Understanding the legal aspects of starting your business
When starting your business, there are various legal responsibilities you should be aware of both to protect your business and to avoid costly penalties. Many of the steps involve filing forms and keeping records that you can take care of yourself, while others it is suggested, if not required, that you have legal counsel. Here are some things that you may want to consider regarding the legal aspects of starting or running a business.
Finding a Lawyer: Lawyer fees can be very expensive, but at the same time, it could be well worth your money to seek their counsel for certain parts of your business. Many aspects of starting and running a business are complex and it may even save you money in the long run to have well-written contracts and be in compliance with the law. For example, it can be helpful to use a lawyer to set up the legal structure of the business, draw up employment contracts, close on real estate purchases, obtain patents or trademarks, and to handle other transactions that involve large sums of money or binding agreements.
|
|
Structuring your Business: There are many ways that you can structure a business. Different entities can be employed depending on the number of people who own the business, the personal liability of the owners, the tax advantages and the simplicity in forming the entity. Depending on the type of entity you choose, you may need to register your business or file papers to incorporate, which may or may not require the legal assistance of a lawyer.
The three general legal classifications are sole proprietorship, partnership and corporation. The easiest entity to organize and create is the sole proprietorship. It can be initiated by simply starting to do business, no paperwork or license necessary. Partnerships and corporations are more involved and there are a number of variations for each, such as S Corporations and Limited Liability Corporations (LLC).
Licenses and Regulations: Almost every business requires a license of some sort, and some may require more than one. You may also need a professional license or accreditation for yourself or your employees, depending on your field. Some fields that require some sort of licensure are beauticians, electricians, restaurateurs, real estate agents and brokers, insurance agents, preschool teacher, etc. to name a few. In all cases it is important that you obtain the proper license or permit before you start up to avoid any penalties.
Federal Regulations: Most small businesses do not require a federal permit to operate unless they are engaged in one of the following services: investment advice, alcohol or tobacco sales and manufacture, broadcasting, preparing meat products, dealing in firearms, or manufacturing drugs.
State and City Regulations: Every state and city varies in what they regulate in terms of business permits, licenses and codes. You will need to research this according to where you plan on starting up your business.
Filing Taxes: Every business is required to pay income or self-employment tax on its profits, but there are other tax liabilities that you need to be aware of when starting out. It is vital that you keep good records because it will save you not only time, but money on taxes as well because there are many things that as a business owner, you will be able to deduct on your tax return. It is recommended that you hire a bookkeeper or accountant to assist you with the legalities to ensure that you are getting the most benefits possible. It could be well worth the money.
Applying for Patents, Trademarks and Copyrights: A trademark is a word, phrase or symbol that identifies your product or your company. A patent is granted to an inventor to exclude others from making, using or selling his or her invention. A patent is valid for seventeen years. Applications for both patents and trademarks are submitted to the U.S. Patent and Trademark Office. You may want to consider consulting a patent attorney before proceeding with any application.
