By Annie Pilon
Many entrepreneurs today get started by working on the side or creating hobby businesses. But what happens when it’s time to take that side hustle to the next level? If you’re looking to grow and make your passion project into a real, official business, there are some legal steps you need to take.
Turn a Side Business Into a Real Business
Here’s an outline of what may be required.
Create a Plan
All of the legal and official steps that go into starting a business can seem overwhelming to someone who is used to running a hobby business or side hustle. So it helps to map out a timeline beforehand so you can break it down into manageable pieces.
Paul Kassabian, Legal Product Counsel at LegalZoom said in an email to Small Business Trends, “Turning a side hustle into a company may seem daunting, but it doesn’t have to be. By taking a step back and carefully evaluating legal steps and business structure options, entrepreneurs can start their dream off on the right foot.”
Develop a Business Model
In addition to planning the actual start of your business, you should have a business model in place that outlines how you plan to make money and grow throughout each stage of your business. This plan can evolve over time, but it’s essential that you create one as soon as you start to get serious about your venture.
Check Name Availability
When you take any official steps to register your business, you’ll need to have a company name. There are tons of different ways to choose a proper name, but it’s always essential to choose something that is not already in use by another company.
Kassabian explains, “Trying to use an existing company name will cause delays and possibly result in legal trouble. If the business name will be used as a brand, it’s wise to search the federal trademark database as well.”
File a DBA
If you’re running your business on your own, it is possible to get started just as a sole proprietor, though you may want to change that down the line. However, you should still file a DBA, which stands for Doing Business As, to reserve your brand name.
Kassabian says, “For entrepreneurs trying to fast track getting their business up and running, sole proprietorship with a DBA is an option, as it’s the quickest and most affordable way to operate a business. That said, a sole proprietorship is not a separate legal entity, so it doesn’t separate personal and business assets and liabilities—which can be risky.”
If you do want to form a company that is a separate entity, then you can do that right away or once you get more serious.
Kassabian explains, “Formally registering a business helps to keep personal and business affairs separate, since the entity is viewed as a separate “person” in the eyes of the law. The business maintains its own legal identity, and, depending upon the entity, can protect the owner’s personal assets from business liabilities.”
Choose a Structure
However, there are multiple …read more
Read more here:: SmallBusinessTrends