It is extremely essential to take care of all the aspects related to the business. Among all these, legal area is generally the most ignored aspect and at the same time most crucial one too. Legal aspects are directly linked to the financial and administrative aspects of a company. Here are the basic legal steps one must consider when starting a new business-
- Decide on a name:
No matter how trivial does it sound in comparison to the real hard work for establishing a business, it is of essential importance to decide on a name for the company. The name represents the brand value and it connects directly with the customers. That is why; it is essential to decide a name and get proper legal permit to use it everywhere.
- Be careful about the trademark protection:
The job does not end with choosing the right name after hours of effort. In order to get recognized legally one should register the name for trademark. This process helps giving the name proper legal protection.
- Incorporation is necessary:
It is extremely important for a blooming business to make a corporation. This process marks a boundary line between the owner and the business and helps to protect the personal belongings of the owner as well. Typically there are three types of incorporating options are available-
- LLC (for small business)
- S Corporation (for small business)
- C Corporation (for a company ready to go public)
- Be careful regarding the employee laws:
Hiring employees is not enough. One needs to learn more and more about the employee laws available out there. Understanding these laws help to understand the obligations of the employer as well. Some of the prime parts of employment laws are-
- Anti-discrimination laws
- Unemployment insurance
- Compensation rules
- Work hour related rules etc.
- Get licensed and a proper permit:
Having a proper business license for the business is of prime necessity. These permits have local, federal and state levels. A license like that can be for operating the business, or using the land properly, tax license, permission from the health department and many more. Having these permits and licenses help to proceed for the business legally.
- Tax ID number is a must:
Separation of the business with the owner does not end with incorporation only. Getting a different Federal Tax Identification number is also important. It is also known as the Employer Identification number. This is not mandatory for sole proprietorship. However, in that case as well, it helps to run the business as a completely separate entity.
- Separate bank account for business credit:
This is another legal necessity for the process of making the business a different entity. Having the personal credit for the funding of the business is not healthy. In that process the process of qualifying for a business loan becomes difficult. That is why; it is wise to open a separate bank account solely for the business and operate from there only.
Legal steps essential part of any business and one should not overlook them for protection and safety.