By Julius Choudhury
Are you finally actualizing your business idea? Starting a business is
challenging and you need to prepare adequately. Apart from funding, setting
up, and hiring employees, there are legal requirements you need to fulfill.
Before starting your business, familiarize yourself with these legal bases
to avoid lawsuits, fines, or jail time. Legal resources are plenty and
readily available online, or you can seek legal counsel.
Below are legal requirements that will help you get started and ensure you
don’t run into trouble with the law.
Choose an Appropriate Business Entity
The first thing to do before starting your business is designating the
proper structure or entity. The kind of entity affects your liability in
terms of fundraising ability and the amount of taxes you pay. You need to
specify if your entity is a limited or general partnership, a sole
proprietorship, C-corporation, a limited liability company, or
S-corporation. Once you've chosen one, have it designated officially by your
secretary of state.
An LLC implies that you have limited liability to damages experienced by
customers. This not only protects your business from possible lawsuits but
also your financial security. Even if your business becomes successful, an
LLC prevents you from unjust lawsuits that take up a lot of money, time, and
energy. Ensure that you have a more modern workplace to give your workers
the tools they require to emphasize a motivated and eager workflow.
Get an EIN (Employer Identification Number)
For you to file taxes as a business, you need to have an employer identification number. You can get one by downloading it from the IRS
website or requesting one room for the IRS through a phone call.
Single-member LLCs and sole proprietorships are exempted from this
requirement.
If you are the CEO, you will need to fill in your social security number,
date of incorporation, and business information like the name and address.
Keep a copy of the signed document.
Comply with Security Laws
Investors and founders of partnerships, LLCs, and C-corporations are subject
to state and federal security laws. These laws ensure that businesses
provide accurate and reliable information. This information helps to create
a fair market, protect businesses from fraud and inside trading.
Insure your Employees
Most states legally require business owners who have more than five
employees to insure them. There are different ways to insure workers; one of
them is the worker's compensation insurance in case they get injured while
on the job. Compare the various state-by-state compensation requirements
when starting your business. Failure to insure workers can lead to lawsuits
that could cost you dearly.
Check the Registrations, Licenses, and Permits your Business Requires
Different types of businesses require specific permits, licenses, and
registrations from the state or city. If you’re looking to establish a more
modern workplace, you will need building permits, industry-related permits,
business licenses, fire permits, health-related permits, and liquor
licenses. Missing these requirements can lead to expensive malpractice
lawsuits.
Bottom Line
Although starting a business is challenging, creating a legal check-list for
your startup can save you from missing crucial steps. You can get legal
information online or seek help from a professional to keep your business secure. Some legal requirements include designating a proper entity,
complying with licenses, permits, and regulations, getting an employer
identification number, and insuring employees.
