Now you need someone to talk to VISA Mastercard Discover and AMEX for you. That’s called a merchant account. Ask your bank to recommend one to you, they may have their own or a company they partner with. The money from a credit card takes a few days to get to your checking account, and it may go faster if you use the credit card processor that your bank is most integrated with. Merchant account companies are a competitive business, so compare transactional percentage fees and total costs in choosing the credit card processing company you are most comfortable with.
• Apply for a merchant gateway
  If you would like to accept credit cards online, you will need a gateway. This is another business in the communication chain of guy-at-home-on-internet to your funds in your company’s bank account. They take a dime or less from each transaction and have a monthly fee probably too.
• Launch a website
  There are thousands of pages about how to launch a website, so research that elsewhere. The platform Allen Booth is built on, Volusion, is pretty nice and has a shopping cart to let you manage products on sale to customers. Even if your business is not about selling things online, launch a website of some sort and realize it is your international business card for your company.
• Tell your friends (and other people)
  Promote your products or services in any way you see fit.  Now you’re legal.  There are many ups and downs to owning and/or operating a business.  Surround yourself with smart people and make interesting things happen.  Don’t forget to pay your taxes on time.

Jotham McCauley lives in Jackson, MS with his wife and two walker hounds and sells rustic wood furniture at Allen Booth.

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