What is a Fictitious Business Name?
Another step your startup must take before it gets underway is relatively simple, but extremely important: you have to register your fictitious business name. A fictitious business name is a name of company that does not include the surname of the owner or the names of all of the partners of the company. For instance, a startup called John Smiths Arcade would be acceptable and would not need to be registered under a fictitious name. On the other hand, a company called Blasters Arcade would be obligated to register its name.
Where Do I Register My Fictitious Business Name?
Where you register your fictitious business name (also known as an assumed name, trade name, or a doing business as name) depends on where you live. Some states make you register your startups trade name with the county clerk, others do not. The amount of paperwork and the size of the fee also vary based on the location of your new venture. We recommend that you visit Business.gov and do some research to find out what you need to do to get your business name listed.
How Do I Get My Fictitious Business Name?
Again, every state has a different set of guidelines for registering your trade name. In San Diego County, it is recommended that you perform an in person search at the clerks office and an online search to make sure that your business name is not already taken. You can also check by mailing your business name to your local clerks office, but this usually takes 2-3 weeks.
If the name you want has not been taken, you can then file your fictitious business name either in person or by mail. We suggest you do this in person due to the importance of this document. In San Diego County, all that needs to be done is completing a Fictitious Business Name Statement and paying a $30 fee. Thats all it takes to get your trade name registered!
In our next post we will review how to get a seller’s permit. See you Thursday!
As mentioned before in the introduction to this series, there are various legal preparations an entrepreneur must take before launching his or her startup. Over the next few posts we will discuss all of the different licenses, permits and documents you, the entrepreneur, will need and how to get them. One of the fundamental actions that almost every business must take is getting a business license.
What is a Business License?
Almost all startups need a local business license. In basic terms, a business license gives an entrepreneur permission to operate his or her startup in a certain geographical area, whether it is for the city, county, state or federal level. As a result, the type of business license you will need will depend on how big your new venture is going to be. The nature of your business may also determine if you need more than just a general business license. For example, if you are going to open a juice bar, not only will you need a general business license at the city level, but you are also going to have to apply for a health permit because of guidelines related to food service businesses.
What Do You Need?
Getting the business licenses you need for your startup isnt the most difficult thing to do, so you wont need a lawyer. What you do need to do is to organize all of your paperwork beforehand. This means making sure that you have any fictitious business name certificates as well as your Employer Identification Number. Once youre organized, the best bet is to contact your local and county government offices and check what kinds of licenses you need to apply for. Your local government will most likely give you some applications to fill out along with a list of fees to pay. Once you hand in all of your paperwork, you should be good to go!
What Kind of Business Licenses Are There?
Below we have listed some of the most common business licenses. If you want to go into more detail, visit www.business.gov and checkout if there are any special permits you need for your specific area.
- General Business License
- Zoning and Land Use Permits
- Health Department Permits
- Sales Tax License
- Fire Department Permits.
We would also like to recommend that you finish writing your business plan before you start any of these pre-launch action items. Many people think that getting your business license is one of the first steps to starting a business, but creating a solid business plan before you launch will greatly improve your chance of success.
Next we will be going over how to register a fictitious business name. Read on!
How to Get a Federal Tax ID
Before your new venture gets started, its important that you let the Internal Revenue Service know of your startup. Giving the IRS your business information is a key step in the pre-launch phase because it allows the IRS to collect taxes on your business and allows you to perform other pre-launch actions. In this post, we will go over the most common way to let the IRS know of your startups existence, which is applying for a Federal Tax Identification Number.
What is a Federal Tax Identification Number?
A Federal Tax ID is also known as an Employer Identification Number, or EIN. Your startups EIN is a permanent number used to identify your new venture and is necessary for other important operational procedures such as opening a bank account, applying for a business license, and filing your taxes. If you are wondering if your new venture needs an EIN, take a look at the six questions below and apply them to your small business. If you answer yes to any of them, youre going to need a Federal Tax ID.
- Do you have any employees?
- Do you operate your business as a corporation or partnership?
- Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms?
- Do you withhold taxes on income, other than wages, paid to a non-resident alien?
- Do you have a Keogh plan?
- Are you involved with any of the following types of organizations?
- Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
- Real estate mortgage investment conduits
- Non-profit organizations
- Farmers’ cooperatives
- Plan administrator
How Do I Get My EIN?
Applying for an Employer Identification Number is free through the IRS and can be done:
- By Phone
- By Fax
- By Mail
Getting an EIN online has become the preferred method for entrepreneurs over the years. After you filled out and completed the application, a Federal Tax ID will automatically be issued. However, it will still take the IRS two weeks to put your companys EIN into permanent record, so keep this in mind before you start applying for bank accounts and other business needs. For more information on this process, visit the Internal Revenue Service.
Come back Tuesday where we will go over the importance of a Business License.
Actions Every Entrepreneur Should Take Before They Launch Their Startup
Its no secret that starting our own business is a challenging task. You have to come up with a unique business idea, organize and strategize by writing a great business plan, and in some cases you have to try to find outside funding. After already going through all these steps, it is difficult to wait even another second before launching. However, there are still several legal, financial, marketing and operational actions you may need to take before you launch in order to make sure things go smoothly when you open your doors. We at The Startup Garage feel that it is important that an entrepreneur know these steps before their new venture enters the market and, as a result, we have created a new blog series, Your Startup’s Pre-Launch Checklist.
The Different Steps
As mentioned before, there are certain legal, financial, marketing and operational steps you must take before your company officially launches. In this series, we will not only outline each major piece, but we will also dive into many of the different licenses, tools and systems you need so your startup can have a sound launch. The series will cover:
- Legal Preparations
- Financial Preparations
- IT Systems
- Hiring and Payroll Systems
Once you address all of these questions, you should be able to launch your company. However, make sure you have a business plan before you start the pre-launch process. Remember, the goal is not just to launch, but to launch a successful company. The process of writing a business plan will help you understand your goals, customers, and needs, as well as create a strategy that will help you achieve success. Once you have your strategy in place, you can confidently tackle all your pre-launch action items on your way to launching and starting a great business.
Tune in on Thursday for our next post where we will go over what information you need to give to the IRS before you launch your business.
Take a look at our Sample Business Plans and Products.
At The Startup Garage, we’ve been spending a lot of time paying attention to the economy as it relates to startups, especially in relation to funding. In the past few days, a variety of reports have been released regarding the state of venture capitalism over the past quarter. Based on what we have seen, VCs and Angels are handing startups less money as of late. Here are a couple of reports that show this in more detail.
Money Trees Quarterly Venture Capital Report
Every quarter Price Waterhouse Coopers comes out with a quarterly report about the state of venture capitalism in America, and this quarter was no exception. According to the report, the total amount VCs invested dropped by 31% from the previous quarter and the number of deals that were made also fell by about 19%. Thats a decrease of $2.1 billion and 182 deals. Software, Biotechnology, Clean Technology, and Internet Specific companies rounded out the top 4 industries that received money this past quarter, but all saw a significant decrease in funding. The one bright spot of the PWC report is that the large portion of the deals, 35%, occurred in the Early stage.
Super Angels Not So Super?
According to blogger Gregory T. Haung and a report coming from the Center for Venture Research at The University of New Hampshire, angel investments for the first half of 2010 totaled $8.5 billion which is a 6.5% decrease compared to 2009. Angels did increase the total number of deals that they made by 3%, up to 25,200. However, the statistic that troubles us the most is that only 26% of all the deals that were made were classified as seed or startup stage.
So what do these reports mean for the average entrepreneur? Basically, that VC and angel funding is decreasing. There are several factors that contribute to this decline. Over the past few months Internet companies have been able to lower their startup costs, which could explain some of the decrease in funding. Also, as has been the trend over the past couple of years, the unfavorable economic climate is making investors pickier about where they put their dollars. Even though this is a negative trend for entrepreneurs, keep in mind that there are still plenty of sources of funding out there.