Whether you are a Grand Rapids entrepreneur that is developing the next big thing or you are at a point where you want to be self-employed, you need to think about forming a business entity. Whatever your business plan is forming a company or corporation is important. So West Michigan, how do you start a small business?
Forming a new business is simple and complex at the same time. It is simple in that if you know the right steps to take and are experienced with the process it is pretty straightforward. If you are unfamiliar with the formation process you can probably stumble your way through it but that does not mean it will be done correctly or go smoothly.
The first step is to choose a name. Michigan does not allow businesses to have the same name or one that is significantly similar to an existing Michigan business. The State of Michigan has an electronic database to search for name availability.
Once you have chosen a name and found that it is available, the next step is to choose what business entity you are going to be. There are many different selections that have their own benefits, but the two most common entities are the limited liability company or the corporation. The differences between the two is for a different discussion, but these two entities are similar and can accomplish the similar things.
After you have chosen your entity, you then need to file with the state. For limited liability company you will file your articles of organization and for corporations you will file your articles of incorporation. Once the state approves your articles, it will issue you an identification number that can be used to open bank accounts and get an EIN from the IRS.
In addition to your articles, you are going to want to have internal documents too. Limited liability companies generally have an operating agreement and corporations have bylaws that basically are the rules that the business will abide by. These are vital, especially when there are more than one owner of the business because it’s easy to agree on these rules at the beginning and it becomes more difficult as time progresses.
On top of the bylaws or the operating agreement, meeting minutes and other agreements might be necessary. Your new business is a stand-alone entity that is distinctly separate from you. Because of that separation, these documents are not only proof that the business is separate but create a history of the business that can be useful down the road.
A Grand Rapids small business attorney can help ensure the formation process is not only done correctly but that it’s done efficiently. There are a wealth of online resources (including this blog) but sorting through which ones are credible or relevant to you can be overwhelming. Your small business lawyer can also help advise you on things to ensure you are protected. These advisers can help guide you too on your future actions to put you on the path of success.