Starting a business involves more than just buying a few computers and hanging out your shingle; it involves various aspects elements like researching about the industry and your competitors, finding the right product or service, mapping out your marketing strategy and much more.
However, it is just as important to be aware of the legal challenges that also come with process. It is therefore important to know the legal steps and best practices that can contribute to the long-term success of your business. We’ve gathered advice from experienced small business lawyers to help you start your business right in the U.S.
Key Takeaways
- Learn the right legal steps to start a business, like picking the right structure and registering with the state.
- See why getting advice from small business lawyers is important for a smooth start.
- Find out how to protect your ideas with trademarks and copyrights.
- Understand the legal aspects that build a strong base for your business.
- Learn how to set up an LLC and the perks of having a small business lawyer on your team.
So, you want to start a business. This is an exciting time for you, but it can also be overwhelming because there are a whole host of legal and other issues which you need to cover. Working with a good business attorney is always a smart move for you and your business. Below is a helpful checklist to get you started. Ensure you address all of these checklist items, and you will start your business on the right foot.
- Forming Your Business Entity: The First Legal Step
Choosing the right business structure is one of the first legal steps to take. You can pick from LLCs, corporations, partnerships, or sole proprietorship.
Choosing the Right Business Structure
There’s no single best business structure for everyone. The right choice depends on several things, like:
- Liability protection: LLCs and corporations protect you more than partnerships or sole proprietorships.
- Tax considerations: Each structure has its own tax rules, like LLCs and partnerships getting taxed once on their owner’s personal tax filing, while corporations get taxed twice.
- Scalability and growth potential: Corporations work well for big growth plans, while sole proprietorship and LLCs are better for small, independent businesses.
The preferred route that most new entrepreneurs take is to create an LLC to establish a strong foundation for their business while benefiting from it’s several advantages. For the long-term success of your business, the expertise and support of a small business attorney can hasten your business formation process and ensure sustained compliance.
2. Register Your Business Name
Your business name is your brand, and protecting it is crucial. To do this, you need to:
- Check Availability: Ensure your desired name isn’t already in use by searching your state’s business registration website and the U.S. Patent and Trademark Office (USPTO).
- Register with the State: This might involve filing a “Doing Business As” (DBA) name, depending on your business structure.
- Trademark Your Name: For broader protection, especially if you plan to operate nationally, consider applying for a trademark through the USPTO.
3. Obtain Necessary Licenses and Permits
Operating a business legally sometimes requires various licenses and permits, which vary by industry and location. Common examples include:
- General Business License: Most local governments require a basic operating license.
- Professional Licenses: Specific professions (like healthcare or legal services) require state-specific certifications.
- Health and Safety Permits: If you’re in the food industry, you’ll likely need health permits.
- Environmental Permits: For businesses that have environmental impacts, such as manufacturing, these permits are important.
4. Draft and Review Contracts
Contracts are the backbone of business relationships. They clarify expectations, protect your interests, and provide a legal recourse in case of disputes. Essential contracts include:
- Partnership Agreements: Define roles, responsibilities, and profit-sharing among partners.
- Employment Agreements: Specify terms of employment, including duties, compensation, and termination conditions.
- Service Contracts: Outline the terms of services provided or received.
- Non-Disclosure Agreements (NDAs): Protect your business’s confidential information.
5. Understand Employment Law
As an employer, you must comply with the federal and state employment laws to avoid legal issues. The considerations include:
- Employee Classification: Properly classify workers as employees or independent contractors to avoid penalties.
- Wage and Hour Laws: Adhere to minimum wage laws and pay overtime when required.
- Anti-Discrimination Laws: Implement fair hiring practices and maintain a discrimination-free workplace.
- Health and Safety Regulations: Ensure your workplace complies with OSHA standards to provide a safe environment for your employees.
6. Protect Intellectual Property
Intellectual property (IP) includes trademarks, copyrights, patents, and trade secrets. Protecting your IP is essential for maintaining a competitive edge. Steps include:
- Trademarks: Protect your brand names and logos.
- Copyrights: Secure the rights to your creative works, such as written content, music, and software.
- Patents: Protect your inventions and innovations.
- Trade Secrets: Safeguard proprietary processes and formulas through NDAs and other protective measures.
7. Prepare for Taxes
Understanding your tax obligations is vital to avoid penalties and make informed financial decisions. Areas to focus on include:
- Employer Identification Number (EIN): Obtain this from the IRS for tax filing purposes.
- Business Taxes: Determine the types of taxes you need to pay, such as income tax, sales tax, and employment tax.
- Tax Deductions: Keep accurate records of expenses to take advantage of tax deductions.
8. Plan for the Future
Your business’s longevity depends on strategic planning for growth, succession, and unforeseen events, which are:
- Business Plan: Develop a comprehensive plan that outlines your business goals, strategies, and financial projections.
- Succession Planning: Ensure a smooth transition in leadership by planning for the future.
- Buy-Sell Agreements: Protect your business in the event of an owner’s departure, disability, or death.
- Disaster Recovery Plan: Prepare for emergencies by having a plan to maintain operations during disruptions.
Final Thoughts
According to Charles Swindoll, “The difference between something good and something great is attention to detail.” And there are so many details to keep up with when starting a business, that it would be in your best interest to consult and maintain an ongoing relationship with an experienced small business attorney in your state to guide you through this legal maze and see to it that your business succeeds in the long run.
