As one might anticipate, starting a business requires a well formulated plan, demanding the knowledge and understanding of the legalities involved. Following these basics steps will help an entrepreneur avoid unsavory legal repercussions.
- Deciding a name – There could be legal ramifications for adopting a name already in use, especially when the name is associated with a registered trademark, copyright, or domain name. There will be plenty of costs accompanying the start of a business, and the last thing an entrepreneur needs is the added expense of litigating early on in federal court for infringement on another’s intellectual property rights.
- Establishing a business structure and entity – The first question to ask is, “What form will my business take? Will it be a sole proprietorship, partnership, limited liability company, corporation, non-profit, or a co-operative?” This decision should be made early on, since there are different requirements in establishing the different entities, and the tax consequences will vary depending upon the business type.
- Obtaining a business license – This will be filed with the city in which you plan to operate your business. This gives you permission to conduct transactions on your premises within that municipality.
- Federal tax ID number – Everyone pays taxes, even business institutions. Most vendors and other professionals you do business with will ask for a tax identification number from you for their own records. Obtaining a federal tax ID distinguishes an individual (or group of individuals) from their business, as most people will want to avoid using their social security numbers.
- Permits/licenses – Depending on the type of business you decide to engage in, you will need specific additional permits and/or licenses issued by an administrative agency, which regulates your line of work. For example, an attorney opening a law firm will first need a BAR card issued by the state BAR, which licenses a person to practice law; someone running a health facility will need a medical license from the state medical board; an establishment serving alcoholic beverages will need a liquor license; and so on. Research must be done in order to determine which license(s) or permit(s) are needed to legally operate your business.
- Intellectual property protection – This will pertain to patents for inventions, trademarks or service marks for registering your brand, and copyrights for original creative works.
- Business banking – A good business mind will keep personal assets and funds separated from funds generated from operating a business. If your business is a corporation, it is imperative to establish a business banking account strictly for conducting financial transactions on behalf of the business; otherwise, you allow the piercing of the corporate veil.
- Financial, accountant and tax professionals – No business will truly thrive to its capacity without the help of a financier. A successful business will conduct numerous transactions daily and will need the assistance of professionals who understand investments, money, and taxation. The numbers must be kept straight, especially if you are ever audited by the IRS.
- Labor/Employment Laws – If you have employees, you must be well informed on all labor and employment laws. You have a duty as an employer to be cognizant of everyone’s rights and duties in the workplace.
- Insurance – This will include liability insurance, worker’s compensation insurance, renter’s insurance, malpractice insurance (depending on the type of business), etc.
Hiring a legal team to receive sound legal advice can become increasingly costly, especially when traditional law firms consult with and bill for the use of accountants, tax agents, and other business professionals. Understanding that business is expensive enough, without adding astronomical legal fees.
Eikon law offers affordable flat rate services. The lawyers at Eikon Law are a reliable, efficient, and experienced team of business and legal minds. Contact Eikon Law now for sound, economical start-up business advice.