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By FindLaw Staff | Legally reviewed by Robert Rafii, Esq. | Last reviewed November 17, 2022
This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw’s team of legal writers and attorneys and in accordance with our editorial standards.
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There are a hundred things to consider when starting a business. Some of those things are legal requirements for which you might want to seek advice from a business lawyer. Here are some of the most common legal questions start-up small business owners ask.
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There are a number of legal structures for businesses. Each type of structure will have its own requirements for formation. The tax status and owner's personal liability will also vary depending on the type of business structure. A business lawyer can help you understand the pros and cons of each legal structure.
There are three general types of corporations — C corporation, S corporation, and nonprofit corporation. There is also a growing movement for corporations to get certified as “B Corporations". This is a private certification awarded to for-profit corporations by a global nonprofit that promotes social and environmental responsibility.
The forms you need to file to register your business will vary depending on the type of business entity you have created.
A business owner could benefit from the help of a lawyer to file paperwork with the Secretary of State. You may want to consult a business attorney about the drafting of Articles of Incorporation and Corporate Bylaws, especially for larger corporations.
For simple start-up businesses, however, FindLaw's Legal Forms and Services area may provide all the help you need to put together legally sound business formation documents.
You don't need an Employer ID Number (EIN) to register your business as a sole proprietor. You can use your personal Social Security number for tax purposes, or you can get an EIN to safeguard your social security number. All other new businesses will need to get a tax ID number in the form of an EIN after filing formation papers with the Secretary of State.
Again, the forms you will need depend on the type of business you are forming. You may need a partnership agreement, a bylaws document, an operating agreement, or a shareholder agreement. Early in your business, you may need employment contracts and non-disclosure agreements for key early employees.
For a sole proprietorship, a business name can be as simple as the business owner's name, or they can choose another name. A business name needs to be easy to remember and distinct from competitors. FindLaw's Starting a Business section has several articles about choosing the right business name.
Before you register a name, you must ensure it is legally available for use. The wider your market, the more thorough your search needs to be. You can investigate for yourself whether the name is available or you can hire a business lawyer who specializes in intellectual property, trademarks, and trade names.
You may also choose to operate under a fictitious business name (dba, or “doing business as"). Fictitious business names must be registered with the state and/or county. Check with your state laws regarding fictitious business names.
To protect your business name, however, you should consider filing a state and/or federal trademark.
The business licenses and permits that a small business needs will vary depending on the business activity and the location of the business. All businesses need a city and/or county general business license.
Other business licenses and registrations are issued by the county, state, and federal governments. Permits are typically issued by the local government for zoning and building matters. Permits for natural resource use are typically issued at the federal or state level. To learn more, see Business Licenses and Permits.
While your tax obligations will vary depending on the type of legal structure you choose for your business, there are a few start-up tax issues to be aware of. First of all, it is imperative that you keep good records. You should also be sure to keep your business bank account and personal bank account separate.
The law has a lot to say about how you manage your bookkeeping and your tax returns. you are obligated by law to record all business transactions according to a specific accounting method. Research what's required of you for your industry and location in terms of record-keeping obligations. Commingling of funds and failure to observe other business formalities may subject you to personal liability even if you are operating under a registered business entity like an LLC or corporation.
The first thing you must know is how to properly classify your employees — especially if you believe you have contractors. Misclassifying an employee as an independent contractor could expose your company to costly penalties and back wages. Sometimes it's clear; sometimes it's a gray area and it would help to consult an employment law attorney.
You will also be responsible for collecting employment taxes — state taxes and federal taxes and forwarding the business and employee share of Social Security and Medicare taxes.
Most employers are required to pay into their state's unemployment insurance and to carry workers' compensation insurance. You can learn more about the legal responsibilities of having employees at the Small Business Administration (SBA).
Every company faces some type of legal liability. It could be from a customer falling in your shop, a defective product, or a mistake handling an employee complaint. One of the early things you need to do to limit risk to your business is to purchase business insurance. The kind of insurance you need depends on the type of business you are operating. A business attorney can advise on the particular areas of liability your company may face.
Simple registration of a trademark can usually be handled by the business owner at the US Patent and Trademark Office (USPTO). But your business idea may need a lot more protection than that. People often work with patent attorneys to secure a patent for their inventions. Learn more about patent law and enforcing patents.
You do not necessarily need a lawyer to start a business. It really depends on the complexity of your business, the amount of advice and support you have from other sources, and your knowledge of starting a business.
An FAQ will only take you so far. Contact a business organization attorney for guidance on everything from which business licenses you need and the best business structure for your company.
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We have a DIY option you can use to save time and stress.We help you:
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