For many, January is a month of fresh starts, new goals, and new adventures and for some, January may be the month that they take that first step in starting a new business.
If you are looking at starting a new business, here are a few key legal and financial actions to take in getting your business started.
1. Get an attorney to file your Articles of Incorporation
Technically, you don’t need an attorney to do this, but having that expertise by your side is incredibly valuable. Articles of Incorporation legally establish your company as its own entity in your state and generally includes information about the name and address of your company, purpose of the company, and names and addresses of the responsible parties of the companies.
When you are filing your Articles of Incorporation, you will be establishing your business structure – sole-proprietorship, LLC,
corporation, etc. Each structure has different implications on taxes and liabilities, so be sure to meet with a business attorney to determine which option makes the most sense for your business.
2. Register your business name with the state
You will need to register your business with the state to obtain a CRS (Combined Reporting System) number, which is used to report and pay taxes for business conducted in New Mexico.
For more information, visit the NM Tax & Revenue website
3. Apply for an EIN
An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number and is used to identify a business identity at a national level, similar to how a CRS is used at state level. EIN are used for multiple reasons including banking, hiring employees, filing tax returns, etc.
To learn more and apply for an EIN go to https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
4. Apply for your business license
Business licenses are not issued at the state level, but rather at a local level. You will need to register your business at a city and
possibly county level. If you are in Albuquerque, you can get more information here https://www.cabq.gov/planning/business-registration-information
Now that you have the legal elements covered, it is time to establish your financial foundation.
1. Open a business bank account
In general, you will need to keep personal and business finances separate. When looking at potential banks to work with, consider and compare the various fees they charge for checking, credit interest and minimum account balance fees. You will also want to look at transaction fees for merchant services, such as credit card transaction fees and ACH fees.
2. Interview Accountants/Bookkeepers
Finding the right person to manage your money while you run your business is vital. Reach out to contacts in the business community for recommendations and be sure to check references. Even if you are planning on taking on the CFO role in the initial phases of your business, you will still want to work with an accountant or bookkeeper to help set up your company’s new accounting software correctly for your businesses needs.
3. Decide what accounting software you would like to use
Speaking of accounting software, now that you have a trusted accountant or bookkeeper in place, your next step is to decide which accounting platform makes the most sense for your company. There are many options available, such as QuickBooks, Xero, FreshBooks, Wave, and more. Each option will have its own list of strengths and challenges, so work with your accountant or bookkeeper to identify your company’s specific needs to determine which platform will make the most sense for you.
When opening a new business, you want to be sure to build your legal and financial foundation properly to avoid future issues. While it may seem that there is a lot of information to absorb, there are also a lot of resources aimed at helping new businesses succeed (many at little to no cost). If you need assistance in getting your new business off the ground, here are a few organizations that may be able to assist:
WESST – https://www.wesst.org/
Small Business Administration – https://www.sba.gov/
Good luck and cheers to a prosperous New Year!