4 Key Legal Considerations for Starting a Small Business

Feeling ready to pull the trigger on your business idea? Starting a small business requires following specific legal processes before owners can open their doors to the public. Review the following vital preparations you'll need to make to get your business running and, more importantly, compliant.

Choose Your Business's Structure

In the United States, entrepreneurs must designate proper business entities for their startups. You have the option to choose from a sole proprietorship, limited liability corporation (LLC), general or limited partnership, C-corporation, or an S-corporation. The majority of small businesses start as sole proprietorships or partnerships, as these types of businesses require the least paperwork and typically follow a shorter setup timeline. Before opting for either of these business structures, plan to establish a corporation or LLC as you expand for more comprehensive liability protection and access to business loans.

Acquire the Necessary Licenses, Permits, and Registrations

Depending on where your business is located and your industry, specific licenses, permits, and documentation may be required per local, regional, state, and federal regulations. Examples can vary from liquor licenses for venues distributing alcohol or health and safety permits allowing the sale of food or beverages—and so many others in between. Before getting too far ahead of yourself, conduct thorough research in advance to determine which licenses and permits you'll need and how much time you'll need to budget in your business roadmap.

Taxes and Bookkeeping

All commercial businesses in the U.S. must pay taxes, including income tax, self-employment tax, and sales tax (if applicable). Some businesses that hire employees are responsible for paying unemployment taxes, which can require obtaining additional tax ID numbers. You can find more information about tax requirements on the IRS website. Instead of using your Social Security Number, you'll use an employer identification number (EIN) to open a corporate bank account or file business tax returns. You can request an EIN for free from the IRS, and only sole proprietorships and single-member LLCs with no employees are exempt from this requirement.

Legally Protect Your Intellectual Property

Every business is different. If yours involves intellectual property created by yourself or an internal team member (whether it's software, a design, or creative work), take the steps necessary to prevent other people from illegally copying your work by purchasing patents, copyrights, or trademarks. Because intellectual property can get complicated, you should consider working with an attorney to ensure that your business doesn't get exploited by other firms. Along with your intellectual property, you should also protect your company's physical location with a comprehensive business insurance policy that will provide coverage in case of an accident.

Equip yourself with the knowledge and skills needed to start a thriving small business by first investing in yourself. The Tulane School of Professional Advancement offers professional certificates in Applied Business Studies, Accounting Fundamentals, and Small Business Development for adults who are interested in returning to school to pursue a more rewarding career path. Request more information about our affordable programs today.