Launching your own business is an exciting endeavor, but it requires careful planning and documentation.
According to the Bureau of Labor Statistics, 65% of small businesses fail within a decade of opening. To beat the odds and set the stage for success, you should have six important documents in place before you launch the company.
1. Business plan
Your business plan serves as the roadmap for your venture. It outlines your goals, target market, competition analysis and financial projections. Crafting a comprehensive business plan not only clarifies your vision but also helps you secure funding and attract potential partners or investors.
2. Articles of Incorporation or Organization
If you are forming a corporation or a limited liability corporation, filing Articles of Incorporation (or Articles of Organization for an LLC) is a legal requirement. These documents officially establish your business entity with the state. They typically include information such as your company’s name, address, purpose and the names of initial directors or members.
3. Employer identification number
An EIN is a unique identification number issued by the IRS for your business. This nine-digit number is important for tax purposes, opening a business bank account and hiring employees. Applying for an EIN is a straightforward process you can do online through the Internal Revenue Service website.
4. Operating agreement or bylaws
For limited liability companies, having an operating agreement is important. This document outlines the rights and responsibilities of members and helps prevent misunderstandings. Corporations, on the other hand, need bylaws to establish the internal rules and structure of the company.
5. Business licenses and permits
Depending on your location and industry, you may need various licenses and permits to operate legally. Research and obtain the necessary permits at the local, state and federal levels to avoid legal complications down the road.
6. Contracts and agreements
Clearly defined contracts are important for any business. Whether it is a client agreement, partnership contract or employment agreement, having written agreements in place helps protect your interests and minimizes the risk of disputes.
The success of your business starts with proper documentation. These key documents provide a solid foundation. They ensure legal compliance, foster transparency and set the stage for a thriving enterprise. By investing time and effort in preparing these documents, you pave the way for a smoother and more secure entrepreneurial journey.