Among the many important decisions you’ll make as a business owner, choosing a location for your business is a crucial choice that will significantly impact its success. Depending on the state, county, or city you choose to operate in, the startup requirements and regulations can vary greatly. Before you decide on a location, it’s essential to research and consider several critical factors that can influence your decision.
Choosing a Location for Your Business
When selecting a location, there several key factors to consider, including the following:
- Proximity to your target market
- Accessibility of resources and infrastructure
- Cost of conducting business in the area
Let’s get into more detail on each of these factors (and more) and how they can impact the success of your business.
Understanding Your Primary Place of Business (PPOB)
Your company operates out of the Primary Place of Business (PPOB). For most brick-and-mortar businesses, an office or storefront will be your location. It will help if you take your target market’s proximity, accessibility to existing infrastructure, the cost of real estate and utilities, and other considerations into account when deciding where to locate your PPOB.
Online vs. brick-and-mortar locations
In the case of an online business, the Primary Place of Business (PPOB) may require clarification. Where your company is physically located and run still needs to be considered. You might have a warehouse or fulfillment center where you store and transport the things you offer on your website.
This location would be referred to as your PPOB. While selecting it, you should consider the same variables as any other business, such as proximity to your target market, access to transportation and other infrastructure, and the cost of real estate and utilities.
Additionally, consider the laws and regulations of the location, as these can impact how you operate your business.
For example, if you are running an e-commerce business, you must comply with relevant sales tax laws. Consider the availability of local resources too, such as business support networks or coworking spaces.
Ultimately, your company’s precise requirements and objectives will determine where to put your PPOB. When selecting a location to support the expansion and success of your business, it is crucial to weigh all the pertinent elements carefully.
Choosing a Business Location: Delaware’s Benefits
Since Delaware is known for its business-friendly laws and regulations, many business owners consider incorporating there. Limited liability protection and access to a reputable court system are just some of the perks and legal protections that Delaware incorporation can offer.
Delaware incorporation might be a better choice for some organizations, so you should carefully weigh the expenses and advantages before choosing.
Visit this post next to learn about your legal considerations for financing a business next.
Registering your company
In general, if you wish to open a physical location in another state, you must register your company with the secretary of state in the other state if you are a foreign corporation seeking to conduct business there. Articles of incorporation or a certificate of authority and good standing are often filed as part of the foreign qualification procedure.
As part of the registration process, you will choose a registered agent for each state your business is located. A registered agent is a person or corporation whom you have authorized to accept service of process if someone wants to sue you.
You can have the founder or director be a registered agent or pay an external registered agent to fulfill this role if you want a higher level of anonymity in the future. Your lawyer may also serve as your registered agent.
Steps to Registering a Business
Because there are several steps to registering a business, your actions will depend on your industry and state. You’ll need to complete and file the appropriate paperwork and pay any required fees. The specific requirements will vary depending on the type of business you are starting and the state where you are doing business. Consult with your attorney and accountant to ensure this step is done correctly.
For example, let’s consider Gabby, whose online jewelry business is based in California and is considering expanding her business to other states. She decides to incorporate in Delaware for the legal protections and access to the court system.
Gabby thoroughly analyzes potential locations for her PPOB and ultimately chooses a small office in Boulder, Colorado, with a large concentration of potential clients. She then registers her company as a foreign business with the secretary of state in Colorado, where she plans to expand her business.
She also hires a local Colorado attorney to act as her company’s registered agent in Colorado. By carefully considering all these factors, Gabby can set her business up for success and growth in the future.
When you think about the PPOB, whether to file in Delaware, the regulations for foreign entities conducting business in another state, and how to register your business with the secretary of state, you can make an informed choice about the ideal location for your company by carefully weighing these variables.
Obtaining business licenses and permits
You also need to realize as a business owner that running a company frequently necessitates obtaining various licenses and permissions. These licenses and permissions ensure your business operates legally and follows all applicable local, state, and federal laws.
Depending on the kind of business they run and where they are located, they may require any number of different licenses and permissions. Different companies have additional regulatory requirements and may need other licenses and permits.
For example, a restaurant typically needs a food service permit, while a retail store may require a sales tax permit. So, research your business’s specific requirements and ensure you have all the necessary licenses and permits in place before you begin operations.
These are a few frequent instances:
1. Local licensing
Commonly, regional or state governments want business operating licenses to operate a business inside their territory legally. A sales tax license or a business tax registration certificate are two examples of this category. Different cities, states, and countries have other regulatory requirements, so carefully research the specific requirements for the jurisdiction where you will be operating. Zoning permits
2. Zoning Permits
To ensure the site is suitable for your business, you should apply for zoning permission if you intend to run your enterprise from a physical location. This license guarantees that your company abides by local zoning laws and does not infringe on the rights of neighboring businesses or residences.
3. Building permits
Building permits may be required if you intend to renovate your business location. This license guarantees the work complies with all applicable codes and safety requirements.
4. Health department permits
Permits from the local health authority may be required if you run a restaurant or other establishment selling food or beverages to maintain a safe and hygienic working environment. This can refer to items like a liquor license or a permit for food service.
5. Professional licenses
Depending on your industry, you might need a professional license to run your business. For instance, if you’re a lawyer, doctor, or realtor, you need a state license from the relevant professional body.
These permissions frequently grant organizations access to resources or privileges and the legal ability to operate in a particular state or perform certain services. Unfortunately, obtaining such licenses and permissions may take a lot of work. Before opening your business at a specific location, thoroughly examine the licensing requirements and plan accordingly.
Business owners can handle the licensing and permit application procedure with numerous tools. There is a wealth of information about the regulations for businesses operating in a specific area on the websites of local and state governments. Other online tools and services can also guide businesses through licensing and permit applications.
Final Thoughts: Choosing a Location for Your Business
Once you have determined the necessary licenses and permits for your business, choosing the right location is another important aspect to consider. Look at factors such as accessibility, cost, target market, competition, and potential resources in an area before deciding.
Consulting with business lawyers like the team at Contigugulia Law is your best bet to effectively navigate the legal aspects of setting up your business. Contact us today to learn more and get started on your entrepreneurial journey.
And remember: My book “Don’t Skip the Legal: The Startup Guide for Entrepreneurs and Business Owners” covers choosing a business location and other legal topics relating to owning a business and much more in greater detail. It’s available on Amazon—get your copy today!