The Basics of Planning a Business
Self-Assessments
In addition to Evaluating Your Business Idea, a tool that may be useful as you plan your business is our article Is Entrepreneurship Right for You?, which may help you decide if you’re ready to become a business owner.
Register Your Business
If the business you plan to start will be named anything other than your own name, you must register it with the New Hampshire Secretary of State. If you are doing business under your own name, registration is not required, but is desirable. Registration helps identify who is operating a particular business. Register the business name early, before spending money on marketing materials. Before registering your business, you need to decide what type of business to form. (See Choosing the legal form of your business below.)
1) Check to see if the business name you would like to use is already taken here.
2) Register the name you want online here.
You can also register in person at the Secretary of State’s office in Concord, New Hampshire.
You can get help from a representative of the U.S. Small Business Administration on certain days at the Secretary of State’s office in Concord. Check here for available days and times.
Choosing The Legal Form of Your Business
You may not know how to incorporate your business or what legal form your business should take.
Businesses can be legally incorporated in different ways and each way has its advantages and disadvantages. Legal forms of incorporation include Sole Proprietorship, Partnership, Limited Liability Company and Corporation. Each form has its own legal liabilities and ways of handling income taxes, protection of assets and transferring the business.
Sole Proprietorship
In a Sole Proprietorship, the owner of the business has sole responsibility for the operation of the business and all finances. In this form of business, the owner’s personal property is directly tied to the business property. Business profits or losses become the owner’s income or loss.
Partnership
A partnership is similar to a Proprietorship, but the rights and obligations are shared among two or more partners. Business profits or losses are split among the partners. Any partnership agreement should be filed with the Secretary of State’s office.
Corporations
A corporation is a legal entity separate from the owner(s). It may be established by three or more persons of legal age and may issue capital stock to investors. Generally, the stockholders and officers of a corporation are not personally liable for the debts and contracts of the corporation. However, in certain instances individual liability may be imposed in certain instances.
Corporations come in two forms: S Corporations or C Corporations. The two are similar, except for the way income from each is taxed. In an S Corporation, income is distributed and taxed directly to the shareholder. Income from a C Corporation is taxed at the corporate level and again at the shareholder level if distributed.
Limited Liability Company
A Limited Liability Company (LLC) is a hybrid of the Partnership and Corporation forms of organization. Stock may be issued to General Partners (those controlling the business) and to Limited Partners (those with an investment in the business). This somewhat complex form of organization should only be considered after all the legal and tax implications are discussed with an attorney or CPA. A LLC requires that you file a Certificate of Formation with the Secretary of State’s office.
The federal Small Business Administration has more detail on these types of business structures.
After viewing the SBA resources, you should consult an attorney and a CPA regardless of which form of organization you are considering. These professionals can analyze your situation and make a recommendation. One of the best ways to find an attorney experienced in business law is to ask around to those you know and trust. Do you have a family member in the state who already has his or her own business? Does a friend of yours run a business? These are good places to start. The New Hampshire Bar Association lists attorneys practicing in the state, but does not provide recommendations, so it’s best to find one through people you trust.
After deciding what form your business should take, register it here:
State of Incorporation
For some businesses, it might make sense to incorporate in a different state than New Hampshire. For tax and other reasons, many companies incorporate in the state of Delaware. You can read about this process here.
Taxes: State, Federal, Income
A federal Employer Identification Number (EIN) is used to identify a business. Generally, all businesses need an EIN. Businesses with employees use their EINs for reporting federal income tax withholding, Social Security payments and unemployment insurance. Businesses can apply online with the IRS here.
New Hampshire State Taxes
As you may know, New Hampshire does not have a general sales tax or an income tax, but it does have some types of business taxes. To understand them and how they might apply to your business, you should start with this Overview of NH Taxes.
State Unemployment Liability
If your business will employ people, you need to be aware of the unemployment taxes you might have to pay if you lay off employees and how unemployment compensation works. Start with the resources available at the New Hampshire Department of Employment Security.
Licenses and Licensing
State and local ordinances require some types of businesses to be licensed. A restaurant, for example, may need clearance from the local fire department, sanitation department, board of alcoholic beverage control and others. New Hampshire requires licenses for businesses such as outdoor advertising, liquor stores, junkyards, lumberyards, lumber sales, electrical contracting and automobile dealerships. You should ask your town or city authorities and state authorities if you need a license for the type of business you intend to start and/or for the location you’ve chosen. Visit the New Hampshire Department of Employment Security for more information on occupations that require licenses and businesses that require licensing.
Insurance
Every business should have a general business insurance policy including liability and other standard coverage, such as coverage for your place of business. If the business has one or more employees, worker’s compensation insurance is also required. Businesses in certain industries require additional types of insurance. Contact your insurance agent or the NH State Department of Insurance.
Occupational Safety and Health (OSHA)
All employers are required to provide a safe and healthy workplace and are subject to no-notice safety and health inspections. The U.S. Department of Labor, Occupational Safety and Health Administration (OSHA) conducts these inspections. Employers with more than 10 employees are required to maintain a record of injuries on an OSHA 300 form, which must be available for inspection and retained for five years. OSHA 300 and other OSHA forms and publications may be found at the OSHA website Find the state and local offices here.