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LEGAL CHECKLIST TO START YOUR BUSINESS

January 31, 2011

So you’ve decided to start your own business now where do your begin? The first step is to research the steps needed to start your business, plan, then act.

• CHOOSE A BUSINESS NAME

Choosing a business name involves availability. Most will select something other than their own name so your business will have a FICTITIOUS BUSINESS NAME. You need to do a search at the county to make sure not only that your proposed name is available but also whether any other businesses have a similar name that might be confusing.

You may create a tagline for your business e.g. “More Filling, Taste Great” and develop a logo like the NIKE swoosh. These creations are your Intellectual Property and you will need to become knowledgeable about how to protect these assets.  The Digital Millenium Copyright Act covers copyrights, trademarks, patents. You can protect some of your assets simply like filing for a copyright, others like trademarks may require you to hire or consult an attorney.

• BUSINESS LICENSE

Type of business will determine which rules apply to your business. Many businesses require a license for legal operation. Most cities require a license to operate within its borders. To find out whether you need a business license or not, check with the CITY where you will operate your business. Check with your Secretary of State, some industries have State requirements, e.g. dry cleaners, day-care providers, contractors. Also, if your business involves consumer products some federal regulations may apply for legal operation.

It is challenging enough to start a business, you don’t want to get hit with fines and penalties for not following the rules. Don’t cut corners on compliance, the money you think you may save by not paying for a license or fees will be a fraction of your financial penalties if you are found to be operating without all your paperwork in order.  Plus your business may be shut down until you file all necessary paperwork.

• BUSINESS STRUCTURE

You will need to obtain an employer identification number (EIN) from the Internal Revenue Service.  Sole proprietorship, partnership, LLC, S corporation, C corporation. There are many business entities that you can choose for your business. Primary considerations:
o risk
o sheltering assets
o annual costs
o terminating the business

I would strongly recommend that while you are planning your business, serious thought be given to, if necessary how will the business close down. Sale of assets, who will take what share of profits, debt? Thoughtful planning and drafting of exit provisions will you save thousands in future legal fees.

• BUSINESS LOCATION 

o Internet
Location, location, location. Even if you determine that your business will not have a brick and mortar presence, the Internet has its own set of regulations from privacy laws, identity security.

Does your business need foot traffic, parking? As you research your potential physical location, check with your city planner’s department on the zoning requirements and permit process. Once you have your physical location, you will be required to provide a safe workplace.

• SUPPLIERS

As you work with your suppliers you will need to determine payment terms, e.g.,net 30. Contact your trade association to find out generally accepted business practices if you are new to the industry.

More importantly, if you have a great idea but no practical experience in the industry, consult with an industry expert before you begin your business, have them review your business plan before you begin. If you plan to trade across state lines, many of the regulations that will apply to your business can be located in the Uniform Commercial Code.

Finally, you will need to research if any of the multiple environmental regulations apply to your business at your chosen or planned location.

• RECORD KEEPING

What does record keeping have to do with legal considerations for my business? Your taxes will require good record keeping , your investments will require good record keeping. You will be better prepared if you are audited.

If you decide to sell stock in your company and issue shares, your business will need to comply with Security and Exchange Commission regulations and also the Federal Trade Commission.

• RESEARCH YOUR MARKET – COMPETITORS

So you have researched your market. You know what you need to sell your product to gain a profit and be competitive. You have a great promotional campaign prepared to launch your business, just make sure your advertising is not false or misleading.

The Federal government has established certain enterprise zones to encourage development and urban growth, these locations offer tax credits and benefits for businesses.

• COMPLIANCE ISSUES

When you begin to hire employees, you will have to adhere to employment and labor laws. If you are hiring teenagers or foreign workers, there are specific laws that apply. In your workplace, you will need to display various posters.

As an employer, you will be required to carry certain types of insurance coverage and employee taxes. Some categories of people that work for you are not employees but independent contractors, e.g. gardener.

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