Starting a small business can seem daunting. There are so many numbers to crunch and so many demands to meet. There are also the legal aspects - and unless you’re a lawyer or have access to one, it can be tricky to make sense of it all.
One of the most common questions we get is how to make it “official.” Do you need to register somewhere or need a license? Is a trademark essential? Let’s talk about it.
First of all, congrats on starting your small business! The first step is registering the name in your state with a business license. It protects you from others creating a business with the same name as yours, or something extremely similar.
Many states have an online search function to check if a business name is already registered. For example, this is Washington’s Business License Lookup. Keep in mind, registering your business only protects the name in your state. The process of getting a license varies widely from state to state, and each one has different rules and guidelines. To learn more about the permits you need, check out the US Small Business Administration website.
When applying for a license, you need to choose what type of business to register. The Small Business Administration has an overview about the different types of business structures here. A sole proprietorship is the most common type. It’s “an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses, and liabilities.” Amanda of Lovin’ Soap wrote a great article that dives a little bit deeper into two popular structures for new businesses.
One of the largest benefits of getting a license, besides making you legal, is it shows you are serious about your business. Customers may feel more confident in buying products from a licensed business, and potential partners may be more likely to work with you. It also gives you a certain amount of protection and it’s important for tax purposes.
Another piece of making your business “official” is quickly grabbing your website domain. We also recommend creating accounts on various social media channels like Instagram and Facebook. You want ownership of your business name online, even if you don’t plan to create a website or post on social media right now.
After you have a business license, the next level of legal protection is a trademark from the US Patent and Trademark Office. It protects a word, symbol, or phrase on a federal level.
A trademark is not essential for owning and operating a business. Whether you get one depends on the level of protection you desire. Some small business names are sufficiently protected at the state level. But if you want exclusive rights for the name of your business or product in all 50 states, you need to apply for a trademark.
While the process of registering your business name on a state level is usually fairly easy, registering for a trademark is trickier. It can take a long time and it can also be expensive. The process can be done online via the Trademark Electronic Application System (TEAS). Get a breakdown of that process here. In general, it usually takes about a year. It’s then good for 10 years, with the opportunity to renew after that.
Although it’s not required, many applicants choose to hire a trademark attorney to guide them through the application process. We recommend Andrea Evans because she understands soap and small business.
When Bramble Berry CEO and Founder Anne-Marie first applied for a trademark, she went the DIY route to save fees on lawyers. She did her own paperwork, but she did it incorrectly. Her first application was denied.
“Afterwards I hired a lawyer, but it took more work and money to untangle the mess I had made,” Anne-Marie said. “I definitely learned my lesson - DIY isn’t always the best route to take when it comes to legal processes.”
So, which is right for you? It’s a question only you can answer. It will depend on how “serious” your business is, your plans for the future, and how protected you want your business to be. Make sure to do your research and speak with experts before you decide!