If you’re on the verge of starting a business, you likely have questions around the legalities of what you need to do. What kind of business structure do you need? What sort of business licenses? Do you need to worry about any legal implications in your industry?
There is a lot to sort through when you’re just getting started. Fortunately, this post will illuminate many of the answers you’re seeking.
The Importance of Having the Right Business Structure
By default, when you start a business, you operate as a sole proprietor unless you designate a different entity. But that’s not always the best option for your new business.
Forming a corporation or an LLC will help separate you from your business financially. That means that you’ll never have to pay the business’s debt out of your own pocket, and your assets can never be seized…but only if you’ve filed the paperwork to become a corporation or LLC.
Keep in mind: if you want to set up your business as an S corporation for this year, you have until March 15 to file your paperwork. Check out CorpNet.com for more info.
Knowing the Best Place to Launch Your Business
More than likely, you’ll launch your business where you live, unless you’re looking for a change. If you’re ready to uproot your life, look for a place where:
- You have access to startup resources you’ll need (Silicon Valley is an obvious choice for tech companies)
- The cost of living is reasonable
- You can find a great pool of talent to hire
When you incorporate your business or form an LLC, you get to choose the state you do so in. You can certainly form it in the state you live and will work in, and there are great reasons for doing so, especially if you have five or fewer shareholders. When you incorporate in a state other than where you do business, you’re considered to be operating out of state, and you’ll have additional fees and paperwork to deal with. Sticking with your state of operations simplifies things.
Still, many people opt for states like Delaware or Nevada, as they are small business-friendly and have lower (or no) state tax.
Taking Care of Business Licenses and Permits
Before you start that business, do a little research to see what licenses, permits, or permissions you need to operate legally. Your city, county, or state may have specific documents you need to fill out and fees you need to pay to ensure you’re compliant with local law.
If you plan to open a retail location, check into local zoning laws to ensure that you’re authorized to run the type of business you want in the location you’re considering.
See? That was pretty painless. Staying on top of legal matters for your small business just requires a bit of diligence and attention to detail!
Back to you. How do you make sure that you stay on top of the legal matters for your small business? Tell us in the comments below!
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