Forming a Company 101

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

Company formation is a key process for entrepreneurs and business owners, no matter the size of the venture. Establishing a legal entity helps protect both the business and its owners, as well as providing structure and stability. The first step is to choose the type of company which best suits the needs of your business; corporation, LLC or other option - understanding the difference between them in terms of regulations, taxation and other important details is essential. The next stage is to register with your state, obtain permits and licenses necessary for compliance with laws, followed by creating governing documents such as Articles of Incorporation or Operating Agreements which will ensure you can run your business efficiently. Finally, obtaining financing through loans or capital raising must be done according to all applicable laws.

The Genie AI team know just how significant this process can be for a successful venture: that’s why we provide free company templates from our extensive open source template library filled with millions of data points about what makes up a market-standard firm. With our knowledgebase and community library you’ll have access to high quality legal documents without paying costly lawyer fees - all without requiring an account with us. Our detailed guidance on forming a company will take you step-by-step through everything mentioned above; so read on now to get started today!

Definitions (feel free to skip)

C Corporation: A type of business structure that is taxed as a separate legal entity, meaning it pays taxes on its income and shareholders are taxed on the profits they receive.

S Corporation: A type of business structure that is taxed similarly to a partnership, meaning income and losses are passed through to the shareholders, who are then taxed on the profits they receive.

Sole Proprietorship: A type of business structure that is owned and operated by one person and is not legally separated from the owner, meaning the profits and losses are not taxed separately.

Limited Liability Company: A type of business structure that is designed to provide limited liability protection for the owner, meaning the owner is not personally responsible for the debts and liabilities of the business.

Partnership: A type of business structure between two or more individuals who share the profits and losses of the business and are personally responsible for its debts and liabilities.

Employer Identification Number: A nine-digit number assigned by the Internal Revenue Service that is used to identify a business entity for tax purposes.

License: Formal permission from a government agency to conduct a business or activity.

Permit: Official authorization from a government agency allowing a business or activity to take place.

Certification: Formal confirmation that a person or business meets certain qualifications or standards.

Chart of Accounts: A list of all the accounts used by a business to record transactions.

Pricing Strategy: A plan for setting the prices of products and services.

Marketing Plan: A plan for promoting and selling products and services.

Legal Structure: A set of laws and regulations that governs how a business is organized and operated.

Equipment: Tools and machines used to produce products or provide services.

Supplies: Materials used in the production of products or services.

Tax Rules: Regulations for filing and paying taxes.

Financial Projections: Predictions of a business’s future financial performance.

Contents

• Researching types of business structures
• Writing a comprehensive business plan
• Registering the business with the state and local authorities
• Obtaining necessary licenses, permits, and certifications
• Choosing a business name and registering it
• Opening a business bank account
• Establishing accounting procedures and bookkeeping
• Developing a pricing strategy and determining costs
• Hiring and managing employees, if needed
• Securing appropriate insurance for the business
• Establishing an online presence and social media accounts
• Understanding applicable tax rules and regulations
• Developing a marketing plan
• Establishing a legal structure and hiring an attorney
• Identifying and securing necessary equipment and supplies
• Creating a business website and/or store
• Developing a budget and creating financial projections
• Planning for growth and expansion

Get started

Researching types of business structures

• Read up on different types of business structures, such as sole proprietorship, partnership, limited liability company (LLC), S-corporation, or C-corporation
• Gather resources to understand the different benefits and drawbacks of each business structure
• Consult a lawyer or other professionals who can provide insight on the different types of business structures
• Make a list of pros and cons for each type of business structure
• Make a decision on the type of business structure that best fits the needs of the company
• Once you have made a decision on the type of business structure, you can check this step off your list and move on to the next step.

Writing a comprehensive business plan

• Identify the type of business you are starting and its purpose
• Create a mission statement for your business
• Identify your target market and potential customers
• Research the competition in your area
• Outline your product/service offerings and pricing
• Identify potential sources of funding
• Develop a budget and financial projections
• Write a detailed business plan that includes all the above information

How you’ll know when you can check this off your list and move on to the next step:
Once you have finished writing your business plan, you should have a good idea of your business’s goals, strategies, and financials. You can then move on to the next step of registering the business with the state and local authorities.

