Starting a small business is often the conclusion of a passion project that has been developed for years which makes it both an exciting and a challenging time for an entrepreneur. However, as with all things, there are certain important legal requirements that need to be fulfilled for small businesses or startups before they can begin their journey officially. These legal requirements may vary from state to state and country to country but here are some of the most general ones.
Establish and Define Your Business
Choosing the right structure for your start-up business is one of the most important decisions you will make as a new business owner. The business structure you choose to operate under will affect your level of personal liability, the amount of tax you pay, your control over the operations of the business, and your growth potential. Bearing in mind there are advantages and disadvantages to each structure.
Depending on your type of business and where it’s located, you might need specific business licenses and permits from your country, state, county, or city. Licenses, permits, and registrations come in many variations. Examples include local business licenses, building permits, health safety-related permits, permits for home-based businesses, fire permits, industry-related permits (like running a legal practice, hospitality, construction, or manufacturing business), liquor licenses, and more.
Create a marketing plan
Just as it sounds, this law requires all advertising or marketing efforts to be truthful. In addition, if you make any claims during an advertisement, you must have proof to back it up. You can’t ever be misleading or unfair. This rule becomes even more specific when you market to children or use endorsements.
If you plan to sell products by mail, phone, or online, you’ll need to brush up on the FTC’s telemarketing rule. Under this rule, businesses must ship products within 30 days, provide delivery notices if a product is delayed, and give refunds if an order can’t be filled.
Get your business registration, licenses and tax identification
Once your business structure is in place, you need to register your business and obtain the correct licenses, taxpayer identification number (TIN) and employer identification number (EIN). There are various resources to assist with business names, filing incorporation paperwork, obtaining necessary licenses and registrations with your local municipality, and getting your federal tax information squared away. Aside from the IRS for federal tax matters, regional corporation commissions can assist any new business owner with meeting the regulatory requirements for each locale around the country.
Protect your intellectual property (IP)
IP includes patents, copyrights, trademarks, and trade secrets as well. Be sure to file any patents as soon as possible a process that can take more than five years. Protecting your intellectual property will be attractive to investors but it will also help you sleep easier at night. Having exclusive rights to reproduce and display your work will make your life much, much easier down the line and ensure that no one tries to rip any IP rugs out from under you.
If you develop a new product, you’ll want to protect it with a patent. You can also protect your business name, symbols, and logos by applying for a trademark.
Starting a business is hard don’t let anyone tell you otherwise. But if you are meticulous about getting your start-up legal checklist in order, you’ll save yourself from some serious headaches down the line. Some of these items are things you can take care of yourself. But for more complicated tasks, or if you run into questions, it’s important to hire a competent attorney to help you.