This web app uses cookies to compile statistic information of our users visits. By continuing to browse the site you are agreeing to our use of cookies. If you wish you may change your preference or read about cookies

December 20, 2023, vizologi

Your First Steps to Starting a Startup: The Easy Legal Guide

Starting a business can be exciting. Whether you have a great idea or a passion for entrepreneurship, the legal side of starting a startup might seem daunting. But don’t worry! We’ve created a simple legal guide to help you with the initial steps. This guide covers choosing the right business structure and understanding the legal requirements. It has all the info you need to get your startup going. Let’s begin your entrepreneurial journey with these first steps.

Getting Your New Business Ready to Go: What You Need to Do

When starting a new business, it’s important to pick a name that truly represents your brand. You also need to register it.

You’ll need an Employer Identification Number (EIN) from the IRS for tax purposes and when hiring employees. This is usually required for corporations and LLCs.

Trademarking your business’s logos, slogans, or other intellectual property is also crucial. It stops others from using them without permission.

This is a big deal for safeguarding your brand and following legal rules as you run your small business.

Picking a Name and Making It Official

How do you pick and register your business’s name?

Choosing a business name that aligns with brand values requires market research and understanding the company’s message and target audience. A good business name can boost marketing efforts and generate interest in the brand.

The process of registering a business name involves checking its availability, filing a “Doing Business As” (DBA) name with the local government agency, and reviewing trademarks. Securing a unique domain name is vital for a business website to establish brand identity and avoid confusion with other companies.

Moreover, it aids in creating a website with strong SEO, making it easier for potential clients to find your site.

What it means to ‘do business as’ (DBA)

  1. Registering a business name involves choosing a unique name. Then, ensure it’s not already in use by another company. This can be done through the Secretary of State or a similar government agency. It’s important for establishing a legal business identity.
  2. ‘Doing business as’ means operating a business under a name different from the owner’s personal name. This is important because it allows a business to operate under a distinctive name for branding and marketing purposes. It also helps fulfill legal requirements for tax and business registration.
  3. Obtaining a website domain name is important for establishing a business’s online presence. It makes it easier for customers to find and access the company’s website. It can help in branding and marketing efforts. Also, it may be necessary for legal and trademark purposes.

Why You Might Want a Website Domain Name

A website domain name gives a business its own online identity. This helps customers find and remember the business. It also shows that the business is established and trustworthy.

Having a website domain name allows for personalized email addresses, which adds to the professional image of the company. It also helps in creating a unique online presence and building brand recognition.

Without a website domain name, a business might find it hard to stand out online and could lose potential customers to competitors who have their own domain names.

Forming Your Business Legally

Deciding between an LLC, Corporation, or Partnership

The differences between an LLC, corporation, and partnership are in ownership, management, and liability.

LLC owners have limited liability protection, while corporate owners typically have the same. In contrast, partnerships do not provide this legal protection.

When deciding on a legal structure, business owners must consider liability protection, tax implications, formalities, and management related to their company.

The potential advantages of choosing an LLC, corporation, or partnership depend on business objectives and needs.

For instance, LLCs and corporations protect personal assets, while partnerships allow profits and losses to pass through to personal tax returns.

Partnerships require owners to share management responsibilities, while LLCs and corporations have a clear management structure in place.

LLCs and corporations often require more paperwork and formal filings, unlike partnerships that can offer easier management and taxation benefits.

Setting Up for Tax Time: ID Numbers and More

What’s an Employer Identification Number (EIN) and why it matters

An Employer Identification Number is a unique nine-digit number given by the IRS to identify a business.

It’s important for a business because it’s used to:

  • Open a business bank account
  • Apply for business licenses
  • File tax returns

Getting an EIN affects a business’s tax responsibilities and reporting needs. It makes sure that employee wages and other tax documents are accurately reported to the IRS. Also, it’s needed for businesses with employees, partnerships, corporations, and tax withholding on non-wage income.

Sales Tax, Income Tax, and other Taxes you should know about

New businesses should be aware of different types of taxes.

