While there are many benefits to starting your own business, few aspects of a new business are more important than meeting legal requirements. Failure to follow the proper procedures may delay or prevent your business from opening. A possible business name may already be registered by the U.S. Patent and Trademark Office. If not, you should seek an alternative.
Choosing a business structure
If you’re starting a new business, you need to choose a business structure. Your choice of business structure affects your liability and your income tax returns. Common business structures are a sole proprietorship, a partnership, a corporation, and an S corporation. In addition to these popular options, some states allow you to form a Limited Liability Company. The choice you make is ultimately yours, but here are a few things to keep in mind before making a final decision.
Choosing a business structure is one of many legal requirements for starting a small business. Your business structure will determine the type of tax you pay and how much paperwork you need to file. Depending on your goals, you might choose one format over another, but you must weigh the benefits of each before deciding on a particular one. If you’re unsure about which structure is best for you, it’s a good idea to consult a business attorney.
Filing a Doing Business As (DBA)
For small businesses that do not use a single name, filing a Doing Business As (DBA), or assumed/fictitious business name, is a vital step. Not only is this procedure essential to protect against identity theft, but in some states, failing to file a DBA will result in hefty fines. A legal document filing service can help you through this process.
If you do not have a DBA, you can file it online. There are ADP system tools that may help you. Many states and counties require this process, while others require you to mail in a notarized copy of your documents. In addition, some states accept credit cards and debit cards for filing a DBA, while others need you to send in a notarized copy.
Filing a founders’ agreement
There are several steps to follow when filing a founders’ agreement for starting s small business. One of the most critical steps is ensuring that everyone signs the document. Even though the deal is not binding until all owners sign it, you should still get a second opinion. Consult with a lawyer if you have any concerns, and have the agreement reviewed by a lawyer and co-founders before signing it. After all, it is the only thing that makes the deal legally binding.
One of the most critical steps in a founders’ agreement for starting s small business is making sure the terms are clear. You should also include a budget and expense reimbursement policy. A founders’ contract will make it easier to start the business.
Obtaining a Tax ID number
You’ll likely need a tax ID number if you’re setting up a small business. In addition, you’ll need your company’s name, mailing address, social security, or ITIN. You’ll also need the purpose of your tax ID.
To start a small business, you need a tax ID number from the Internal Revenue Service (IRS). These numbers are similar to your social security number and are required for payroll and tax purposes. Your tax ID number will also be needed for opening a bank account. Obtaining a Tax ID number is essential for starting a small business.
Keeping proper documentation
Proper documentation is crucial to a business’s success, but what does this mean in practice? First, the types of business documentation required depend on the type of industry you’re in. For example, medical businesses need more paperwork than a landscaping business does. General business documents include financial statements, payroll documents, and contracts. Receipts are also essential for taxes. Keeping these documents organized is critical to maximizing your deductions and protecting your business from audits.
In addition to accounting records, record-keeping is also necessary to keep your business running smoothly. Fraud is common for small startups, but maintaining proper records can prevent it and save your business. Putting systems of checks and balances in place will prevent theft and make sure your business keeps track of every dollar it spends. For example, do not allow the same person to handle your business’ revenue and bills. This makes it easier for thieves to cover their tracks and cheat you out of money.