Your dream of adding “Boss” to your resume will soon be realized. Why? Because you’ve decided to start your own business this year.
The good news? You’re in good company: You’ll be joining the ranks of the 27 million Americans who are currently starting or operating their own businesses.
Of course, before you take the dive into entrepreneurship, there are many important things to know before starting a small business. Here’s a rundown on the legal requirements for starting a small business that you need to know.
Legal Requirements for Starting a Small Business Include Setting Up a Business Structure
The first step toward starting a small business is to choose an appropriate legal structure for your company. For instance, you can choose to create a limited liability company (LLC) or set up a corporation.
An LLC offers the benefit of personal liability protection. So, if your business ends up declaring bankruptcy, you don’t have to worry about losing your vehicle, home, or other personal assets as a result.
A corporation also offers the same type of liability protection than an LLC does. That’s because corporations are legally separate entities from their owners. However, a major drawback of a corporation is that it is more complicated and expensive to set up.
A business attorney can provide you with more information about how to protect your business from lawsuits as you launch your business.
Business Name Registration
After you have chosen the right business structure for your firm, you should register your company name. Ideally, your business name should reflect your brand.
Note that a name for your entity will help to legally protect your company at the state level. In addition, consider creating a trademark for your company. This will provide your business with legal protection at the federal level.
Be sure to also claim an appropriate domain name for your business’s website address.
Federal and State Tax Identification Number Applications
The next legal step in starting a small business is to apply for a federal tax ID number as well as a state tax number, if required.
The federal number, also known as your Employer Identification Number, will let you legally hire workers and pay your federal taxes. You’ll also be able to submit applications for business licenses or open business bank accounts with this number.
Your federal tax identification number is known as an Employer Identification Number (EIN) and it allows you to legally hire employees. It will also let you pay federal taxes, apply for business licenses and open a business bank account.
How We Can Help
In addition to highlighting the legal requirements for starting a small business, we provide a variety of tips for aspiring business owners.
For example, through our site, you can learn about how to excel in project management as well as product management. In addition, you can learn the top tips for negotiating virtually anything in the business world.
Take a peek at our site to find out more about how to elevate your business’s reputation and revenue and in the weeks and months ahead.