Registering the business with the state and local authorities

• Contact your Secretary of State’s office or other state-level agency to register your business name and obtain the necessary business license
• Visit the Small Business Administration website for information about registering for a federal Employer Identification Number (EIN)
• Check with your state’s Department of Revenue to learn about any tax registration requirements
• Obtain any necessary licenses or permits required to operate your business in your state
• Contact your local chamber of commerce or other local government agencies to find out what additional permits, licenses, or certifications may be necessary in order to conduct business in your area
• When you have received all of the necessary documents from the state and local authorities, you can check this step off your list and move on to the next step.

Obtaining necessary licenses, permits, and certifications

• Research and check with your state, county and local governments to determine what licenses, permits, or certifications you may need to obtain to operate your business legally
• Contact the relevant agencies to apply for the necessary licenses, permits, or certifications
• Ensure that you have the correct documents, such as an EIN number, to complete the application for the licenses, permits, or certifications
• Pay the required fees for each license, permit, or certification
• You will know that you have obtained all the necessary licenses, permits, and certifications when you have received approval from the relevant agencies and have the relevant documents in hand.

Choosing a business name and registering it

• Research to determine if the name you choose is available
• Check with your state’s Secretary of State office to see if the name is available to register
• Submit an application to register the business name with the state
• You will know you have completed this step when you receive a confirmation that your business name has been approved and registered with the state.

Opening a business bank account

• Research local banks to find the best account for your business needs
• Gather documents such as a business license, EIN, and other legal documents that may be required
• Make an appointment with the bank and bring the necessary documents with you
• Set up the bank account and discuss any additional financial services the bank may offer
• Make sure to get a copy of the bank’s policies and procedures
• Once all documents are signed, the bank account is ready to use

How you’ll know when you can check this off your list and move on to the next step:

• After the appointment with the bank is complete and the bank account is set up, you can move on to the next step.

Establishing accounting procedures and bookkeeping

• Decide on the accounting software that you will use to track your finances and manage your books
• Choose a chart of accounts that your business will use to track income and expenses
• Set up the account structure in the accounting software
• Decide how often you will enter financial data into the software
• Determine who will be responsible for entering and reviewing financial data
• Establish procedures for approving and recording expenses

You can check this off your list when you have completed the above steps and have the accounting software and chart of accounts set up for your business.

Developing a pricing strategy and determining costs

• Research pricing of other companies in the same industry and geographical area
• Determine what goods and services you’ll offer and at what price
• Consider any added costs such as shipping and taxes
• Calculate all costs associated with production and delivery of services
• Calculate all overhead costs such as labor, advertising, and other operational costs
• Make sure you are able to earn a profit while still offering competitive pricing
• Once you have determined your pricing strategy and the associated costs, document them in a pricing guide

When you have completed developing a pricing strategy and have documented it in a pricing guide, you can check this off your list and move on to the next step.

Hiring and managing employees, if needed

• Research local labor laws, regulations, and the rules of your industry to make sure you are compliant
• Develop a job description for each position needed and post the openings
• Gather resumes and review applicants
• Arrange interviews with qualified applicants and conduct them
• Make an offer to the chosen applicant and conduct any required onboarding and training
• Establish company policies and procedures
• Designate a person to be in charge of day-to-day employee management
• Set up payroll and benefits
• When all of the above is complete, you can move on to the next step of securing appropriate insurance for the business.

Securing appropriate insurance for the business

• Research the type of insurance coverage needed for your business
• Shop around for quotes from multiple insurers
• Compare the terms, coverage, and cost of the quotes
• Choose the insurer that best meets your needs
• Purchase the insurance coverage
• Keep documentation of the insurance policy
• Review the policy regularly and update as necessary

Once you have secured the appropriate insurance coverage for your business, you can move on to the next step of establishing an online presence and social media accounts.

Establishing an online presence and social media accounts

• Decide which websites and social media platforms you want to use
• Create a business presence on those websites
• Develop a content strategy for your social media accounts
• Create a unified branding across all of your online platforms
• Create a schedule for updating your online presence
• Monitor performance of your online presence and make any necessary changes

You will know that you have completed this step when you have created an online presence on the platforms you chose and have a content strategy and unified branding in place.

Understanding applicable tax rules and regulations

• Research and familiarize yourself with local, state, and federal tax rules and regulations that apply to your business
• Consult a professional or trusted advisor to ensure that you understand all applicable tax rules and regulations
• Determine what type of business entity you will register with the IRS (e.g. sole proprietorship, LLC, C-corporation, etc.)
• Check with your local and state governments to find out what type of licenses or permits you may need to obtain for your business
• Set up a process for tracking and filing all necessary taxes on time
• You will know when you can check this off your list and move on to the next step when you have a solid understanding of all applicable tax rules and regulations, and have completed the necessary paperwork for registering your business entity and obtaining all necessary licenses and permits.

