Think about it, every year, lots of entrepreneurs wanted to turn their vision of starting a business into a reality. Most of these start-ups are overflowing with creativity, bustling with ideas, with an optimistic outlook of the future, and with a drive to succeed. However, the majority of them don’t have a clear idea when it comes to legal matters involved when starting up a business. Yes, the legal side isn’t always the most exciting part, but it is a critical turning point for your finances, as well as your company as a whole.
Here are the essential key legal considerations you shouldn’t forget when starting up a business.
- Picking the right name for your business
Did you just pick a name for your business? That’s great. However, the next question is- are you legally permitted to use it? Before anything else, you must be sure that the name you’ve picked isn’t the same name of another existing business, or you’ll be infringing on their legal rights. You can search it up online and look for names that are previously registered with the Secretary of State, or on all state and local databases.
- Form an LLC
Forming a corporation, or an LLC will secure your assets from any potential liabilities that may occur in the company. These specific structures might have particular pros and cons. For example, an LLC will work best for those small businesses who have less than five shareholders, want legal coverage, but with minimal formality. S corporation works for small business owners who qualify, and finally, C corporation is mostly for companies that seek funding from a VC.
- Getting a Federal Tax ID number
Before launching your business, you need to get a Federal Tax ID number to recognize your business as a separate legal entity. It’s quite the same as your social security number, and the IRS can track whatever your company’s transactions are.
- Learn about employee laws
It’s your role as an employer to understand your obligations to your employees fully. Whatever, it is, from worker’s compensation, hour requirements, to self-employment taxes, you need to consult everything first with your business law attorney.
- Obtain business permits and licenses
Depending on what type of business you are in and where you are located, it’s imperative for you to secure permits and licenses for your business (both local and federal) to be fully operational.
- Seek trademark protection
You’ve put in hours to think about the right name for your business. Therefore, it makes sense that as your brand gains recognition, you should consider registering. Although you’re not required by the law to register a trademark, this ensures that your company would have proper legal protection.
- Open a bank account with the name of your company
Just settling for just your personal bank account will not qualify you for a business loan in the future. Therefore, opening a separate bank account with the name of your company will help build your business credit.
You can’t wait to start your new business, or you may have, and everything’s doing great. However, it is also vital to take into account the key legal considerations you shouldn’t forget when starting your own business. Learn from a business attorney here to avoid potential business pitfalls as your road to success.