Starting a business can be an exciting time, and its easy for us to get caught up with the excitement and overlook some factors when starting a business.
Although you can effectively run a business using your own rules, there are some legal requirements that should be taken care of before any other aspects of the business.
While these requirements may not seem important on the surface, there can be some ramifications should they not be in place at the right time.
Registered Business Name
Depending on the niche of your business, you may want to use a business name. If this is the case that you will need to register as a DBA (Doing Business As) or FBD (Fictitious Business Name) which will inform the local government of how your business will be identified.
Even if you’re using your real name as part of the business name such as willshapools who offer pool construction, you will still need to register the business in the right way, or you will be restricted to using your real name as the business name, which can hinder future marketing efforts, especially if you’re looking to brand your business.
It’s also worthwhile ensuring that the name you’re planning to use isn’t in use by someone else. Although this can be a time-consuming endeavor, it does mean that you can avoid any potential infringements later on.
Business Permits and Licenses
When running a business, you need to ensure that you have the relevant business permits and licenses in place. The documentation you need depend on the industry you’re operating in, as well as the state the business is situated in. While some states may have similar guidelines in place, it shouldn’t be assumed that these are the same.
There could also be a requirement for federal license should the business carry out services that are regulated by a federal agency.
Operating without the right credentials could mean that the business is fined. How much the fine is can depend on the severity of the reason. For example, those who forgot to file taxes are likely to fare better than those who have been running a business for several years without a license.
Although sole traders will only need to complete a personal tax submittal, those who are looking to operate as a corporation will need to ensure that they obtain an Employer Identification Number.
An EIN is effectively a Social Security number for the business and allows business to open business accounts and submit returns.
Even if you’re a sole trader there are still some federal tax obligations you need to be aware of. The US Small Business Administration offers information about the taxes and forms required. The information that’s required may vary from state-to-state, so it can also be a good idea to ensure that you’re operating within the guidelines of the state.
State and Local Taxes
As well as federal taxes, a business will also need to ensure that its up-to-date in relation to state and local taxes. The taxes due often depend on the structure of the business, as well as what state the business is located in.
An example of the taxes that need to be considered will come from payroll, income, sales and property tax.
If the company has employees, then the business will need to ensure that it’s take care of any unemployment taxes relevant to the state. Again, more in-depth information can be found via the US Small Business Administration.
Adherence to Laws and Regulation
When operating as a small business owner, many would be forgiven for assuming that they don’t have to adhere to the same business laws and regulations as a large corporation would, but this isn’t always the case. Although some small businesses may be exempt from certain laws and regulations, there will be others that need to follow the same guidelines.
What business laws and regulations you must adhere to will depend on the nature of the business as well as where it’s situated.
The sectors of the business that laws and regulations apply to can vary, but can include aspects such as finances, marketing and intellectual property.
Become Familiar with Employee Laws
Although you may not be considering hiring employees at this particular moment in time, it can still be worthwhile brushing up on the laws surrounding employees.
Should your business start hiring, you need to ensure that the right tax regimes are in places, as well as making sure that anti-discrimination laws are followed to the letter.
The last thing a business wants to do is have its expansion efforts hindered by a legal oversight.
Open a Business Bank Account
In order for your business to viewed in the right way, it needs to be separated from your personal finances. Although there are many who look to fund their business venture with personal loans, this can be detrimental in the long-run.
Opening a business account gives your business its own identity, which makes acquiring a business loan a much easier endeavor.
The sooner you’re able to open a business account, the sooner you will be able to start building a positive credit profile for the business, which means acquiring capital should be an easier endeavor, regardless of whether you’re looking to acquire a loan, grant or investment.
It can seem like that there is a lot to take care off before the business can operate in the right way, but its important that all the necessary checks are made, otherwise you may find that the business experiences some forks in the road in the future.