Starting your own business can be very exciting, infact the thought of owning and running your own business can make you forget the necessary things to do when starting out. One of such thing is the Legal requirements.
A business that is started without fulfilling some of these legal requirements is already showing signs of failure, which shows the importance of paying close attention to these requirements.
Unfortunately, many business owners jump into the competitive marketplace without doing enough research when it comes to covering their legal bases.
Read Also: 8 Places to find Investors for your Startup
In view of this, let us now consider seven legal requirements you need to fulfill when you start a business, and the costs associated with letting these important concerns fall by the wayside.
Check if your industry needs licensing
Licensing might not be required in some industry to start a business, but some industry place special emphasis on it. It is important for you to make your research and find out whether a license is required for you to start your business.
Check out a list of professions that require licensing across the United States and ensure that your documents are up to date if you want to avoid legal trouble.
Medical professionals, legal experts and other professionals in important industries should take special precautions when checking their licensing requirements. Malpractice lawsuits can be ludicrously expensive, so don’t skip this step.
Make sure you pick a Name you are permitted to use
You might have spent sleepless nights trying to pick a business name that will strike your audience, but before you proceed with printing business cards and other branding, here is what you should do.
Make sure the great new name you thought of isn’t infringing on the rights of an already existing business.
Sometimes, you don’t need an attorney for this task, as 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.
You can even go further by taking your search to the next level and conducting a no-conflict, free trademark search to see if your name is available for use in all 50 states.
And considering you can still infringe on someone else’s trademark even if they’ve never formally registered it with the U.S. Patent and Trademark Office, you should also do a comprehensive search into all state and local databases
Protect your personal assets
The most important thing to consider when launching your own business is how you intend to protect your personal assets. No budding business owner wants to think about failure, but the truth of the matter is that many new companies struggle to earn a profit and collapse.
Even those that are successful might find themselves the victim of an unjust lawsuit that eats up time, money and energy. To be on the safer side, here is what you should when starting out.
Protect your assets by forming an LLC. A limited liability company, as the name implies, limits the degree to which you as the business owner are liable for damages incurred by customers.
So a customer who sues your company after receiving a faulty product or inadequate service won’t be able to touch your personal finances or bank account.
The process look lengthy because you need to take plenty of time to research forming an LLC, but it is worth it as it saves you in the long run.
Get a Federal Tax ID Number
Before you can open your doors, however, you need to address the issue of how you’ll be paying federal taxes. Unless you want the IRS knocking on your door, you’ll need to apply for an Employer Identification Number online via a holding company, which will allow the U.S. government to differentiate between your business and others when collecting what it’s owed.
Take some time to browse the EIN page on the IRS website if you’ve not taken care of this already.
Learn About Employee Laws
As an employer, your legal obligations starts immediately you hire your first employee. So before you do that, make sure to 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 (an Age Discrimination Lawyer or similar will be able to advise on this area), OSHA regulations, unemployment insurance, workers’ compensation rules, and wage and hour requirements.
Offering worker’s compensation insurance to those who are injured on the job and incapable of providing for themselves, for instance, is required in most of the United States.
Many new business owners attempt to cut down on the costs associated with running a company by mitigating their insurance rates, but understand that skimping out on worker’s comp could seriously backfire and cost you dearly.
You can avoid this by checking out a state-by-state comparison of worker’s compensation requirements and should not delegate this responsibility to someone else.
Some small businesses may be exempt, but when you start growing, keep in mind that you’ll need to think about worker’s compensation soon.
Open a Bank Account to Start Building 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 (and for how much).
Read Also: What to do when your Business Fails
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.
Hire a Competent Lawyer
every business needs a good lawyer to call upon when things inevitably go wrong. In this day and age, it’s only a matter of time until you’re dealing with a lawsuit, and when the subpoenas arrive you’re going to want solid legal expertise to rely on.
Thoroughly vet the lawyers in your area and don’t be afraid to ask them why they’re the best choice for your business.
Always remember that lawyers who can’t answer your questions in a satisfactory manner won’t be capable of seriously defending your business.
Invest plenty of time, energy and money in finding the right legal experts to help protect your business, and your new company will be up and running in no time.
