When you plan to start your own business, you probably know the extent of the hard work you will have to do. Apart from having a business plan and analyzing whether it is workable, you have to check paperwork. You must also see if you have the required finances that are mandatory for your business setting up a process to start.
No business can survive if it does not have a strong team to support it. Finding a team of dedicated professionals to tackle your jobs is another essential requirement. Amongst other things, one aspect which confuses the new business owners is the legalities of the entire process. If you are in the same boat, we are here to help.
Mention below are some legal requirements that are required to set up a new business.
Understand the laws
All the procedures that would ensue finally are subjected to specific laws. Intellectual property and patent law are one amongst them. Under this, you have to first find out if somebody has already started working on a similar concept later on. You would not want that as it could have profound implications. The previous owner of the idea could drag you into court for that.
On the other hand, if you know that your idea is unique, you need to get it patented. Inability to do so would allow others to claim and hijack the product later on. Unfortunately, you cannot do anything about that.
Creating an LLC or corporation
You need to register your company as an LLC or a corporation when you startup. According to Business Law, this probably is the first step in the setting up of a company. An LLC or limited liability company keeps you protected from all kinds of liabilities. Even if your business is at risk or faces losses, your home and property won’t be at any risk.
On the other hand, a corporation is a separate entity. They offer the highest level of personal protection in case of liability from business structures. However, setting up a corporation is an expensive idea in comparison to LLC.
Registering a name
Now that you have decided on the business structure, focus your attention on registering your business name. You will have to check that someone already does not have a business registered in the same name. Apart from that, if you have a website, you will need to register the domain. If that domain is already, you could use alterations to the same.
Applying for a Federal Tax ID number
Next, you have to apply for a Federal Tax ID Number. This is known as an Employer Identification number and gives you the right to hire new employees, pay taxes, and open a business account, among other benefits. You may apply for the EIN through the IRS website.
Find out if you need a State Tax ID number
Some states even need a state tax id number for you to run your business. You will have to first research and find out if your state has any such requirement too. This is usually required when the state collects taxes from businesses.
Understand the tax obligations of your particular state by accessing their website. In case it is mandatory for you to have one, you will have to apply for that as well.
Obtain business permits and licenses
Your next plan is to obtain the required business permits and licenses to get the ball rolling. If you do not have these papers in place, chances are you will not get an opportunity to proceed with the setting up of your business. Small business administration has a set of guidelines about what kind of licenses any specific sort of business needs.
On the state level, the licenses and fees you need are dependent on your location and the business activities you are indulging in. On the whole, you will have to research a lot about this header and keep it focussed on your state regulations.
Insurance for your business
Now you will have to insure your business as well. Any kind of mishappening should not leave you in an unfortunate situation. Taking insurance keeps your interests protected. Business insurance not only protects your assets but the business assets as well.
Business insurance can be of different types. It is always better to sign up for all of them to reduce the loss you will make.
- General liability insurance is taken to protect your business from financial loss due to property damage, injury, lawsuits, etc.
- Product liability insurance is offered in a situation your product causes a problem to the customer. You will have to withdraw the product, which is a sort of financial loss to your same.
- Commercial property insurance is when you try and protect your business from any acts of vandalism or damage due to natural disasters.
Opening a business bank account
After all the above jobs are completed, you will have to open a business bank account. From the legal angle, you must maintain a separate bank account for your business. You will first have to select a bank that you can trust with your money. To open an account, you will have to share this information with your bank.
- Employer identification number or social security number
- Forming documents of your business citing its formation date
- Your business license information
- Ownership agreement documents
Your business would be successful only if you have completed the above processes properly. A failure to accomplish any of the above can lead to legal implications. Do not be in a rush for things to start working as per your requirement.
All the processes take time, and give yourself sufficient time to start the business. Hurried work can have a negative impact, and it is better to avoid it. Once the entire setup in one place, your entire focus would be limited only to increase brand awareness. Achieving that gives you a sense of accomplishment, and the profits follow you soon enough.