Starting a new business can be an exciting venture, but it does not come without its challenges. Once the idea for your business is decided upon, you’ll have to start navigating the many legal requirements needed for your business to be considered established and compliant, with the least odds of litigation. Knowing some of the most important steps will ease your way into getting your business up and running.
It’s All in the Name
The very first step towards legal compliance involves choosing a name for your business. As a commercial litigation lawyer from Silverman Law Office, PLLC forewarns, the name you choose cannot already be claimed by another business, so you must ensure it’s not in use before officially registering it.
LLCs vs Corporations
Next, you need to choose whether you want to structure your business as an LLC or a corporation. If you want to protect yourself from liability as much as possible, establishing your new business as a corporation would help, since a corporation is a completely separate entity from you. However, the start-up procedures and costs are significantly more complex and expensive than establishing a business as a limited liability company.
LLCs are popular among small, owner-run businesses since this business structure allows for greater flexibility while still offering a bit of liability protection. Additionally, business owners that own LLCs typically pay self-employment tax since business income can be filed alongside personal income taxes, whereas corporations have their own income tax.
A Numbers Game
Applying for a federal tax ID number through the IRS is your next step. This allows you to set up the integral financial operations of a business: payroll, taxes, and bank accounts. You’ll also need this number to start applying for business licenses. Depending on the state your business is located in, you may need to apply for a state tax ID number as well.
Ready for Action
The next few steps are specific to your location and your industry. You’ll have to check in with your local or state regulations and apply for the appropriate business permits and obtain any legally required insurance. Then, you can finally open a business-specific bank account. This step is essential so that your business income is not mixed with your personal income.
Legal Professionals Know
There are many steps to becoming compliant, but don’t worry. A knowledgeable professional can walk you through each step of the process and ensure that you are doing everything to legally run your new business. If you’re planning on starting a new business, consider consulting with a lawyer today to ensure this transition is as smooth as possible.