The US isn’t called the land of opportunity for no reason. It’s built on the backbone of businesses owned by people just like you. It’s not all about corporations run by larger-than-life celebrities.
You can start a humble business and expand it to whatever heights you want. That’s how all the giants you look at today started.
However, it’s not a free-for-all. There are legal requirements that you have to meet when you attempt to open a business.
Every type of business is going to have some unique requirements or guidelines you’ll have to follow, but there are some essentials that you’ll need no matter what.
Today, we’re going to go over the essential legal requirements for starting a business to help get you started on the path to success.
Let’s dive in!
1: Business Structure
You can’t just say “I want to start a business” and then start selling a product or service. Uncle Sam needs to know what your business is going to be and how it’s structured. This means that you need to determine whether you’ll be an LLC, Sole Proprietorship, corporation, etc.
The reason this is necessary is that there are a lot of tax laws that vary depending on the type of business structure your company has. It also affects how future legal issues might be handled.
For example, if you’re operating it by yourself and the business entity is attached to you, you are fully responsible for legal consequences, and your assets can be at stake.
In comparison, many partnership-based structures limit consequences to the person who committed wrongdoing or limit financial liability to the company’s assets.
The structure you choose for your business will impact it going forward. So, spend time researching the different options at your disposal.
2: You Must Register the Business
Once you have a business structure defined, you also need to register the business’s name. This gives the business a registered identification for all legal purposes, and it’s an entity of its own.
This is subject to approval and denial processes, too. After all, we can’t have everyone picking the most popular company in their niche and copying its name to benefit from its reputation. Names must be unique and match set requirements.
3: Get Your EIN
You have your legal identification number. It’s your social security number. With that 9-digit code, the government can quickly look up any legal information it needs about you.
Well, your business needs one, too.
This is called your EIN, or Employer Identification Number. It’s the number the IRS uses to identify employers and quickly gather information on them the same way an SSN is used.
If you’re not an employer, you might get a Tax Identification Number that functions as your business’s tax-related ID number.
4: State Revenue Office
You can’t just register on the federal level. The state oversees much of the business laws you’ll be subjected to, and it handles its own set of business taxes. As such, you have to register your business with the state revenue office. This is essentially your state’s version of the IRS.
5: Licensing and Permits
This will vary dramatically depending on the type of business you operate, the products you sell, and the services you offer. However, almost every business requires some sort of license or permit.
At this point, you’ll want to apply for those licenses and permits along with paying any fees required for them, and you’ll want to learn how to maintain them down the line.
There are too many types of licenses and permits to cover them all here, but once you have the information we’ve listed so far, it’s easy to find out which ones you need and where to apply for them.
6: State Tax Registration
You already registered with the state, but you still have to register specifically for tax purposes. You’ll need much of the information we’ve already listed to do this, but it’s a fairly straightforward process and one of the easiest to get through.
7: Insurance Policies
Unfortunately, no matter what type of business you’re starting, you’re going to need some sort of insurance. Some forms of insurance are legally required for a variety of reasons, and some are essential to protect you from extremely costly consequences.
This isn’t a horrible thing, though. Not only do you get insurance to protect your business’s physical location from emergencies like fires and flooding, but there’s also insurance to protect you in case a customer gets hurt on your property, you need to cover legal fees to protect yourself from a scam, etc.
Insurance can mean the difference between staying open for many years to come or closing up shop because someone slipped in your parking lot.
8: Get Organized
Finally, the last legal requirement to start a business involves submitting some final paperwork to the state. These organized documents confirm that you’ve met all requirements and provide the state with essential information about your business structure and operations, ensuring proper engagement if needed.
The Importance of Getting Professional Help Starting Your Business
If all these business legal requirements seem overwhelming, that’s because they are. While it’s important to work, it can be a lot to handle on your own.
Not only is it stressful, but there’s also a lot of room to make poor decisions with lasting impacts on your business, file something incorrectly and have to start all over, or get yourself into legal trouble by skipping steps entirely or missing important licenses.
Because of that, it’s highly recommended to get a professional service to help guide you through the whole process. Business formation companies who do this every day for hundreds, even thousands, of businesses like yours can ensure that you get started on the right track.
If you’re looking to start a business and want to do it right, reach out to Legal Crystal and start your business journey today!
