5 Major Legal Considerations to Make When Starting a Business
Venturing into entrepreneurship is many peoples’ dream but it is also a challenging task that makes you liable to comply with necessary legalities. However daunting this may sound, it is actually for your own good. Ensuring a protected start from the onset makes sure you don’t end up with any lawsuits or fines.
Startup business individuals tend to overlook the legal aspect of setting up businesses and usually realize when they encounter certain issues. Hopefully, this wouldn’t be the case with you, as you can learn from the experience of others and be advised of these 5 legal considerations:
1. Securing a Legal Structure
Every business must comply to legal status. Deciding on the right legal structure for your business is significant. The legal status you choose to operate your business under will determine your personal liabilities such as the amount of tax you may owe or tax deductions that you may be entitled to. Your ultimate control over your business has a lot to do with the legal status it bears. There are benefits and disadvantages to each of the following legal structures listed below:
- Limited Liability Company (LLC)
- Limited Partnership
- Sole Trader
You can decide which status best suits you by assessing the liabilities associated with your business. You can also consider the tax structures of each of these statuses and see which one best saves you from paying a high tax.
The trademark policy will help you stay original and avoid infringing on the intellectual property of others. Once you’ve decided on a name for your business, run a quick search to make sure it isn’t already registered as a trademark by someone else. If not, proceed to officialize your trade name by getting it trademarked.
3. Getting Licensed
Every state and municipality has its laws and policies pertaining to business legalities. You may be required to have several licenses and permits for starting up your business. The license and permit will depend on the type of business you have. Typically, you will be required to produce a sales permit, business license, and trade license. You may seek professional assistance from lawyers to ensure you have all the right documentation before you start running your business.
4. Getting Insured
There may be laws that require certain types of businesses to have insurance; you may also need more than one insurance. For example, businesses that recruit employees are required to insure themselves under employer liability insurance. There is also a public liability that you may need depending on your business establishment. These legal coverages offer protection from unjust claims that may prop up against you and your business.