When you start your own business, there are a number of legal requirements that you meet or must comply with. The most important are: If you have employees (whether W-2 or independent contractors, depending on applicable law), you are required by law to obtain an employee settlement. Employee compensation protects employees who may be injured on the job and achieves the following results: For those who register as sole proprietors, register a Doing Business As (DBA) or Fictitious Business Name (FBN) to register your business name. This process informs your state or local government of the name under which you operate your business. This registration does not provide trademark protection, but it allows you to create and use the name you want for trademark purposes without having to embed it. It also does not constitute a legal entity and does not offer legal protection to the individual entrepreneur. Starting a business is hard – don`t let anyone tell you otherwise. But if you`re meticulous in putting your legal checklist in order for getting started, you`ll save yourself serious headaches down the line. Some of these things are things you can take care of yourself. But for more complicated tasks or if you encounter questions, it`s important to hire a knowledgeable lawyer to help you.
The Small Business Administration has created a helpful guide to the different business structures and the pros and cons of each option. Often, you want to set up a formal business structure for your business. Different states have different legal formalities for starting a business, so you should consult your state`s laws or a local expert to find out exactly what options you have. Generally, you can form a partnership through an agreement, or you can formally form a company or a simpler structure called a limited liability company. You can often integrate your business online, either working directly with your state or going through a law firm or incorporation counsel. You`ll also want to learn more about the most common legal mistakes small businesses make, which you can see in our infographic below: After all, every business needs a good lawyer to turn to if something inevitably goes wrong. Nowadays, it`s only a matter of time before you have to face a lawsuit, and when the subpoenas arrive, you`ll need solid legal expertise that you can rely on. Check out the lawyers in your area carefully and don`t be afraid to ask them why they are the best choice for your business. Most small business owners can`t wait until March or April to pay their taxes. The IRS has a pay-as-you-go tax plan for businesses that requires business owners to pay estimated quarterly taxes. Be sure to check the IRS requirements for your type of business to avoid fines and tax arrears. Licensing requirements or mandatory registrations are designed to help your business thrive wherever it operates.
Each state regulates small business creation differently, and requirements may change if you plan to do business across state borders. Most small businesses start as sole proprietorships or partnerships, as these require minimal paperwork and setup time. However, this type of business also does not provide sufficient liability protection for business owners. A company or LLC is usually a better choice as your business grows, especially if you`re considering getting a business loan or raising venture capital. The above legal requirements are just some of the steps you need to take to ensure that your business is compliant with the law. Of course, the steps you take depend on your business unit, your business, and the state in which you operate. Therefore, it is advisable to hire experienced business lawyers so that they can help you solve complex legal problems from the beginning. Liability: A company is an “immortal” legal entity, which means that it does not end with the death of the shareholder. The shareholders of the company have limited liability because they are not personally liable for the debts and obligations of the company.
Shareholders cannot lose more money than the amount they have invested in the business. Like the provisions of an LLC, shareholders must be careful not to “penetrate the corporate veil.” Personal checking accounts should not be used for commercial purposes and the company name should always be used when interacting with customers. Legal incorporation of your business, entering into an agreement with your business partners, obtaining operating licenses, and protecting your name, slogan, and other assets are all prerequisites for starting a successful business. Read on to explore each of these steps in detail. Depending on your type of business and location, you may need certain business licenses and permits from your country, state, county, or city. Licenses, approvals, and registrations come in many variations. Examples include local business permits, building permits, health safety permits, home-based business permits, fire safety permits, industry-specific permits (e.g., operating a law firm, hospitality, construction or manufacturing), liquor licenses, etc. About the Author: Priyanka Prakash is an author who specializes in finance, lending, law, and insurance for small businesses, helping business owners navigate complex concepts and decisions. Since graduating from the University of Washington with a law degree, Priyanka has spent half a decade writing about the financial and legal concerns of small businesses. Read more Every entrepreneur is legally obliged to pay taxes. These include income tax, taxes for the self-employed and, for some businesses, sales tax.
It is advisable to hire an accountant or accountant to ensure that you comply with all tax laws. Accounting software can also help you determine when to file a tax return and which forms to fill out. Consult a list of professions that need to be licensed in the U.S. and make sure your documents are up to date if you want to avoid legal problems. Health care professionals, lawyers and other professionals in key industries should take special care when reviewing their licensing requirements. Malpractice lawsuits can be ridiculously expensive, so don`t skip this step. With the exception of sole proprietorships, which allow you to operate under your legal name, each business entity needs its own unique name, which you file with the state. Once you`ve determined that your business name is available, register it and make it official: There are many other types of business insurance that can protect your investments from certain threats, such as earthquakes, floods, and even data breaches. Consider the potential risks you face before writing off a particular type of insurance. “This blog post is provided for informational purposes only and is not a substitute for legal advice from a qualified lawyer and client- and fact-specific legal advice.” You don`t need to make moves you`re not sure about.
Legal and professional advice can guide you through the incorporation process so that all your individual needs and legal requirements are met. You`ll need to apply for federal and state business licenses and permits, but the specific licenses you need depend on the industry you work in and the location of your business.