Developing a marketing plan

• Research the target market for your company and determine the best methods for reaching them
• Brainstorm and list potential marketing strategies and materials (e.g. website, brochures, and advertisements)
• Develop a marketing budget and timeline for implementation
• Hire a marketing professional or team to help you execute your plan
• Monitor the progress and effectiveness of your marketing plan
• When you have a plan in place and have started to see results, you can check this step off your list and move on to the next step.

Establishing a legal structure and hiring an attorney

• Research the different legal structures for businesses and decide which one is the best fit for your company
• Draft articles of incorporation, articles of organization, or other necessary documents to register your business
• File the documents with the appropriate government agency
• Obtain the necessary licenses and permits
• Hire an attorney to ensure that all legal documents are in order and all necessary filings are made

You’ll know you can move on to the next step when you have filed all necessary documents, obtained the necessary licenses and permits, and have hired an attorney.

Identifying and securing necessary equipment and supplies

• Research the types of equipment needed for your business
• Make a list of what you need and determine the cost of each item
• Make a budget for the equipment and supplies
• Identify suppliers and compare prices
• Place orders for the equipment and supplies
• Purchase necessary software licenses
• Set up and install the equipment and supplies
• Monitor the arrival and delivery of the equipment and supplies
• Check the equipment and supplies for quality

Once all the necessary equipment and supplies have been acquired and installed, you can move on to creating a business website and/or store.

Creating a business website and/or store

• Select a website building platform such as WordPress, Squarespace, or Wix.
• Decide on a domain name and register it with a domain registrar.
• Design the website and store, including content, images, and products.
• Test the website and store to ensure everything is working correctly.
• Publish the website and store.

How you’ll know when you can check this off your list and move on to the next step:

• You have designed the website and store to your satisfaction.
• You have successfully tested the website and store to ensure everything is working correctly.
• You have published the website and store.

Developing a budget and creating financial projections

• List all estimated costs associated with starting the company
• Create a budget that includes all startup costs, such as legal fees, software costs, and office supplies
• Research industry and market trends to develop accurate financial projections
• Use financial planning tools and software to create accurate projections
• Analyze and review financial projections to ensure accuracy and validity

When you can confidently say that you have accounted for all startup costs and that your financial projections are accurate and reasonable, you are ready to move on to the next step of planning for growth and expansion.

Planning for growth and expansion

• Research and understand the various growth and expansion models available to you
• Consider the pros and cons of each model for your particular business
• Develop a plan for growth and expansion that accounts for your business goals
• Estimate the resources needed to implement the plan
• Make sure to include enough resources for contingencies
• When you are confident that your plan is feasible, you can check this step off your list and move on to the next step.

FAQ:

Q: How does the UK’s GDPR differ from the USA’s CCPA?

Asked by Mason on April 19, 2022.
A: The UK’s GDPR (General Data Protection Regulation) and the USA’s CCPA (California Consumer Privacy Act) both have similar aims, in that they both exist to protect consumer data and make sure it is used responsibly. However, there are some differences between the two. For example, the GDPR applies to all EU member states, while the CCPA only applies to California. Additionally, the GDPR has broader requirements for how user data must be handled, while the CCPA focuses only on consumer data.

Q: What are the implications of privacy regulations for a B2B company?

Asked by Olivia on October 12, 2022.
A: When it comes to privacy regulations, B2B companies need to be aware of their obligations for protecting customer data. Depending on their industry and sector, this could involve complying with specific regulations such as GDPR or CCPA. They should also consider implementing measures such as encryption and other security measures to ensure customer data is kept secure. Additionally, they should be aware of any additional requirements from customers when it comes to handling their data and make sure they meet these requirements.

Q: What impact will privacy regulations have on SaaS companies?

Asked by Noah on June 15, 2022.
A: SaaS companies will need to ensure they are compliant with any relevant privacy regulations in order to remain competitive. This could involve updating their policies and procedures in order to meet any new requirements set out by the different regulations. Additionally, SaaS companies should consider how they store customer data and how this affects their ability to comply with these regulations. This could involve implementing measures such as encryption or segmentation of customer data in order to ensure that it is kept safe and secure.

Q: Do I need to follow privacy regulations if I’m a small business?

