Starting a new business is challenging. It’s never as easy as placing a “Now Open” sign in your storefront.
One of the first steps as a new business owner is to make sure all of your bases are covered legally. There are many legal requirements for starting a business and below are just a few things to consider-
- The legal structure. Structures include sole proprietorship, partnership, corporation, S-corporation, limited liability company and non-profit.
- Registered business name. You will likely register your business as a “Doing Business As” (DBA), unless you’re a sole proprietor and decide to operate under your own name. This process lets your state or local government know the name you’re operating your business under. In addition, most banks require this to open a corporate account.
- Taxes. All business owners are legally required to pay taxes, so make sure you are paying proper business taxes. Taxes can include state and federal income tax, sales tax, and self employment tax. You will also want to track business expenses that can be deducted to minimize the taxes you owe. Unless your taxes are simple, it’s recommended that you hire an accountant or tax advisor to make sure you are compliant with all tax laws.
- Business permits and licenses. Depending on your type of business and the location, you may need specific business licenses and permits. Think zoning permits, sales tax permits, health permits, building permits, construction permits, liquor licenses, etc. Laws very from state to state, so do your research.
- EIN number. In most cases, businesses need an employer identification number (EIN). EINs are used to open a corporate bank account, process payroll and properly file your business tax returns. An EIN can be requested online from the IRS. Want to know if you are exempt from needing an EIN? Head here!
- Insurance. Property insurance, liability insurance, workers compensation, and more depending on the nature of your business.
- Patents and Trademarks. Once your business name is chosen, you need to protect the name and also make sure you aren’t violating another business’ protected trademark. You can search business names and also register yours through the U.S. Patent and Trademark office.
While these are just general guidelines, we recommend consulting a lawyer to make sure you are in compliance with all laws and regulations for your business.
Looking for more resources? Head to Small Business Administration for great tips and guides.