FOUNDATIONS NAMING YOUR BUSINESS

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1 Step #5 There are all sorts of little (and big) tasks that we need to get done to make our business legit. This segment covers naming your business, filing with the state, and opening your business checking. Once you do this, other people think you have a business too! NAMING YOUR BUSINESS Naming a business is a lot like laying the cornerstone of a building. Once it's in place, the entire foundation and structure is aligned to that original stone. If it's off, even just a bit, the rest of the building is off, and the misalignment becomes amplified. So if you have that gnawing sense that choosing a name for your new business is vitally important, you're right! Here are some things to consider and tips to help you in making your choice: 1. How will your name look? On the web, as part of a logo, on social media. 2. What connotations does it evoke? Is your name too corporate or not corporate enough? Does it reflect your business philosophy and culture? Does it appeal to your market? 3. Is it unique? Pick a name that hasn t been claimed by others, online or offline. A quick web search and domain name search (more on this below) will alert you to any existing use. 4. Check for Trademarks - Trademark infringement can carry a high cost for your business. Before you pick a name, use the U.S. Patent and Trademark Office s trademark search tool to see if a similar name, or variations of it, is trademarked. 5. If You Intend to Incorporate you ll need to contact your state filing office to check whether your intended business name has already been claimed and is in use. If you find a business operating under your proposed name, you may still be able to use it, provided your business and the existing business offer different goods/services or are located in different regions. 6. Pick a Name That is Web-Ready - In order to claim a website address or URL, your business name needs to be unique and available. It should also be rich in key words that reflect what your business does. To find out if your

2 business name has been claimed online, do a simple web search to see if anyone is already using that name. Next, check whether a domain name (or web address) is available. You can do this using the WHOIS database of domain names. If it is available, be sure to claim it right away. This guide explains how to register a domain name. 7. Claim Your Social Media Identity - It s a good idea to claim your social media name early in the naming process even if you are not sure which sites you intend to use. A name for your Facebook page can be set up and changed, but you can only claim a vanity URL or custom URL once you ve got 25 fans or likes. This custom URL name must be unique, or un-claimed. Here are some further considerations: Beware names that are connected to your area or region. You may outgrow them as your business grows. Stay away from words that are hard to pronounce or spell. Do not choose alternate spellings the attempt to find an untaken domain name. Substituting a ph for an f and other cute spellings will make your business name harder to search for and therefore harder to find. Don t be afraid to change! If you do find down the line that you have made the wrong choice for your business name, change it. It is not going to somehow magically become right so the sooner you do it, the better. (some information taken from Phil Davis s article 8 Mistakes to Avoid When Naming Your Business,

3 REGISTERING YOUR BUSINESS Each state has varying requirements for registering your new business. In most cases the process can be taken care of online and is free. Check out the.gov website for your state requirements. EIN Number - You will want to obtain an Employer Identification Number (EIN) for the purpose of your Fedral taxes. EIN can be obtained online through the IRS website: Employed/Apply-for-an-Employer-Identification-Number-%28EIN%29-Online Business Banking - In most cases, you will need your EIN to create a separate business banking account. Separating out your business and personal funds is something you will want to do immediately upon beginning your business both for legal and your own personal accounting reasons. Sole Proprietorship vs. LLC - There are key advantages and disadvantages to each form of business and the nature of your enterprise and other business and personal circumstances may impact your choice. Here are some important factors to consider when assessing the main pros and cons of a sole proprietorship versus an LLC. Ease and Costs of Formation. In the United States, a sole proprietorship is the most popular business entity because it is the easiest to form. Compared to an LLC, a sole proprietorship is less complex and less expensive and demands less paperwork to start. You only need to begin transacting business and make sure you have any required licenses and permits and you have started your new enterprise. To establish an LLC, you must form and register your LLC entity with the applicable state agency, often the secretary of state s office. You must draft and file articles of organization and pay a filing fee which can be hundreds of dollars in some states. Your LLC filing typically spells out your LLC s name, principal office s location, your owners or members names, the expected term of your LLC, and any other state-mandated information.setting up an LLC requires more upfront time, money, and

