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As a San Diego North County business attorney, I am frequently asked: “What does it take to start a business?” Generally, there are six steps to take into account when starting a business:

1. DECIDE ON A LOCATION FOR YOUR BUSINESS

When deciding on a location for your business, certain factors need to be taken into consideration such as liabilities, taxes, incorporation costs and fees; where you want to do business; foreign entity doing business; raising capital; and reporting requirements. The decision to incorporate the entity in another state should only be made after weighing the advantages against the disadvantages. These factors should be discussed with your business attorney before you decide on a location for your business.

2. DETERMINE THE APPROPRIATE BUSINESS STRUCTURE

There are several business structures that are used in setting up a business. Here are some of the most common entities used, their requirements and liability issues:

Sole Proprietorship is a business owned and operated by an individual. Sole proprietorships are the basic forms of business organizations, which require no formal type of government filings to form the business and are not required to follow any type of operating formalities. The benefit of a sole proprietorship is the taxability of business income and the deductibility of business losses on the business owner’s individual tax returns. The liability of a sole proprietorship is that the business owner is personally liable for all liabilities and obligations of the business, which liability extends, not only to liabilities in excess of the amounts invested in the business including any insurance coverage, but also to the business owner’s personal assets.

General Partnership is an association of two or more persons to carry on a business. A general partnership is another type of business entity which is easy to form but requires a written partnership agreement to govern the operations of the partnership and the relationship among the partners. Compliance requirements for a partnership are minimal and require that a Statement of Information be filed with the State of incorporation and the partnership maintains records to provide to the partners. The liability of a general partnership is that a partner’s liability not only extends to that partner’s percentage interest in the business but also to the partner’s personal assets as well.

There are those who believe that business education goes hand-in-hand with any college degree. There is logic to that assertion. It is wise that every person has some basic knowledge of business, as it is a necessary component regardless of a person’s field of study. An Introduction to Business class touches on several areas of business that would benefit all careers, including business law.

If you are planning to be self-employed, partner with, or operate your own business, it is good to have some knowledge of business law because it focuses on laws that apply to such entities, like partnerships and corporations. There are many factors that go into running your own business. Business law provides insight into which direction may be best for your entrepreneurial aspirations.

Many people wish to have their own business; however, it is no small feat. Business law can answer some of the most basic questions, which could impact your decision of whether you want to own a company: What type of business should I set up? What is the easiest type to set up? When are business owners personally liable for debts? How can I protect myself from liability?

Business law also delves into the financial aspect of the field. This can include understanding the importance creating an effective business plan. Typically, an Intro to Business course teaches students how to draft a business plan so that they can have a thorough understanding of its significance. Other finance learning can include financing a business using bank loans or investment capital and utilizing other capital resources like an equity loans.

Business law explores the four general ways to organize a business. One way to form one is by sole proprietorship. A sole proprietor is inseparable from its owner. Consequently, the business and the owner are one in the same. This is considered the easiest and economical type to set up. But on the down side, the owner is fully responsible for the company, with no form of limited liability.

How to register a business name is a question many entrepreneurs ask when they start their first business. Along with this question there are more questions that should be answered before you register a business name. Consulting a business lawyer, certified public accountant and or a tax lawyer to help you with the answers is advisable.

Some examples are: What will the legal structure of your business be? Will your business be a sole proprietorship? Will your name be your legal name or a fictitious name? Will you need a tax ID? Will the business name infringe on any trademarks? Will you need to obtain any of the answers to these questions in order to help you decide what type of business entity to establish. Once the entity is established then you will know which guidelines to follow to register your business name.

The actual process to register a business name is usually fairly simple. In most cases a form is provided for you to complete and provide the needed information to the proper government office and in a few days or weeks the name gets approved. The guidelines to register a business name are independent to the state you are doing business in.

These guidelines can be found at Business.Gov business name registration website. Each state has different guidelines and offices for registering. This is a list of some of the places you can register your business name in different states; your county courthouse, online application, the Secretary of State, Parish Clerk of Court, to name a few. Not all states use the same process.

So when you are in the process of finding out how to register a business name, remember to ask yourself some of the questions I listed above and seek professional advice. The actual process to register a business name is usually quite simple and if the proper research is done prior to registering, it will stay simple.