Because September and October are historically times when many people open their first business, this week is dedicated to topics surrounding starting your own business. While this is not an end-all-be-all list of steps you must take, they’ll help you get a solid head start on your new business venture. Thank you for joining us on this journey!

One of the first questions prospective business owners ask is, “What type of business should I form?” Indeed, the confusion surrounding this question often stops business ventures before they ever get started.

To clarify, there are seven basic types of businesses:

• sole proprietorship
• partnership
• limited partnership
• limited liability company (LLC)
• corporation (for-profit)
• nonprofit corporation (not-for-profit)
• cooperative.

There are a number of good resources that outline and define them, such as this one.

To simplify your choice of business type, first ask yourself a few basic questions:

1. Is your business a charity or is it for-profit?
2. Is your business a partnership?
3. Do you want to file the business taxes under your social security number, or do you want your business to have a Tax ID?
4. How much personal liability are you comfortable with accepting?
5. How much control will your partner (if you have one) assume?
6. Will you have employees?
7. Will your company be owned and operated democratically by its members with no single owner?

After you’ve answered these questions and have decided on a business type, the next steps are dependent on your state and local laws and ordinances, as you may need to fill out additional forms specific to your location and type of business. There are a number of books and resources for this. Many of them recommend using the small business association (the SBA) as the starting point since they maintain local offices.

Finally, check your local and state laws regarding running a business out of your home, as zoning laws can sometimes be an important factor in your business decisions.

-Ryan Connelly Community Evangelist

Related articles:
Starting a Business Part 1: Types Of Business
Starting a Business Part 2: Policies You Should Think About
Starting a Business Part 3: Choosing The Right Products To Sell
Starting a Business Part 4: Selecting A Dropshipper
Starting a Business Part 5: Logo Design
Starting a Business Part 6: How To Get Paid
Starting a Business Part 7: Marketing your Business

(Special thanks to the current business owners in our online community who helped out with these posts!)

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