Startups: ESSENTIAL TASKS before you launch
From filing with the state to tax structure, to value proposition EXPLAINED.
So you're building your side hustle/potential future unicorn.
First off - that's amazing, go for it, and try not to listen to your critics.
Next, you need to complete the following tasks before you start selling.
I. File your business with the secretary of state
This can cost between $50-$200 depending on what state you reside in.
Until you are accepting venture capital investments, stick with a limited liability company structure.
The entire process should take 10 minutes or so but is crucial.
II. Obtain an EIN
Once you have your LLC filed with the state, head on over to here to obtain an employer identification number (EIN).
This is free and takes 2 minutes.
You will need this to open a bank account and file your taxes.
III. Draft an operating agreement
If you have more than 1 owner, this is crucial.
You can find templates here.
This agreement specifies who makes final decisions, who owns what, and what happens any of the owners leave the company.
It may seem trivial now when you create a business with your friends/family, but you need a clearly defined document establishing who gets what if the company is sold/if someone should leave.
Not having this can ruin relationships - do it.
IV. Choose a business name
This doesn't have to be related in any way to the name of your LLC.
The important part of the name is that it should be both memorable and reasonably related to what you are building/creating.
Once you have a few names in mind:
Run a trademark check here.
If someone has it trademarked already, move on to the next option.
Next, see if a domain name is available that is related to your company name here.
If not, you may want to move on to another option as customers will have a difficult time finding you otherwise.
V. Open a business banking account
You will need your LLC name and EIN to do this.
My personal recommendation is that you use www.mercury.com (I am in no way affiliated with these guys - just a fan).
It's a solid digital bank for startups.
If you are cash-intensive - you should research local credit unions and community banks. They will be able to handle your cash needs far better.
VI. Obtain business insurance
At a bare minimum, you should obtain general liability coverage for your business.
A ton of insurance companies offer this but I can recommend Hiscox or Putty (if you're a contractor/do small projects).
You can delay starting the policy until you start actually selling/accepting customers but have it in place.
Also, not a bad idea to research if you need a more comprehensive policy if you are offering digital products that collect private information (banking/medical/similar).
VII. Start compiling all of your receipts
Start compiling receipts for all expenses related to your business.
This includes home mortgage/rent (if you work from home), phone bills, auto expenses for business travel, business meeting meals, accounting & legal expenses, etc.
Year 1 is tough for any startup but it's a great time to maximize your losses so you can pay fewer taxes during year 2 (net operating loss carryforward).
VIII. Review your value proposition/business model
This is less admin and more strategy.
But it's essential.
Work through -
Who am I selling the product/service to? (target market)
What pain point am I solving for them?
Why will they pick me over other options?
Until you have these answered, you are going to have a very difficult time selling/marketing/making money.