One of the most important (albeit boring) tasks that you need to do for your business when you are starting out is get your legal ducks in a row. As an entrepreneur, getting your business squared away legally can prevent you from having to pay some hefty fines and will set a solid foundation of trust with your customers.
But how do you do that? Here are some must-haves in the legal department for your business.
Before we begin, take note that you should speak to a certified legal advisor before making any legal decisions. The following should not be taken as legal advice. I am no lawyer, folks, I don’t even play one on tv. I’ve just been around the business block and know a thing or two.
Choose Your Business Name
I know what you’re thinking, “this isn’t legal advice”. That’s where you’re wrong. Your whole business is going to center around your business name. In order to accomplish anything else, you’re going to have to fill out your business name on documents. It’s important.
Check the Trademark
When thinking of what name you want to use, do a trademark search to determine if anyone else in the United States has already trademarked that name. Sure, you might be a small business now, but you want to think long term and ensure you have an area to grow.
Register with the State
Register your name with the state once you have settled on one. Even if it’s not legally required, it will prevent someone else from using the same name for their business.
If you’re functioning as a sole proprietor and using any other name than your legal first and last, then you are required to fill out a “Doing Business As” form (otherwise known as a DBA). Other names for the same form include a “Fictitious Name Form” or a “Assumed Business Name (ABN)”.
Don’t let this part stump you and prevent you from moving forward. Spend a couple days brainstorming names and pick one that speaks to you and will attract your ideal audience.
Choose a Business Structure
Establish a business structure that fits your needs and will allow for some growth without too much headache. I’ll give you the quick and dirty about two major legal business structures below.
In a sole proprietorship, you are your business. Income and losses are taxed on the individual’s personal income and taxes. So what’s the draw? Sole Proprietorships are simple to set up, easy to use, with few startup costs. For most freelancers or businesses with a single owner, sole proprietorships are a great way to start and get your business off the ground legally. Just be prepared to upgrade your structure once you start adding subcontractors to your team or creating some serious wealth.
Limited Liability Company (LLC)
An LLC establishes your business as an entity separate from the owner. That gives you a layer of protection when it comes to your personal assets. If you have the unfortunate event of being sued by a client, then your personal property and assets are off limits. Typically, LLCs are a bit more work to setup and can cost a few more shekels. This is a great place to move once you find your sole proprietorship growing.
Research State Regulations
Reach out to your state office and make sure that you are following all of the business regulations that you should be. For some businesses, you will need special permits and permissions to function in your office. Some of these might include zoning, sales tax, liability insurance, etc.
Use Non-Disclosure Agreements
Non-disclosure agreements should be your best friend. They can help protect your information and ideas as well as dictate what happens should a breach occur. Make sure you have a legal representative take a look at your NDA and give you guidance.
There’s nothing worse than realizing you wrote an NDA that won’t hold up in court.
These are the bare bone basics on what you need to know to get your business started. Tell me, which do you think is the most important?