4 effort than a sole proprietorship so you ll have to factor that in when deciding which entity is best for you. Raising Capital for Your Start-Up. Every business needs capital in order to start and maintain its operations. With a sole proprietorship, you will need to fund your own business using your personal resources or by seeking out loans. Establishing a line of credit or receiving loan approval from a bank or other lending institution may be a daunting challenge for a new entrepreneur. Often, you will be required to provide a personal guaranty for any loan to your business. However, if your LLC has other members, you and your fellow owners can pool together your resources and reach out to a broader network of potential business contacts. Bringing in additional members may also help to fund your new LLC. Reviewing your financial resources, credit history, and business investment potential will help determine if you can afford to go it alone as a sole proprietor or if you will need the additional resources that other owners can provide. Taxation of Your Business. For federal tax purposes, a sole proprietor s income is taxed on an individual income tax return. Similarly, LLCs receive pass through treatment allowing allocated profits to be taxed on each member s individual income tax return. If your LLC qualifies as a partnership or S corporation, it may also receive pass through treatment. Since federal income tax treatment is similar, this factor may not play a major role in choosing between a sole proprietorship and LLC. Consult a tax professional to determine if state or local taxes will impact your start-up s tax situation. Risks of Personal Liability. Under the sole proprietorship, you and your business are viewed as one in the same. Therefore, you have unlimited personal liability for all of the debts and legal liabilities of your sole proprietorship. Your personal assets, such as your home or personal bank account, could be at risk to satisfy unpaid debts, legal judgments, and other legal obligations of your start-up. On the other hand, an LLC is a separate legal entity and an LLC member is normally not personally liable for the LLC s debts or legal liabilities. As an LLC owner, you are mainly putting your financial contribution to your LLC, not your other personal assets, on the line. However, as an LLC owner, you may still be personally liable for your own conduct or LLC loans in some cases. For example, you may still be responsible if you personally guaranteed repayment of an LLC loan or if your own acts cause harm to a third party or to your LLC. Like any business person, it is important to consider appropriate liability and other forms of insurance to help protect your personal assets and your business. Overall, the sole proprietorship tends

5 to expose a business owner to greater risks of personal liability. Assessing your comfort level with personal liability risks should be an important aspect of your decision-making process. This is information is shared from For information on forming an LLC and other formats for your business, visit the US Small Business Administration website: Business Banking Support Article: From the very start, your business should be on the lookout for a supportive and reliable bank. Whether your needs are simple (a separate business checking account) or complex (a line of credit), finding the bank that fits your business's needs is crucial. In making the decision, it is pertinent to consider not only your business's current needs, but its potential future aspirations. That's especially true if you're anticipating being in the market for a loan over the next few years. Because the bulk of small business loans come these days from smaller community banks, it is advisable to establish a good relationship with your bank before your business needs outside capital. But that's just part of the equation. Before you start making any decisions, remember that all banks are different. We've compiled some guidelines to help you find one with the right stuff from interest rates to investment products for your business. Dig Deeper: Financing a Small Business Choosing the Right Bank: Knowing Your Needs Before you start shopping around for a financial institution, consider why you need one in the first place. Are you looking for specialized services, such as investment help or a small business loan? You can search online for local banks that specialize in equipment loans or small business working capital Consider also how much cash flow will be moving in and out of your business account. Is your "business" even a business yet? You will be required to have a business name and usually be registered with the state upon opening up a business banking account. San Francisco-based financial advisor Kathryn Amenta suggests using this rule of thumb: "Once someone is spending 20 hours

6 a week on a project and counting on the revenue to make up as much as 50 percent of their personal income, it's definitely a business for financial and tax purposes," she says. Some banks provide incentives to keep a certain amount deposited and others offer services to make the most of your profits. If you don't already have a financial advisor who can help with investments and cash flow management, it might be wise to consider a bank that can offer those services. Certain institutions can even help you collect financial information in your industry. Otherwise, you would be wise to enlist an independent financial advisor to pinpoint your needs before choosing a bank. If you're just starting out and think you only need a checking account to manage incoming payments from your clients and reliably handle outgoing checks, think again. What else might your small business need in the next 10 years? Might you be expanding and need a loan in the future? Finding a bank that could work with you on that is most important to focus on. "Free checking" is no longer an offer to make a decision based on. Dig Deeper: Is Online Banking Right for You? Choosing the Right Bank: Comparing Features Once you know what you're looking for in a bank, comparing what banks offer in your area and worldwideis relatively simple. Search for banks that specialize in what you need, and call them to request specific information, including additional services, fee structures, and interest rates. Before setting up meetings with bankers, review the information, and create a list of questions. If you fall in the category of just needing simple account services as an entrepreneur, you might take a look at the growing sector of online banks. When Elizabeth Potts Weinstein, an attorney and small business consultant, started her own business six years ago, she realized her priority was to have easy online access to her accounts and most community banks she checked with didn't offer online banking. She went with a nationwide bank with an online banking system that fit her needs. On the other hand, if location and face-to-face treatment is important to you, and easy access to deposits and cash is necessary, Potts Weinstein suggests: "Use a local bank with an extensive ATM network. Or, get into an institution that will

