The Technicalities of Running a Business: Legal, Taxes, Banking and More
Are you ready to start a business in the US? Before planning your big launch, it’s extremely important that you’ve taken care of some important legal and financial processes. We don’t talk about these aspects of starting a business nearly enough, but you don’t want to be in a situation where you missed some of these critical steps. Read on!
— Hani Anis, Founder of Anis Collections
Part 1: Setting Up Your Business & Finances
Register your business
This is step one! Your state should have a website to register your small business and they will give you instructions on how to pick what kind of corporation you want to register as (LLC, S Corp. etc.). When you get approval, you will be issued a federal tax ID.
Sign up for a business bank account and get a company card
We signed up for both a bank account and credit card through our local bank and they walked us through the process. Make sure all transactions that are business related are charged on your company card so you are not scrambling during tax season. Trust me, I’ve been through this once and it is not fun! At this stage, you should also think about what kind of payments you will want to take. If you want to do credit card payments I suggest you create a business PayPal account or invest in a software like Square. They do charge you fees so this is something to keep in mind when pricing your inventory. You can also set up Venmo or Apple Pay depending on your preference.
Plan your overseas transaction strategy
If your vendors are based outside of the US, transferring money overseas is also something to think about. Your local bank can facilitate these transfers, but they will charge you high fees and are also usually slow. We’ve had a good experience with the companies I list below for reference:
Pros - The other person gets the money within a couple hours, very small fee, great exchange rate, easy to cancel a transaction
Cons - Only usable for person to person transactions (cannot be used for business transfers), has a limit for the amount of money transferred per household (daily, weekly, monthly and bi-yearly)
Pros - Minimal fees, quick transfer, works for business transactions, no limit, easy to cancel and track a transaction
Cons - Takes more time to get the account registered and functioning
Pros - Easy to use, you can also collect money from clients here so keeps everything in one place, very quick transfers, easy to get your money back should you need to
Cons - Does not work in some countries, must use a business account, you have to pay fees per transaction
Pros - Good support, most popular / well known money transfer system
Cons - You have to submit an invoice with every transfer, sometimes takes more than a week, and charges around $30 in fees per transaction, they are not super reliable after the transfer in terms of tracking the money
Congrats! You made it through Part 1. Now for some more fun stuff…
Part 2: Legal Documents and Taxes
Write your terms and conditions
With any retail store (especially a desi one) you should have terms and conditions clearly listed. I did not want to be just another person selling clothing out of my house - I wanted to be a brand. I have my terms and conditions clearly listed on my website as well as on each invoice I send to my clients. This ends up protecting you in the end, so make them as detailed as you can get and post them somewhere (preferably on your receipt copies) where no one can argue with you for them being there. Once they are done, have a lawyer review them to make sure whatever you have written is going to protect you. I was lucky to have a friend and family member review my terms. You don’t have to hire a lawyer to do this by any means, I asked a family friend.
Quick Note: If you are in a desi product business in general, send everyone a receipt, even in a cash transaction. The more you document everything, the more you have covered your bases should someone come back and want to argue. Square is a software that I mentioned above that makes this easy, and you can program it to send all customers an immediate receipt post transaction whether it is cash or card.
Write your shareholders’ agreement
A shareholders agreement is something you should have if you have business partners. In my case, my parents are my partners. This agreement doesn’t have to be anything fancy, nor do you need a lawyer to write it up for you, but it needs to be a document that spells out each of your responsibilities and what happens in the case a partner wants to leave, you want to split the company, etc. If everything goes well, you should never need to use this document. If not, you are protected. Make sure all parties involved sign this, and that it is updated as management goes through changes and as the company grows.
Prepare for taxes
If you are not familiar with business taxes, or have no one in your family to help you, then talk to an accountant and sign up for some accounting software. We personally use Quickbooks and it is relatively easy to use and super beginner friendly. If you have someone in your family that is an accountant or does taxes and is willing to help you then you can bring them on as a CFO. In my case, my dad handles the accounting work. Remember, you must pay taxes every month on your sales and then file yearly. You don’t want to mess this up and run the risk of being audited!
Liability insurance is something I very recently discovered when I shot my #decadesbrideandgroom campaign. This is a document you typically provide to a larger corporation when you work with them for something like a shoot, that serves as protection from a lawsuit. Also it will protect your business from things like theft, fires, employee compensation etc. Again, not totally necessary when you’re starting out but if you intend to work with larger vendors or corporations for shoots, it's a good thing to have. Our insurance is through Geico, and most home / auto insurance companies should also be able to offer business liability insurance policies.
That’s all I have for now, but hopefully this helps you start off on the right foot! Send us a note with any questions you might have or what you’d like to hear more about.
A few words from Hani herself:
Hani Anis is the founder of Anis Collections, custom South Asian bridal wear company. She started her business as a senior in college, stemming from a personal passion and a desire to take a risk and try something new. Over the past two years, she’s grown Anis Collections from a college pursuit to a full time venture (and even worked a full time job in finance along the way!). You can follow her at @anis.collections1 and @hanianis786 on Instagram.