Five Things to Know about the Laws of Starting a Business
June 11, 2021
Starting a business is an investment, a life-changing event, and a big commitment. It is something that takes a lot of motivation, but also comes with a lot of risks. All startups and businesses will require individual laws and formations that are essential for its practice. Here are five things to know about the laws of starting a business.
Perhaps one of the most important steps in creating a company is its structure. As an entrepreneur, you need to register your business name with the secretary of state and the IRS. Until this is completed, you can only do business under your personal name.
Typically, the structure of your business will fall under one of two categories, a Limited Liability Company (LLC) or a Corporation. With an LLC the owner files the business income as part of their personal income tax which leads to self-employment tax. If done correctly, you are protected from personal liability in most circumstances if your company faces a lawsuit.
A corporation is a company that is a separate entity from the owner. Corporation establishment is regarded as the more expensive and complicated option, as it grants the owner the greatest amount of protection.
When beginning a startup, chances are you already have the name determined. In fact, you probably have many ideas mapped out. It is important to register these names and ideas so that you can get to work.
By claiming your business name, you are ensuring that no one else can use that name or claim your ideas. To register a business name, you will need to fill out state and federal paperwork to develop your company.
There are many different ways to register a business name. First, you can create a DBA (Doing Business As) name. In some states, this may be referred to as a Fictitious Name. This name does not offer legal protection, but it is one of the first steps many people take to naming their company. In order to protect your business at a state and federal level, you will need to establish an entity name or a trademark. Depending on the scale of your ventures, you can decide which option will best fit your needs.
If you are conducting business online, you will need to register for a domain name, this claims your business’s web address. This is a necessity in modern-day business practices and can be used to start promoting your startup.
Agreements / Contracts
The best time to start drafting agreements and contracts is right away. To ensure fairness and protection, you should hire an experienced lawyer to draft agreements. Here are some agreements and contracts that are important to business formation:
Partnership & Limited Partnership Agreements
LLC Operating Agreements
When filling out agreements and contracts it is important to think outside the box to protect the business from future lawsuits. By establishing written professional practices, rights, percentages, partnerships, succession plans and more, you will be able to secure the future success for your startup.
It’s often said, the only two things certain in life is death and taxes. When starting a business, you will be required to create an Employer Identifying Number (EIN). This is needed to pay business tax, hire employees, apply for licenses and bank accounts and more. To do this you will need to fill out the federal government’s IRS forms.
Tax obligations differ from state to state so be sure to research your specific requirements. In some states, you will need to file for a state tax ID number. This is required for obtaining licenses and permits depending on the field of the business.
Upon your creation of the EIN, you should begin to plan for business insurance so that you can be protected from various outcomes like property damage, injury, medical issues and more.
When it comes to starting a business, it is best to hire and consult a professional so that you can be confident that you have all of your bases covered. You have put time and effort into your startup, so don’t neglect the legal side of creating a business. Hire a professional. You will be glad you did.
If you are an entrepreneur in Naples, Florida, trust Cardillo Keith Bonaquist to help establish the legal side of your company. With over 45 years of business law experience, our lawyers are expertly prepared to help you create a successful brand. For more information contact the business professionals in our law office at 239-774-2229 or at ckblaw.com.