Legal Aspects of Your Own Business.

A successful business is not just a great idea. You also need a viable business model and some understanding of the aspects of a business. Would-be entrepreneurs must remember that a business is not started just because you want to become an entrepreneur. In my previous articles, I have discussed some important points to keep in mind while planning to start a new business.

Today, I am going to discuss the legal aspects that you should remember when you are planning the start-up.

Business Structure

• Determine the legal business structure that you want for your business.
• Your business structure legally affects everything from how you file your taxes to your personal liability if something goes wrong.
• Before you can register your company, you need to decide what kind of entity it is.

• A partnership, as its name implies, means that two or more people are held personally liable as business owners.
• If you own the business entirely by yourself and plan to be responsible for all debts and obligations, you can register for a sole proprietorship.
• If you want to separate your personal liability from your company’s liability, you may want to consider forming one of several different types of corporations.
• Corporations can pay taxes, sue and be sued, own property, assume liability and enter contracts, like any other individual.
• This makes a business a separate entity apart from its owners.
• The limited liability corporation (LLC), however, is one of the most common structures for small businesses.
• An LLC is a hybrid structure which allows the tax benefits of a partnership and has the legal protections of a corporation.

Ultimately, it is up to you to determine which type of entity is best for your current needs and future business goals. More details about the different business structures can be found here.

Registration

To become an officially recognized business entity, you must register with the government. Keep these points in mind:

• Register your business with the government and IRS and the local municipality.
• File the necessary paperwork to receive your DBA (doing business as), which is one of the key documents you will need to open a business bank account.

• Your business name is how customers find and recognize you, so a unique DBA can have a positive impact.
• Do a preliminary name search and file your DBA statement with the appropriate office.
• Corporations will need an “articles of incorporation” document, which include your business name, corporate structure, business purpose, stock details and other information about your company.
• You may also want to take steps to trademark your business name for extra legal protection.
• If your business is not a corporation, you will just need to register your business name, which can be your legal name, a fictitious “Doing Business As” name (if you are the sole proprietor), or the name you’ve come up with for your company.
• The registration process can also help you avoid legal problems by making sure you don’t choose a name that’s confusingly similar to another business in your area.
• Every state and county has different regulations about DBAs.

Identification

After you register your business, the next step is obtaining an employer identification number (EIN) from the IRS. Here are some important pointers:

• The IRS has provided a checklist to determine whether you will require an EIN to run your business.
• Regardless of whether or not you need an EIN, you will need to file certain forms to fulfill your federal and state income tax obligations.

• While a sole proprietorship with no employees may not require an EIN, you may want to apply for one anyway to keep your personal and business taxes separate.
• This also saves you the trouble of making changes if you decide to hire an employee down the line.
• You may register online for free to get an EIN.
• The forms you need are determined by your business structure.

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Disclaimer: The information provided here is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any legal matters. The opinions expressed here are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.