Asked by Emma on August 8, 2022.
A: Yes, all businesses need to comply with relevant privacy regulations regardless of size or industry sector. This could involve updating policies and procedures in order to meet any new requirements set out by the different regulations, as well as implementing measures such as encryption or segmentation of customer data in order to ensure that it is kept safe and secure. Additionally, businesses should consider any additional requirements from customers when it comes to handling their data and make sure they meet these requirements.

Q: What are the implications of privacy regulations for technology companies?

Asked by Liam on November 3, 2022.
A: Technology companies need to be aware of their obligations for protecting customer data when it comes to privacy regulations. Depending on their industry sector and where they operate, this could involve complying with specific regulations such as GDPR or CCPA. They should also consider implementing measures such as encryption and other security measures in order to ensure customer data is kept secure. Additionally, technology companies should be aware of any additional requirements from customers when it comes to handling their data and make sure they meet these requirements.

Q: How do US companies comply with European privacy regulations?

Asked by Ava on December 5, 2022.
A: US companies need to comply with European privacy regulations in order to do business in Europe or process European citizens’ personal data outside of Europe. This could involve updating policies and procedures in order to meet any new requirements set out by the different European regulations (such as GDPR). Additionally, US companies should consider how they store customer data and how this affects their ability to comply with these regulations - this could involve implementing measures such as encryption or segmentation of customer data in order to ensure that it is kept safe and secure.

Q: How can I ensure my business complies with privacy regulations?

Asked by Elijah on February 13, 2022.
A: To ensure your business complies with privacy regulations it is important that you have a clear understanding of the relevant laws and what is required of you under them. This can involve researching applicable laws for your industry sector or jurisdiction (e.g., GDPR for EU businesses). Additionally, you should consider implementing appropriate security measures such as encryption or segmentation of customer data in order to keep it safe from unauthorized access or misuse. Finally, you should also review your policies and procedures regularly in order to ensure continued compliance with applicable laws and best practices in the industry sector you operate in.

Q: What are the penalties for non-compliance with privacy regulations?

Asked by Abigail on March 9, 2022.
A: Penalties for non-compliance with privacy regulations can vary depending on which regulation you are looking at and which jurisdiction you operate within (e.g., GDPR penalties can range from €10 million or 2% of a company’s global annual turnover). Generally speaking however, failing to comply with applicable laws can result in fines or other legal action being taken against your company - so it is important that businesses take steps to ensure compliance with all relevant laws when it comes to protecting customer data and information security best practices at all times.

Q: How do I know if my business needs a privacy policy?

Asked by Benjamin on January 16th 2022
A: Generally speaking if your business collects or processes personal information about customers then you will need a privacy policy which outlines your obligations for protecting this data under applicable laws - this includes information about how customers’ personal information will be collected and used (including who will have access), how long it will be kept for and how customers can request access or delete their personal information if they wish to do so (among other things). Depending on where your business operates there may also be other legal obligations which require you to have a privacy policy - so it is important that you check relevant laws before deciding whether you need one or not.

Example dispute

Suing a Company

• File a complaint with the local court and serve the company with a summons.
• Include in your complaint the facts of the case, the legal claims that support your position, and the relief that you are seeking.
• Provide evidence to back up your claims, such as documents, witness statements, and other relevant information.
• Attend all scheduled court appearances and respond to any motions or requests from the defendant.
• If a settlement is possible, work with the defendant to reach an agreement that is satisfactory to both parties.
• If the court rules in your favor, the defendant may be required to pay damages, which may include compensatory damages, punitive damages, and legal fees.

Templates available (free to use)

Certificate Of Amendment Of Certificate Of Formation Corporation Texas
Certificate Of Amendment Of Certificate Of Formation Limited Liability Company Texas
Certificate Of Amendment Of Certificate Of Formation Limited Partnership Texas
Certificate Of Correction Of Certificate Of Formation Corporation Texas
Certificate Of Correction Of Certificate Of Formation Limited Liability Company Texas
Certificate Of Formation Delaware
Certificate Of Formation For Profit Corporation Texas
Certificate Of Formation Limited Liability Company Texas
Certificate Of Formation Limited Partnership Texas
Certificate Of Formation New Jersey
Certificate Of Formation Professional Corporation Texas
Certificate Of Formation Tennessee
Certificate Of Formation Washington
Joint Venture Formation Contract
Restated Certificate Of Formation Corporation Texas
Restated Certificate Of Formation Limited Liability Company Texas

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