How to Start a Business in a Week
Starting a business does not take much, in most instances it can take only one week to get your business started quickly and legally. This article focuses only on the legal aspects of creating a company, there are other great resources to get you to the point of needing an actual entity including (note: I do not endorse any particular author or program, these are just some handy resources I found online that I share occasionally): Tim Ferriss’ How to Create a Million-Dollar Business This Weekend; 6 Week Business Start-Up; and Skillcrush’s 2-Week Action plan for Launching Your Business.
Day 1: File the Certificate of Formation
In Texas, for entities with limited liability (limited partnerships, LLCs, and Corporations) you will need to register your company with the Secretary of State. The certificate of formation will lay out the directors or managers of the company, any special provisions for governance, and lists the registered agent and office. After filling out the appropriate form for your entity, file it online with the SoS, you will get a document number you can track online which allows you to complete the other steps before getting the paperwork by snailmail.
Day 2: Draft the Operating Agreement (LLC) or Bylaws (Corporation)
While waiting for the Certificate of Formation, it is time to draft up our internal documentation. The most important document will be the internal governance documents, in an LLC these are called Operating Agreements, in a corporation these are called Bylaws. A well drafted operating agreement or bylaws are essential to any company and often helps avoid the most common business litigation issues.
Day 3/4: File for an EIN
After your Certificate of Formation has been filed for record with the Secretary of State, you now have a filing number with the State of Texas. This filing number is required when obtaining an Employer Identification Number (EIN) with the IRS. An EIN is required to hire employees or to open a business bank account. File for the EIN online at IRS.gov, you should be able to get the EIN in a couple days, depending on the IRS load at the time.
Day 5: Edit/Re-Draft the Internal Docs
You will want to go over and edit your operating agreement or bylaws very thoroughly. Also you may need to look into drafting employee contracts, non-disclosure agreements, buy/sell agreements, stock/membership certificates, and other important internal documents. Get these tidied up while we wait for the IRS.
Day 6: Create a Digital Corporate Books Set and Execute the Internal Docs
In the old days companies had big dusty binders with all the important corporate documents. These were big, unwieldy, and often not kept up as they should. Best business practices are now moving to agile and seamless digital corporate books sets. These can be saved on a local hard drive or even held in the companies cloud storage. You will want to keep all the documents you have accumulated and drafted this week in the books set and keep it updated as more comes in and state filings are made annually. Be sure to sign and properly execute any of the internal documents.
Day 7: Start Selling
Hopefully your EIN has come in from the IRS and you can open your bank account today and be done with the start up phase. If not, wait another day or so for the EIN and finish it as soon as it comes in. In the meantime, start selling! At this point there should be nothing holding you back from making sales and starting to bring in receivables.
Check out our other articles for startups including: How to Franchise Your Business, Should I Form My Startup in Texas or Delaware?, and more here at our website. If you would like more information about starting a business in Texas call Reidel Law Firm at (832)510-3292 or use the contact form below.