After overcoming the first stages, namely the ideation and conception, it is now up to the entrepreneur to open his startup considering all the legal aspects involved. Before venturing into the development of your product, the entrepreneur needs to follow the steps listed below in order to establish a business and ensure, little by little, the success of your business:
Look for possible partners
The first step to take to establish a business is to determine if the entrepreneur needs and wants to have a partner. Having someone with whom to share fears, anxieties, expectations, victories makes the process safer and more viable.
By having a partner, the entrepreneur will have more security and confidence in moving forward with his idea. However, this does not mean that this is the key element to success. In this step, you should consider the advantages and disadvantages that entails have a partner and finally determine if in your case, you need one or not.
If you want to tackle challenges of entrepreneurial environment alone, you must then realize that you are at your own risk. This is true for both beneficial and less-than-good situations.
Otherwise, you should start looking for partners. The skills of that person or persons must complement the skills of the entrepreneur in order to obtain the skills necessary for the development of the business. Entrepreneurs can find potential partners in entrepreneurship fairs or events, among family and friends, founders of others startups, between others.
Having a good idea is not enough and one of the most important resources, if not the most important, is funding. In fact, many individuals with ideas with great potential for success are unable to put it into practice due to lack of funding or difficulty in obtaining foreign investment. Establish a business it requires a large initial investment as it is necessary to cover all the expenses that this entails until it starts to generate income and profits.
At this stage, the entrepreneur and partners, if applicable, must decide how to finance their business. Ideally, they would be able to finance their business with their own capital. However, the percentage of entrepreneurs who manage to create a company without resorting to investors is quite small.
Thus, it is necessary to estimate the most realistic possible capital needs for business start-up through a financial plan. Thereafter must preparing a presentation with potential investors. The objective of this phase is to get some financing commitment that will ensure the creation of the company and make this official with a lawyer.
Formalize a company
Once the financing issue is overcome, the entrepreneur can proceed to formally establish their startup. These people, in the agitation and enthusiasm of wanting to put their idea into practice, end up postponing the administrative aspects of a bureaucratic nature that formalize a startup it implies.
Despite this being a very painful and uninteresting phase, this is essential for the success of a business. Thus, it must be dealt with as soon as possible, in order to avoid possible future legal problems.
Bureaucratic processes vary from country to country. In other words, the entrepreneur must consult specific guides about the country where he wants to establish his company. Furthermore, depending on the situation and type of business, it may be advantageous and advisable to even hire a lawyer experienced in this field to ensure that all legal aspects are covered.
Below are the 6 administrative aspects that any entrepreneur needs to deal with for their startup or small business:
The first step in formally setting up a company is choosing the name. It plays a leading role as it will be present in all aspects and business activities and therefore it needs to be appropriate.
After identifying the name, it is essential to verify that it does not violate the rights of an existing company. If so, it is necessary to choose another name and repeat the verification process. After choosing one that is possible, the entrepreneur must register it.
legal form of the company
The way in which the company presents itself legally is very important for its functioning and will have an impact on several factors, from the name of the company, the responsibility of the founder and partners, and the fees and interest to be paid.
Each country offers several legal forms, each with its own particularities, and it is up to the entrepreneur to analyze these in detail and choose the one that seems to him most suitable for the type of business he wants to create. They can choose an initial legal form and then change if they feel that the current one is not the most suitable.
Permits and business licenses
Depending on the type of business and physical location, it may be necessary for the entrepreneur to have one or more commercial licenses or permits, at the state, local or federal level. It is important for the entrepreneur to research what documents are needed and where to obtain them.
Tax Identification Number
This identification is similar to the individual social security number, except for companies. Even if the entrepreneur is the sole owner of the company, it is recommended to have an ID dedicated only to the company's business affairs, allowing government agencies to control the company's transactions.
In order to separate personal activities from commercial activities, it is necessary to open a bank account in the name of the company where it will contain the profits and revenue that the business will generate. THE startup having your own bank account also increases your chances of getting a commercial loan.
Laws of workers
There is also bureaucracy associated with hiring human resources for the company. Entrepreneurs need to understand correctly what procedures are required and what obligations they have, such as payroll taxes, work insurance, workers' remuneration rules, among others. It is advisable that this meets with an employment law professional in order to comply with all surrounding rules.
Choose working team
At this stage, the entrepreneur must start by estimating the number and profile of partners he will need to develop his product. This is a fundamental step for establish a business and people should not be selected for their financial investment capabilities, but for their technical qualities.
The entrepreneur should follow the same tactics presented in the selection phase work team for your company. In other words, you must hire professionals with skills different from yours in order to obtain the technical skills necessary for good development and who share the same vision of the business and the same ambition.
If not necessary, the entrepreneur can take advantage of this phase to establish their own independent employee contract, if they work alone, or prepare a hiring plan for the future.
Set the workplace is a key step in establish a business. This can influence not only the success of the business but also its expansion. Depending on the type of business and the size of the work team needed, the entrepreneur can opt for a home office format, working from home or in a coworking space, or renting or buying a commercial space.
The location chosen to establish the company can make all the difference. It is through this that customers and partners will create their first impressions about the business. The entrepreneur must, therefore, consider which type of space it is more advantageous for your type of business, the activity to be developed, the targets you want to achieve, among many other factors.
Choosing an accounting system
The accounting of the future company is something that all entrepreneurs should take into account. It is through this that budgets are created and managed, rates and prices are defined, tax payments are made, business with third parties is established, among various other bureaucratic aspects.
At this stage, the entrepreneur must define whether he has the capacity to deal with these issues. That is, if you can develop your own accounting system or if it is more favorable to hire an accountant. With the support of an expert, the legalization of startup it becomes much faster and simpler. Thus, it does not have to worry about the accounting and tax area, nor about the payrolls, thus avoiding administrative failures. Likewise, it increases the chances of business success.
Whichever method the entrepreneur chooses, the accounting aspect is important for the proper functioning of the business and must always be up to date.
Start the company's activity
Once the steps previously presented have been completed, the startup it is now legally established and ready to develop the long-awaited product. At this stage, the entrepreneur has to check if all points are ready to start the practical activity of the company in order to attract customers in the near future.
In conclusion, these are the main steps to establish a business. However, it does not mean that they are the only steps, being the responsibility of the entrepreneur and his team to determine if it is necessary to follow more steps.