If you are about to start a new business, a critical point that you must think of is the legal requirements to launch the business. Fulfilling the legal procedures is crucial to validate your business in the market and establish your business as a trusted and reliable brand.
You need to follow the laws to avoid any further legal issues and stay in the safe zone. Violating the business laws can get you into trouble. Your business may shatter and lose the clients’ reliability if you avoid the legal regulations in the long run.
Hence, it is always recommended to register your company and follow the legal regulations. But what are these procedures? Let us look into the basic steps that you need to go through while legalising your company.
Basics of Company Registration Law:
Here are the basic steps that should be followed in order to make your business legal in the market.
Identifying the structure of the business
Make sure that the structure of your business is specified. It would depend on your priorities and business size. Do a little research before deciding. The two types of structures are-
- LLC- Limited Liability Company protects your personal assets in case of a business bankruptcy or financial breakdown. This policy makes you give self-employment taxes as part of your personal income taxes.
- Corporation- This structure identifies the company separately from the owner and files separate income taxes on its profit. It also offers personal protection but can be more expensive.
Register the company name
Create a business name that is not there in the market and represents your service. Then register it under any of the four categories-
- Entity- state-level registration
- Trademark- federal-level registration
- DBA (Doing business as)- not legal but required as per your locality and business structure
- Domain- web registration
Obtain business license
You require a license from the state or federal to run the business. The permits, fees, rules, and regulations would vary from place to place and also depend on the business structure and the industry you are working in.
Get a federal tax ID and state tax ID number
You would need a federal tax ID to get an employer identification number (EIN) to hire employees, legalise the company as a corporation, pay taxes, open a business bank account, and license. Check if you need a state tax ID by searching the state’s website to pay state-level taxes and know the state laws to run the business.
Get an insurance
Stay risk-free by purchasing insurance for your business during any financial loss or potential risks. Some essential business insurances are-
- General liability insurance
- Product liability insurance
- Commercial property insurance
Open a business account
Legalise the money transfer process by opening a business account. You would need the documents mentioned above to start a business account. This allows seamless and legal cashflow with your clients and employees reducing financial risks.
Don’t miss out on this checklist and legalise your business to get long-term benefits and smoothly run your company.