Many different elements go into starting a new business. One of the primary requirements for setting up a business is to abide by the legal requirements set by federal, state and county rules and regulations. Abiding by these rules allows you to start your business off on the right path to help you avoid legal issues regarding the business structure in the future.
Here is the list of legal aspects you need to consider for start-up. Depending on your situation and type of business, hiring a tax accountant and/or good attorney with specific experience in your industry can help you.
- Business name –
Before you start printing out business cards, make sure the great new name you thought of isn’t infringing on the rights of an already existing business. You can perform a free search online that looks at business names registered with the Secretary of State — that will tell you if the name is available in your state. Then, take your search to the next level and conduct a no-conflict, free trademark search to see if your name is available for use in all 50 states.
- Register a fictitious business name/DBA –
A DBA (Doing Business As) must be filed whenever your company does business under a different name. If you’ve got a sole proprietorship or general partnership, a DBA is needed if your company name is different from your own name. For an LLC or corporation, a DBA must be filed to conduct business using a name that’s different from the official Corporation or LLC name you filed.
- Incorporate Your Business or Form an LLC –
Forming an LLC or corporation is an essential step to protect your personal assets (such as your personal property or your child’s college fund) from any liabilities of the company. Each business structure has its own advantages and disadvantages, depending on your specific circumstances. Three popular options are: the LLC (great for small businesses that want legal protection, but minimal formality), S Corporation (great for small businesses that can qualify), or C Corporation (for companies who plan to seek funding from a VC or go public).
- Get Federal Tax ID Number –
To distinguish your business as a separate legal entity, you’ll need to obtain a Federal Tax Identification Number, also referred to as an Employer Identification Number (EIN). Issued by the IRS, the tax ID number is similar to your personal social security number and allows the IRS to track your company’s transactions. If you’re a sole proprietor, you’re not obligated to get a Tax ID number, but it’s still good practice as you won’t have to provide your personal social security number for business matters.
- Learn about employee laws –
Your legal obligations as an employer begin as soon as you hire your first employee. You should spend time with an employment law professional to fully understand your obligations for these (and other) procedures: federal and state payroll and withholding taxes, self-employment taxes, anti-discrimination laws, OSHA regulations, unemployment insurance, workers’ compensation rules, and wage and hour requirements.
- Obtain business permits and licenses –
Depending on your business type and physical location, you may be required to have one or more business licenses or permits from the state, local or even federal level. Such licenses include: a general business operation license, zoning and land use permits, sales tax license, health department permits, and occupational or professional licenses.
- File for trademark protection –
You’re not actually required by law to register a trademark. Using a name instantly gives you common law rights as an owner, even without formal registration. Since you’ve spent untold hours brainstorming the ideal name, and you’ll be putting even more effort into cultivating name recognition, you should consider registering your trademark for proper legal protection.
- Open a bank account to build business credit –
When you rely on your personal credit to fund your business, your personal mortgage, auto loan and personal credit cards all affect your ability to qualify for a business loan. Using business credit separates your personal activities from that of the business. To begin building your business credit, you should open a bank account in the name of your company, and the account should show a cash flow capable of taking on a business loan.
If you are a start-up owner or have plans of becoming one, we at TheGongzuo.com are eager to assist you. Our experts will provide you guidance regarding your financial or legal matters. Do contact us today!