Quite a few people I know have long dreamed of owning a staffing company. They speak of their dream like it’s some lofty goal attainable only by others. They say things like “If only I had the time get it started” and “I wish I was rich so I could start my own company.”
Bullcrap.
Getting your business off the ground does take time and money, but the first step doesn’t require a dime. It’s so easy, you can do it on your lunch break.
I’m not kidding. On the IRS website you can fill out a very easy-to-use questionnaire and at the end you get your very own Tax ID number (aka the EIN). It takes about 15-20 minutes. When you’re done you print out a PDF with your official business name and EIN, and you’re ready to roll. Check out the step by step guide below.
Before you dive right in, it helps to do a little homework first.
Getting your business off the ground does take time and money, but the first step doesn’t require a dime. It’s so easy, you can do it on your lunch break.
Is your new company a business or a hobby? In other words, do you intend to make a profit or not? This matters to the IRS.
What kind of business structure are you going to choose? You have a few options here and it’s imperative you choose the right one. There’s not enough space here for me to explain the difference in detail, but I’ve included links to resources below:
- Sole Proprietorship: A sole proprietor is someone who owns an unincorporated business by himself or herself. However, if you are the sole member of a domestic limited liability company (LLC), you are not a sole proprietor if you elect to treat the LLC as a corporation.
- Partnership: A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.
- Corporation: In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation’s capital stock. A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income.
- S Corporation: S corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes.
- LLC or Limited Liability Company: LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC.
What name are you going to choose for your company? Choose a name that other people haven’t already trademarked. Check the TESS (Trademark Electronic Search System) website for this information. Also check GoDaddy for taken domain names. Since you will need to promote yourself online, you want to make sure you can get your company’s domain name.
What state will you be operating in? You need to choose your home base.
Who will be the responsible party for the LLC? For an LLC, “responsible party” means a person who has a level of control over, or entitlement to, the funds or assets in the entity that, as a practical matter, enables the individual, directly or indirectly, to control, manage or direct the entity and the disposition of its funds and assets. In other words, who’s the boss? You can choose it to be an individual or a business. If this is your first business, you will choose individual (yourself!).
Let’s go through it step by step!
Step 1: First decide what kind of company you are starting. Since LLCs seem to be really popular these days for staffing firms, I chose LLC.
Step 2: Decide how many members are in the LLC and in what state you will be doing business. This is easy!
Step 3: Why do you need an EIN? Easy for us… We’re starting a new business!
Step 4: Here is that “Responsible Party” question we talked about earlier.
Step 5: Here is where you fill out your name and SSN. If you are the owner, this is where you declare that!
Step 6: Fill out your company address. You can not use a P.O. box.
Step 7: Now things really start to get exciting. This step allows you to enter in your business name.
Step 8: Very simple, straightforward questions here.
Step 9: More easy questions.
Step 10: You’re almost done! If you choose to receive the letter online a new window will pop up with your EIN letter ready to print.
Step 11: Confirm that you have entered everything correctly. Don’t rush through this part. Make sure everything is correct.
Step 12: Your beautiful new EIN. You have now officially created a new business. Aren’t you excited?
Step 13: Now you can read more about you should do next. The IRS website has all the info you will need.
So what’s next? Generally the next thing you want to do is open a bank account. Depending on what state you are in, you may need to fill out an Articles of Organization form with the Secretary of the State before you can open an account under a business name. This costs a little money: maybe a $150 or so.
Take your EIN form into the bank and ask them what else they need. They can help you from there.
What are you waiting for? There are no more excuses. Log on to the IRS website and start your company RIGHT NOW!
{ 7 comments… read them below or add one }
For those not aware and as you can tell from this excellent post, Paul is the real guy that makes Staffing Talk work…he does all the work while i take the bows.
Thanks for everything Paul!
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Paul, thanks for the useful article. IRS.gov is a very good sight with lots of info. If anyone who reads this article would like additional info about launching a staffing business, please call me: Jack Terrana at 516-358-4062. I have worked with hundreds and hundreds of start up staffing ventures.
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Good for a start, but it takes a great deal more than that. I know, I am a start up staffing company and what you must figure in the start-up, that is a HUGE cost, is Worker’s Comp Insurance. This article makes it seem easy, but the over simplification in this article of doing a start-up staffing company is a tad misleading. Those are just the very first baby steps in the process of starting any business. Without a business plan, capital and vision success is not guaranteed…its just a pipe dream. It can be done, but planning is the key to success in starting any business; especially a staffing business in my humble opinion.
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Melinda;
If you are starting out you can connect with a PEO that will i essence do your work comp and payroll (for a fee) until you can generate enough money to take on these expenses for yourself!
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Thank you for the kind offer, but I have now been in business for 1 year and 7 months and last year which was my first full year I turned a profit
That is why I feel so strongly about planning. I have funded everything with my own money because I saved for it and researched everything before I took the leap to open my own staffing company. I have vision on where I want my business to go and grow, but I plan on how I want to accomplish it.
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Hi Melinda,
Have you ever considered partnering with a staffing franchise? We provide payroll funding, back office support, and staffing software. We can also save you a lot of money on Worker’s Comp insurance. Visit our site at http://www.atworkfranchise.com.
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Thanks for the comment Melinda! You are right, it does take a lot more than filling out a form to launch a good staffing business. But you have to start somewhere! Lots of people I have talked to had no idea that the first step to becoming official was this simple. We would love to have you share your first-hand experiences in a guest article!