Commencing a business requires meeting all applicable legal requirements. Failing to do so could result in costly fines or legal disputes in the future.
Legal considerations when starting up a new business include incorporating, obtaining necessary permits and licenses, protecting intellectual property and adhering to antitrust guidelines. By following these tips you can help limit legal liabilities associated with your new venture.
Forming a Business Entity
Starting a business involves fulfilling numerous legal requirements, such as creating a legal entity and obtaining licenses/permits as well as understanding consumer protection laws. Failure to fulfill these requirements could result in fines for businesses of all sizes.
Establishing a business entity helps reduce personal liability and provide tax advantages. Entity structures vary by state and business type; typically a sole proprietorship requires minimal filing requirements but exposes itself to greater liabilities; an S corporation or LLC provides limited liability and offers tax advantages.
An Employer Identification Number (EIN), used for tax identification purposes, should be obtained prior to launching any business. When starting up, it’s wise to keep business and personal transactions separate, as mixing them may make tax preparation more complex and potentially lead to legal issues should an audit occur.
Obtaining Licenses and Permits
Starting a business requires much planning and creativity. There are, however, certain legal considerations which must be addressed before officially opening its doors – including creating a business entity, obtaining necessary licenses/permits and adhering to consumer protection laws.
What kind of license and permit your business needs will depend on its industry of operation; however, most will need at least a general business license from their local government in order to operate effectively. You may additionally require property use permits, certificates of occupancy, professional/occupational licenses and sales tax licenses and numbers as part of their requirements.
Prioritizing legal matters when starting up your new company is of vital importance in terms of legal compliance. Make sure you address this checklist early on; otherwise contact an experienced business attorney if any queries arise.
Choosing a Business Name
An important decision when starting up a new company is selecting its business name. If someone else has trademarked that same name, legal action or long-running litigation could ensue requiring both time and money for resolution.
For maximum brand protection, trademarking your business name through the United States Patent and Trademark Office offers more robust safeguards than simply registering your DBA or FBN.
Sole proprietors can file for an FBN or DBA to register the name you are operating under with state and local governments, although DBA registration won’t provide as much protection as trademark registration; therefore, before making your choice official. LLC and S corporations can file for an Employer Identification Number (EIN), providing them with an identifier number used for tax purposes.
Keeping Records
Accurate records are one of the most essential elements of running any successful business. They ensure compliance with record-keeping standards, protect intellectual property rights and enforce tax laws correctly – while helping inform decisions about your operations to plan for the future.
Beginning a business can be both exciting and daunting at the same time, as legal requirements must be complied with to protect it from its inception. It’s essential that all applicable requirements be fulfilled to safeguard your venture’s protection.
By taking steps like incorporating, obtaining permits and licenses, choosing a business name and protecting intellectual property in advance, you can reduce costly legal issues in the future and start your venture with confidence. FasterCapital can assist with this process!
