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Startups Are the American Dream

As we kick off a new year, many future entrepreneurs are thinking about starting their own small business. Small businesses are the backbone of our community and have been credited as one of the reasons that this nation emerged from recession. It is important to remember that Apple started in Steve Jobs’s garage, Facebook got its start in Mark Zuckerberg’s dorm room (we will take about Facebook’s origins in a future blog post), and Chick-Fil-A started as a small restaurant in Atlanta’s Greenbriar Mall. Now is an exciting time to form a startup and it can be your pathway to financial freedom.

So, you have a great idea for a new startup. You’ve thought of a fantastic and creative name, you’ve gotten your friends and family to support your dream, and you think that you’re ready to get started. But what do you do first? Do you just start selling your product or services to the public and wait for the checks to roll in? The short answer is no and here’s why.

Legalize Everything

When starting a new startup, or thinking of a new business idea, it important that you LEGALIZE EVERYTHING. I cannot stress this enough. Unless ownership of your new startup or business concept exists on paper (in a legal document), it is up for grabs for someone else to profit off of your idea or hard work. In other words, legalize your business or idea before someone else does!

So how do you legalize your new startup or business idea? First, future entrepreneurs should go through the necessary steps to set up their business as a legal entity authorized to do business in their state. Conduct your own research or utilize the assistance of an attorney to determine the best legal structure for you (i.e. LLC, Inc., LLP, Solo Proprietor, etc.). Once you’ve determined the best legal structure, set up your startup as a legal entity with your appropriate state official (usually the Secretary of State).

Why You Need to Legalize Your Startup

There are three main reasons why you need to set up your business as a separate legal entity:

  • It protects you. Registering your startup shows the public (your customers, vendors, the government) that you are operating as a real business and not just as person who dabbles in business activities. Registering your business in your state will help you to protect your personal assets (house, savings, etc.) should you get sued for your business activities;
  • It protects your startup’s name. Deciding on a business name could be one of the most difficult tasks of a future entrepreneur. Registering your business in your state will prevent someone else from registering a business with the same name in your state. It pays to be the first; and
  • Some programs, such as SBA supported small business loans and government programs, require that you operate as a business as a legal entity and that you have been in business for a certain amount of time. Often, your business start date is the date that your business became a legal entity recognized by your state.

Setting up your startup as a legal entity in your state is often not complicated. Many states will permit you to establish your business as a legal entity online with a few clicks of your mouse. Google for information on setting up your business in your state. However, if you have questions about which legal structure you should use (LLC, Inc., LLP, Solo Proprietor) it is best that you seek the advice of an attorney or and/or tax professional as this decision has both legal and tax implications.

In the next blog post, I’ll discuss a foundation agreement that every new startup should have in place especially if the business is being formed by more than one person.

Talk to me in the comments. Let me know your experience (good or bad) in registering your business, or failing to do so, in your state.

Until next time,


Disclaimer: I am a lawyer so you know there is going to be a disclaimer. The information contained in this blog post should be construed as legal advice. If you have a real legal issue, do your own research or contact an attorney (me!) to set up an appointment to discuss further.


About Samantha: I am an attorney that helps small businesses and entrepreneurs start and grow successful businesses. I also help individuals who have been sued or need to sue someone. I have a passion for justice and am dedicated to effectively guiding my clients through the complex legal system. I am an attorney that is willing to listen, qualified to counsel,
and ready to serve.

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