12  Legal Requirements When You Start A Business

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Starting a business is an incredibly exciting time, but it can also be a bit daunting.

There are so many things to think about, from the business entity to the business plan. And don't forget about all of the little details, like getting your business name registered or setting up your taxes correctly. 

In this blog post, we will go over some of the most important legal requirements for starting a business. 

Keep in mind that this is not an exhaustive list - please consult with a lawyer to make sure you are covering all of the bases! Now, let's get started.

Business entity

The first step in starting a business is to choose the right business entity. This will determine things like how much liability you have, how easy it is to raise money, and what your tax obligations are. 

12 Legal Requirements When You Start A Business

The most common business entities are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Each has its own advantages and disadvantages, for example:

Sole proprietorships are the simplest and most common type of business entity. They are easy to set up and usually have very few legal requirements. 

However, sole proprietorships also have unlimited liability, meaning that the owner is personally responsible for all debts and liabilities of the business.

Partnerships are similar to sole proprietorships, but there are two or more owners.

Partnerships have the same advantages and disadvantages as sole proprietorships, but with one key exception: each partner is only liable for their own actions, not the actions of the other partners.

Limited liability companies (LLCs) are a type of business entity that offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business.

LLCs are a bit more complex than sole proprietorships and partnerships, and they have different tax consequences. If you would like more information regarding limited liability companies, you can learn more with LegalVision.

Corporations are the most complex type of business entity. They offer limited liability to their shareholders, meaning that the shareholders are not personally responsible for the debts and liabilities of the business. 


Corporations also have to follow a few more rules and regulations than other business entities.

Business plan

After you have chosen your business entity, you need to start working on your business plan. This is a document that outlines your business goals, strategies, and how you plan on achieving them

Your business plan should also include a financial projection, which is an estimate of your revenue and expenses for the next few years.

In addition, your business plan should include a marketing plan, which will outline how you plan on promoting your business and attracting customers. It's important that your business plan is clear, concise, and realistic.

In order to write good business plans, you should do some research on your industry and competitors.

Business name

In addition to the business plan, you also need to choose a business name. This is the name that you will use for your business, and it should be something that is easy to remember and pronounce. 

Business Name

It's important to choose a business name that is not already being used by another company, as this could create legal problems down the line. You can search for available business names online or at your local courthouse. 

Once you've chosen a business name, you need to register it with the government. To do this, you will need to fill out a form and pay a fee.

Taxes

One of the most important legal requirements for starting a business is to pay your taxes. When you register your business, you will be assigned a tax identification number (TIN). This number is used to identify your business for tax purposes.

You will need to use this number when you file your taxes. In addition, you will need to pay federal, state, and local taxes. Depending on the type of business you have, you may also be required to pay payroll taxes.

In order to find out what taxes you need to pay, you should speak with an accountant or tax attorney. They will be able to help you determine which taxes you need to pay and how much you need to pay. 

With these considerations in mind, taking the next step to form a company becomes a pivotal move in turning your business aspirations into a tangible reality. Consulting with legal and financial experts can streamline the process and ensure that your business is structured and set up in accordance with regulatory requirements.

Opinion letter

Another important legal requirement when starting a business is to get an opinion letter from a lawyer. This letter will state that the lawyer believes that your business is legal and in compliance with all applicable laws

In order to get a legal opinion on the matter, you will need to provide the lawyer with information about your business, including your business plan and business name. 

The lawyer will then research the laws that apply to your business and give you their opinion on the matter.

This letter is important because it will protect you from liability if your business is ever sued. In addition, it can be used as evidence in court if your business is ever accused of breaking the law.

Permits and licenses

Depending on the type of business you have, you may need to get a permit or license from the government. For example, if you are starting a restaurant, you will need to get a food service license.

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If you are starting a daycare, you will need to get a childcare license. There are many different types of businesses that require permits and licenses, so you will need to do some research to find out if your business needs one. 

You can typically apply for a permit or license online or at your local courthouse. Your chosen lawyer can also help you determine if you need a permit or license. He/she can also help you with the application process.

Bookkeeping

Another important legal requirement for starting a business is to keep accurate records of your financial transactions. This includes all income and expenses

For example, if you sell products or services, you will need to keep track of the sales price, date of sale, and quantity sold. You will also need to keep track of your expenses, such as office supplies, advertising, and travel. 

In addition, you will need to keep track of your employees' salaries and wages. It's important to keep accurate records because you will need them for tax purposes. 

In addition, accurate records will help you make better financial decisions for your business. Keep in mind that if you do not keep accurate records, you may be fined by the government.

Bank account

Another legal requirement when starting a business is to open a bank account for your business. This account will be used to deposit your revenue and pay your expenses. 

When you open a bank account, you will need to provide the bank with your business name, address, and tax identification number. 

In addition, you will need to provide the bank with your business plan. The bank will then review your information and decide whether or not to approve your account.

It can help to have a lawyer or accountant review your bank account before you open it. 

This way, they can make sure that everything is in order and that you are not violating any laws.

Insurance

One of the most important legal requirements when starting a business is to have insurance. This will protect your business from liability in the event that someone is injured on your property or if you are sued

There are many different types of insurance, such as property insurance, liability insurance, and workers' compensation insurance. Property insurance will protect your property from damage or theft.

Liability insurance will protect your business from lawsuits. Workers' compensation insurance will protect your employees in the event that they are injured on the job. 

It's important to speak with an insurance agent to determine which type of insurance you need.

Intellectual property

Intellectual property refers to any ideas, inventions, or creations that you own. This includes trademarks, copyrights, and patents. If you have intellectual property, it's important to protect it. 

Otherwise, someone else could steal your ideas and make money from them. One way to protect your intellectual property is to file for a trademark or copyright. This will give you legal ownership of your ideas.

Another way to protect your intellectual property is to keep it confidential. 

This means that you don't share your ideas with anyone else. If you do share your ideas, make sure that you have a nondisclosure agreement in place. This will prevent the other person from sharing your ideas with anyone else.

Privacy policy

If you collect personal information from customers, such as names and addresses, you need to have a privacy policy. 

This policy should state how you will use the information and how you will protect it. In addition, the privacy policy should explain what rights the customer has.

For example, the customer should be able to opt-out of having their personal information shared with third parties. 

When creating a privacy policy, it's important to have a lawyer review it. This way, you can be sure that it meets all legal requirements.

Have a lawyer

One of the most important things you can do when starting a business is to hire a lawyer. A lawyer can help you with many aspects of your business, such as choosing the right business entity, drafting contracts, and protecting your intellectual property.

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In addition, a lawyer can help you comply with all legal requirements when starting a business.

This includes filing the necessary paperwork and obtaining the necessary licenses and permits. When choosing a lawyer, it's important to choose someone who is experienced in business law. 

This way, you can be sure that they will be able to help you with all of your legal needs.

Final words: 12 legal requirements when you start a business

Starting a business can be a daunting task, but it's important to make sure that you comply with all legal requirements. 

Hopefully, this article has given you a better understanding of some of the things you need to do in order to start your business off on the right foot.

Remember, it's always a good idea to have a lawyer review your plans before you get started. This way, you can be sure that everything is in order and that you are not violating any laws.

About the author 

Peter Keszegh

Most people write this part in the third person but I won't. You're at the right place if you want to start or grow your online business. When I'm not busy scaling up my own or other people' businesses, you'll find me trying out new things and discovering new places. Connect with me on Facebook, just let me know how I can help.

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