Starting a new business? This is a time full of excitement, hard work, and big dreams. As an entrepreneur, you’re likely a big-picture thinker who can see a vast horizon of possibilities and opportunities — but what about the small, easy-to-miss details and common mistakes people make in business?
We’re here to remind you that amidst all the eagerness and anticipation, it’s important to remember all the essentials. Read on for five things entrepreneurs need to know that often get overlooked when getting projects off the ground.
1. Appoint a Registered Agent
Every official business entity is required to have a registered agent in every state it does business. A registered agent is a designated person who is always available to receive official government correspondence, including annual report forms, tax forms, notices of litigation, and more.
You may choose to be your business’s own registered agent if you’re over the age of 18 and have a street address in the same state as your business. You may also choose another member of your business or even a trusted friend or family member, as long as they meet the requirements. But remember that whoever acts as your Registered Agent will have their personal information on public record, which you may want to avoid. And they have to be available at a physical street address during normal business hours, Monday through Friday, which can prove difficult if you need to travel or often work from different locations.
There are many registered agent services that will take care of everything on your behalf. They’ll forward you every correspondence they receive so you can focus on running your business.
If your registered agent ever needs to change — for example, if your current one moves to a different state that your business doesn’t operate in — you’ll need to file a Change of Registered Agent form with the state. This usually comes with a filing fee. For minimal hassle, try choosing a registered agent that has no plans to relocate, or use a service to guarantee a registered agent at all times.
2. Consider a Virtual Address for Privacy
The U.S. Secretary of State requires an official business address to be listed when registering a business. If your company doesn’t have a physical brick-and-mortar location, you may be wondering what to do.
A virtual address protects your privacy by leaving your personal home address out of your business’s registration details. A virtual address is a service that assigns you a real street address that receives, scans, and uploads all business-related mail to a secure portal you can access at any time from your phone or computer.
Many entrepreneurs prefer the convenience of a virtual address over a traditional P.O. box because they don’t have to add a trip to the post office to their daily routines. The only downside is that a virtual address doesn’t offer a physical access where you can receive physical packages. If that’s something you’ll need for your business, consider a large P.O. box option.
3. Get All Official Agreements in Writing
We can’t stress the importance of business contracts enough. They ensure that all parties are on the same page regarding work expectations, timelines, due dates, payment terms, exclusivity, and more.
Without a written contract, you could leave your business vulnerable to people who’d take advantage of your time, money, and intellectual property. You also wouldn’t have any clear guidelines on how to resolve disputes, which could leave you in a tricky legal situation if things get messy.
There are countless scenarios where a contract could be beneficial, but if your business plans on doing any of the following, a contract is a must:
- Bringing on freelancers or independent contractors
- Entering collaborations or joint ventures
- Creating sales agreements
- Hiring employees
- Terminating employees
- Transferring ownership of intellectual property
- Working with consultants
The good news is that you don’t have to be a lawyer to draft up a watertight contract. There are many free templates available for entrepreneurs to download and customize.
4. Trademark Your Business Name
You work hard to create a curated brand image and aesthetic. Your name, logo, slogan, and more are precious to your business. But without a registered trademark, your brand’s entire reputation could be left vulnerable to imitators and imposters.
Make sure your trademark is allowed before getting started. Generic names and descriptions are considered “weak” and usually not a fit for a trademark. Check out what the United States Patent and Trademark Office (USPTO) deems as “strong” and “weak” trademarks.
From there, conduct a trademark name search using the USPTO’s Trademark Electronic Search System (TESS) to see if your name is available or if it’s already been taken. If you’re ever unsure about what’s available and what’s protected, consult a trademark attorney.
Once you’re certain your name hasn’t been taken, you’ll need to pay a filing fee ranging from $250 to $350 and wait 3–4 months for the USPTO to finalize your trademark. You can check the status of your trademark online.
5. Submit Your First Annual Report
A common mistake in business is forgetting to file your maintenance paperwork. Once your business turns a year old, you’ll need to file an annual report with the Secretary of State. Also referred to as a “statement of information,” this is a requirement in most states. It compiles your business’s activities over the past year and some key information, like your address and registered agent.
If you fail to file an annual report, you’ll receive a notice from your state, which will likely come with a penalty late fee. If you still don’t file, you’ll lose your “good standing” status, which is essentially your state’s recognition of your business’s legitimacy. Further delays could cause the state to dissolve your business entirely. You wouldn’t be able to operate under your business name, which could cause issues with partners, customers, and shareholders.
Depending on your state, you may only need to file every two years (called a biennial report). Check with your location to see fees, deadlines, and more information.
We know you’re excited to start your business venture. But before you can make your entrepreneurial dreams come true, make sure you’re not making any of these common business makes or missing any of these essential business-formation steps. Once you’ve created a strong foundation, your business will be revved up and ready for long-term success.
⸻ Author Bio ⸻
Dustin Ray is the Chief Growth Officer & Co-CEO of Incfile. Incfile is a leader in online business formation and startup services. Since 2004, Incfile has simplified the process of registering and running a business for over one million entrepreneurs and small business owners. In addition to streamlining formation and incorporation with end-to-end service, Incfile’s all-in-one solution delivers a full suite of essential ongoing services like compliance, banking, bookkeeping, and more. Incfile is proud to be recognized in Inc. Magazine’s Inc. 5000 National Awards for 2022. For more information, please visit www.incfile.com.