There are some legal issues in business entrepreneurs must follow to ensure their businesses are legally sound right from its foundation. If these legal issues described as laws are not obeyed, the entrepreneur may face a serious legal challenge in future which will affect his business negatively.
Starting a business can be a difficult task involving many important decisions including the important legal issues in business entrepreneurs need to follow for startup or small business, but it is highly exciting that the business idea is taking shape with every decision ready for takeoff.
One needs to make sure that all legal formalities have been put in place. To avoid severe legal and liability consequences in future, a targeted business plan should list all legal concerns that might negatively affect the business and invariably other investors. The right legal structure that will suit ones particular type of business or circumstances and ambitions should be considered.
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Legal Issues in Business Entrepreneurs Need to Follow
Legal issues in business are the first steps for starting a successful business. Although, these regulations may not the most exciting parts of business startup. Yet they’re critical to the health of your business and personal finances. Here we have done a quick rundown of some legal issues in business entrepreneurs need to consider for your startup or small business. These legal issues depends on the situation and type of business, they are:
1. Pick a Legally Permitted Name
One of the legal issues in business entrepreneurs need to consider for business startup is to pick a Legally Permitted Business Name to use it before printing out business cards and other materials, entrepreneurs should make sure the great new name isn’t infringing on the rights of an already existing business.
You don’t need an attorney to know whether a name infringing on the rights of an already existing business or not, you can perform a free search online at the authorize business registration center to know a business name is registered or available. Then, take your search to the next level and conduct a no-conflict, free trademark search to see if your name is available for use.
2. Incorporate Your Business
Incorporate Your Business or Form an LLC. Forming an LLC or corporation is an essential step to protect your personal assets (such as your personal property or your child’s college fund) from any liabilities of the company. Each business structure has its own advantages and disadvantages, depending on your specific circumstances. Three popular options are: the LLC (great for small businesses that want legal protection, but minimal formality), S Corporation (great for small businesses that can qualify), or C Corporation (for companies who plan to seek funding from a VC or go public).
3. Get Tax ID Number
Another legal issues in business entrepreneurs need to address is to get Tax ID Number. To distinguish your business as a separate legal entity, you’ll need to obtain Tax Identification Number, also referred to as an Employer Identification Number. The tax ID number is similar to your personal social security number and allows the right authority to track your business transactions. If you’re a sole proprietor, you’re not obligated to get a Tax ID number, but it’s still good practice as you won’t have to provide your personal social security number for business matters.
4. Know the Employee Laws
Your legal obligations as an employer begin as soon as you hire your first employee. You should spend time with an employment law professional to fully understand your obligations. Employment law may includes issues like self- employment taxes, anti-discrimination laws, unemployment insurance, workers’ compensation rules, and wage and hour requirements.
5. Get Business Permits and Licenses
Obtaining the necessary business permits and licenses in an important legal issues in business entrepreneurs need to address before launching the desired business. Depending on your business type and physical location, you may be required to have one or more business licenses or permits from the country, state, local or even federal level. Such licenses include: a general business operation license, zoning and land use permits, sales tax license, health department permits, and occupational or professional.
6. Open Bank Account to Start Building Business Credit
Open a Bank Account to Start Building Business Credit. When you rely on your personal credit to fund your business, your personal mortgage, auto loan and personal credit cards all affect your ability to qualify for a business loan and for how much. Using business credit separates your personal activities from that of the business.
To begin building your business credit, you should open a bank account in the name of your company, and the account should show a cash flow capable of taking on a business loan. No matter how busy things with your startup get, set aside some time to address these matters and take your legal obligations seriously. Getting your legal ducks in a row right from the start will help you avoid any pitfalls down the road, and will help you scale your business successfully as you grow.
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