7 rebate foreign ATM fees. But be realistic about the requirements for getting this done. Are you really going to provide the bank with ATM receipts?" As you move closer to selecting a bank, pay close attention to the fees. The fee structure for business checking can be significantly different and much higher than those assessed by a bank on a personal checking account. Some banks will also charge small businesses for online banking services, even though they do not charge individuals. Remember, as a potential customer, you have the right to ask for exactly what you need. If that's free online banking, make that clear to your community bank manager. Or, if you're willing to pay for certain services, but need a representative to be available on a monthly basis to counsel you, let them know that upfront. Dig Deeper: Scoping Out Start-up Banks Choosing the Right Bank: Size Matters, Especially for Lending At some point in your entrepreneurial life, chances are you're going to need to borrow money in order to get your business off the ground or keep it going strong. And if that point is now, when so many banks are clamping down on credit, the task may seem near insurmountable. The good news is, while they may be fewer and farther between, there are still banks out there that believe in entrepreneurs like you-and you'll find them here in our rankings of the best small business banks In the post-credit crisis economy, there's a lot of movement toward small banks especially in the small business world. Research shows that small banks are more likely than large institutions to issue loans to businesses in their community. In fact, though small and midsize banks control only 22 percent of all bank assets, they account for 54 percent of small business lending, according to Federal Deposit Insurance Company data from the third quarter of (See charts here.) The little local bank down Main Street will also offer you the level of human interaction you won't find elsehwere. Part of a community bank's mission is to help the neighborhood thrive. If you're principally looking for a lender, creating a relationship with a small bank could be mutually beneficial.

8 That said, you should still shop around for loan rates when choosing a bank. Big banks can sometimes offer lower rates. They are more bureaucratic, however, and iif your business is online or might not fit into a classic industry category, getting a great rate from a big bank might be difficult. "Some of us have these weird online businesses that don't fit into a slot we're not a dry cleaner, for instance," Potts Weinstein says. "That's when you need to find someone, a human, who can make exceptions to the rules. A really big bank just won't do that." As her business grew, Potts Weinstein found it time to transition from a large lender to a small one that had the online services she needed, but also could work with her financial needs on a personal basis. "I'm getting to the point where I'm going to plan a large event, so I'm going to need help with cash flow," she said. "I need a bank that's going to be able to work with me on it, and be flexible." There's also increasing political support for small businesses to partner with small banks. In addition to federal Small Business Association loan incentives, some experts think small businesses could have a hand in solving the credit crunch by simply changing their banking habits and putting their money in small banks. The Institute for Local Self-Reliance's New Rules Project has teamed up with Move Your Money, a new initiative by the Huffington Post and Roosevelt Institute to provide resources to companies in switching their business to community banks. Dig Deeper: Tapping Community Banks Choosing the Right Bank: Remembering to Reevaluate Once you have a bank that works for your business, don't forget to shop around periodically. It's natural to take time to re-evaluate your business's financial needs every time your bank changes something about its service whether it is bumping up a loan interest rate or adding on a periodic finance charge. Even if the customers service is satisfactory and consistent, most experts recommend reevaluating your financial needs every few years. Your business's needs will likely change as it grows from infancy into a midsize company, or perhaps morphs from a physical storefront to an online shop (or vice

9 versa.) As an owner you need to both make your bank aware of changing needs and keep your business with a financial institution that will help your business thrive at every step. Alternatively, if you like certain services your bank provides, but need additional services, you can consider maintaining accounts at different banks. Of course, doing so might require more intense internal accounting systems, so if your business is growing more complex financially, it might be time to consider hiring a CFO, an accounts payable or accounts receivable professional, a bookkeeper, or part-time CFO, which is what Amenta recommends. A part-time CFO can step in quarterly or once a month if your needs are more strategic in nature. "They are people who have reputable business and finance training and now make business their livelihood," Amenta says. "They have a number of clients, and can come in once a month to oversee what's going on financially." Another type of account to consider: Many thriving online companies use separate merchant accounts to manage online business. Merchant accounts tend to come with numerous fees associated with transactions, processing, and monthly usage, so research these carefully before setting up one. Choosing the Right Bank: Final Thoughts A good bank can prove to be an invaluable partner to a small business, not only helping its owner to borrow capital, but also working with him or her to plan for the future and assure potential customers of the business's stability and credibility. Put as much effort into finding the right bank and nurturing your relationship with your banker as you would put into landing a big customer or hiring a new member of your management team. business.. guides/choosing-the-right-bank-for-business.html