You spent months, perhaps years, developing your vision for your business. Now, you are ready to put that vision into action. Starting a small business can be a difficult task involving many important decisions. There are also multiple laws that business owners must follow to ensure their businesses are legally sound. That is why it is important to speak with a lawyer experienced in business formation law who can help you evaluate all of the options available to you.
Choosing a Business Entity
There are benefits and drawbacks to every type of business entity. For example, corporations and limited liability companies allow you to reduce personal liability, while a sole proprietorship allows a business owner to have full control over the business. Partnerships, on the other hand, have few formal requirements, making them inexpensive to run in comparison to corporations.
The business structure you choose will depend on a number of factors. How many business partners will you have? How many employees? Would you like to avoid personal liability for business debts? How would you like to be taxed? These are questions to discuss with a business lawyer near you.
Legal Formalities Involved in Starting a Business
The legal formalities involved in starting a business include:
- Applying for an EIN (Employer Identification Number): An employer identification number is also called a federal tax identification number. It is used to identify your business for federal tax (and similar) purposes.
- Choosing a tax year and tax accounting method: An accounting period spans 12-months, and can either be an exact calendar year or another fiscal year.
- Registering your business with the Secretary of State: If you would like to start a limited liability partnership (LLP), limited liability company (LLC) or corporation, you must file certain forms with the Secretary of State.
- Obtaining necessary permits and licenses: You may need a business operation license to operate your business in your city, a business name permit, a health department or fire department permit, land use / zoning permits, a sales tax license, liquor license, and other licenses or permits.
- Registering your trade name / company name: Choosing a name for your business is important; registering that name is just as important. Registration ensures that no one else can capitalize on your trade name.
The legal formalities you must meet will depend on the entity you choose and the state in which you live. To learn more, speak with a business formations lawyer near you.