These include sales tax, income tax, property tax, and payroll tax.

Sales tax is a percentage added to the sale of goods and services and is collected by the seller for the state.

Income tax for businesses is based on the profits of the business and is paid to the federal government.

Payroll tax includes Social Security and Medicare taxes that are paid by both the employer and employee on employee wages.

Property tax is based on the value of a property and is paid to the local government.

Understanding these taxes is important for new businesses to comply with legal responsibilities and avoid financial penalties or legal issues.

Protecting Your Name and Ideas: Intellectual Property

How and when to trademark your stuff

  1. Trademark your business or product name once you have a clear concept and plan. This protects your brand identity and prevents others from using the same or similar name.
  2. To trademark your ideas or products, search to ensure no one else has already trademarked a similar name. Then, file a trademark application with the USPTO to register your trademark.
  3. Benefits include exclusive rights to use your brand name or logo, legal protection against similar names or concepts, and the ability to take legal action against infringers. Trademarking adds value to your startup and enhances credibility with customers and investors.

Applying for Permits and Licenses: Stay on the Right Side of the Law

Do you need a building permit or a certificate of occupancy?

Depending on the type of business you are starting, you may need to obtain a building permit. This permit is required for most construction or alteration activities, including new buildings, renovations, and additions.

Additionally, if you plan to operate your business from a physical location, you will likely need a certificate of occupancy. This certificate ensures that the building is compliant with local zoning laws and building codes, and it verifies that the property is suitable for conducting business activities. It’s important to research and understand the specific requirements for your industry and location to ensure legal compliance and avoid potential fines or penalties.

Fitting Into Laws about Work and Workers

How to hire the right way and follow work laws

To hire the right way and follow work laws, small business owners should properly classify employees. They should also comply with labor laws. By understanding employee classification and labor laws, business owners can ensure they are following legal requirements.

Business owners can protect their business with appropriate insurance. This includes general liability insurance and workers’ compensation insurance to cover various risks and accidents.

To ensure compliance with the law, business owners must research and apply for necessary permits and licenses. This includes securing a federal tax ID number , determining if a state tax ID number is needed, and obtaining the required business permits and licenses.

By following these legal steps, small business owners can protect themselves and their employees. This allows them to focus on growing their business.

Banking, Accounting, and Keeping Track of Your Money

Why separate bank accounts for business make sense

Separate business bank accounts ensure clear separation between personal and business finances for legal and financial purposes. They simplify accounting and financial tracking. This makes it easier to monitor business expenses, income, and track tax obligations accurately.

Additionally, having separate accounts helps protect personal assets from business debts and liabilities. It reduces the risk of IRS audits and enhances the professional image of the business. However, business owners should be mindful of potential fees associated with establishing and maintaining a separate business account. They should also consider the time and effort required to keep accurate records and manage multiple accounts.

Moreover, it’s important to consider the eligibility criteria and minimum balance requirements of different business accounts offered by financial institutions.

Insurance: Protect Your Business from ‘Oops’ and ‘Uh-oh’

The kinds of insurance that keep your business safe

When you start a small business, it’s important to have the right insurance. Different types include general liability, property, professional liability, and workers’ compensation. Each one protects against specific risks, like property damage and employee-related issues. Insurance provides financial support in case of accidents or lawsuits. When choosing insurance, consider your industry, company size, employees, and specific risks.

Customize coverage to meet your business’s needs and ensure protection against potential threats.

Vizologi is a revolutionary AI-generated business strategy tool that offers its users access to advanced features to create and refine start-up ideas quickly.
It generates limitless business ideas, gains insights on markets and competitors, and automates business plan creation.

Share:
FacebookTwitterLinkedInPinterest

+100 Business Book Summaries

We've distilled the wisdom of influential business books for you.

Zero to One by Peter Thiel.
The Infinite Game by Simon Sinek.
Blue Ocean Strategy by W. Chan.

Vizologi

A generative AI business strategy tool to create business plans in 1 minute

FREE 7 days trial ‐ Get started in seconds

Try it free