Startup Legal Issues
Startup Legal Tips for Entrepreneurs
Startup small businesses are subject to a dizzying array of laws and regulations. And if you aren't adequately versed in startup legal issues, the impact on your fledgling company could be devastating.
The startup phase is an extremely busy time. With a countless list of tasks that need to be performed before opening day, it's easy to forget about the legal issues associated with launching a small business.
But while you're focused on other things, the legal details that are simmering on the backburner can ignite a firestorm in your business.
Fortunately, the legal requirements for starting a typical small business aren't extremely burdensome. Unless you are incorporating or securing millions of dollars in investment financing, it shouldn't be too difficult to meet federal and state requirements.
However, there are several legal areas where it is important to have your ducks in a row. If it will help you sleep a little better, consult an attorney to make sure you have adequately addressed the necessary startup legal requirements. Otherwise, do your research and ensure that you have addressed the following four areas of legal concern.
- Business Name. Choosing a good business name is your first major hurdle as an entrepreneur. From a legal standpoint, it's important that your name is original. In other words, you can't adopt a name or logo that is currently in use in the marketplace. To avoid infringement, you will need to research registered and unregistered trademarks. A simple Google search is a good start, but you may also need to conduct a formal trademark search.
- Organizational Structure. Many entrepreneurs underestimate the importance of the business structure they choose for their startup. The default business structure is a sole proprietorship. But you may determine that another business structure (i.e. partnership, LLC, corporation, etc.) is more beneficial. If so, you may need to jump through legal hoops to secure the appropriate structure for your business.
- Licenses & Registrations. Licensing and registration requirements are not universal - they vary based by state, municipality and industry. But if you lack the proper licenses and registrations for your jurisdiction, your business can quickly come to a grinding halt. If you aren't sure which licenses and registrations you need to operate legally, contact your local Chamber of Commerce for assistance.
- HR Requirements. If you plan on being your startup's only employee and your business is organized as a sole proprietorship, you won't need to address any employer-related legal requirements. But if you plan on hiring even a single, part-time employee, you will need to obtain a Federal Employer Identification Number (EIN), register as an employer with your state and perform various other activities that are legally required of small business employers.
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