Let the Paperwork Begin!

Before you can even open a business account, you need to decide on what type of business you will form. A partnership, a corporation, a sole proprietorship, etc. and for that we needed the help of a lawyer or an accountant to explain the differences to us.


We met one Saturday with a local accountant who was very helpful and didn’t charge us anything for the consultation visit. (We will definitely be doing business with her once we are actually open for business). She suggested an LLC (Limited Liability Company) and urged us to create a Partnership Agreement.

I didn’t even know what that was, but especially because Tiffany and I aren’t related, she expressed to us how important it was for us to formally agree on what we expect from each other as it related to the business and what would happen to the business if one of us wanted to leave, or retire, etc. These were things we hadn't even thought about.

We searched online for a template form we could use to draw up this contract and went from there. It took us several hours and was eye opening. We had to hash out things we had never considered. Going in you think that everything is going to be sunshine and roses, but what if Tiffany and I started to hate each other? What would happen to the business if we could no longer work together? Who would get control of the company? Would the other partner be able to compete in a similar business if they left? What if I wanted to buy her out what would be the rules set for that? If one of the partner’s retires or becomes deceased, will the business revert to the other partner in total or will our heirs be able to assume our share in the business? What role or claim, if any, did our spouses have in the business? These were tough questions that we had to work through, but hours later we had an agreement on paper and we had it notarized and each got a copy.

Then we had to actually apply for our business name and file the paperwork with the Secretary of State. This is required unless you are a sole proprietor. The Arkansas Secretary of State website has lots of helpful information under the Business and Commercial Services tab:

There you can search for business entities by name to ensure that the name you wish to use for your business is available and download forms required for business filings. With my paperwork in hand, I went to their office in Little Rock and filed for roughly $50.00 and we were officially in business!

Now we could file for our federal tax id number, open a bank account, get a lease, etc. and we had found a place we really and truly were excited about. The FOR LEASE sign went up almost as soon as we agreed to be partners. I took it as a sign that we were truly meant to start this business. Now if we could just afford the rent. We had to seriously and realistically identify what we thought our potential earnings would be and what, at the bare minimum, we would have to sell each day/week/month to stay in business.

I had negotiated a good deal on the rent partly because our husband’s would do much of the renovations inside to make it ready for a bakery so that our new landlord would not have to do them himself and then charge us a higher rent to cover his expenses. This proved to be a blessing and a curse.

M