Starting your own business is in equal measure exciting and terrifying. Owning a small business is like walking through a minefield of possible legal issues ready to explode if you are not careful.
From the moment you decide to launch a business, the law should be your constant concern. You can many legal questions of which this guide written by entrepreneurs for entrepreneurs will answer simply and practically
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STARTUP
How to Start Your Business Legally
When you launch a business in America you need to register with the Federal government Internal Revenue Services IRS by obtaining an EIN Employer Identification Number. Most new businesses will need an EIN number, even if they are not planning on hiring employees. While it is called, Employer Identification Number, it is actually used more as a federal tax id number. It acts similarly as your social security number, which identifies you as a person, these EIN numbers identify your business.
> Guide to EIN FEIN Employer ID and Tax ID Numbers
>Legalzoom Review EIN Employer Identification Number
In addition to your federal government registration, though obtaining an EIN, dependent upon your type of business, additional licenses and certifications may be required. Contact your state’s business permit office to inquire about your specific situation.
>Checklist to Start Your Business Legally
>Legal Mistakes That Can Shut Down Your Business
Business Formation Structures
Once you have decided to launch a new company you need to decide how you want to “structure” or “form” your new firm. This is a legal term which denotes ownership and personal liability for business debts by you the entrepreneur.
Most small businesses use one of these types of legal entities; DBA Doing Business As, Sole Proprietor; LLC Limited Liability Company, INC, S Corp or C Corp, Incorporation; or Non-Profit.
DBA Sole Proprietorships
The simplest structure is the sole proprietorship. Typically one owner, or a married couple, both own and operate the concern. If you are a solopreneur and work by yourself with no employees this could be a good option. Taxes on your earned business income are included on your personal tax return. Also, you must pay self-employment taxes and make estimated tax payments quarterly if you expect to owe more than $1,000 annually.
Simple to form by filing a DBA Doing Business As Certificate.
No protection for personal assets from business liability or lawsuits.
>Advantages of Sole Proprietorship DBA for Business
>How to Pay Yourself as a DBA Sole Proprietor
>DBA vs LLC: Which is Best for Your Startup?
>Legalzoom DBA Review Sole Proprietorship
LLC Limited Liability Company
Sometimes called “LACS” is the most popular business structure for entrepreneurs today. An LLC, Limited Liability Company, is a type of hybrid legal entity for businesses. They combine the advantages of multiple owner partnerships and pass through tax savings of corporations. The United States only recognize this type of company it provides some, limited, protection for owners from business debts and court judgments. Additionally LLC is very flexible, allowing for multiple owners and the choice of tax rules either corporate or partnership.
Easy and inexpensive to form LLC, starting at $149 . Read my review of LLC formations and get a Legalzoom promo code to save
> Do You need an LLC to Start a Business Legally?
>Should Your Photography Business be an LLC?
Corporations – C corp and S corp
Incorporations are the most complex type of business structure. They were designed for maximum protection of liability protection for the company owners. Your corporation is a separate legal entity from you the business owner. As such it has specific regulations and tax rules. Its complexity, greater taxation, and higher formation costs are offset for some entrepreneurs by the greater advantage of the ability to raise business finance money by selling stock shares in their companies. Each state has different corporation rules for formation, taxation, and maintenance. In addition, you will need a Registered Agent to be your point of contact with legal and government agencies.
A disadvantage to many business owners is the possibility of paying double taxes on their earnings. This is alleviated by electing to form an S corp, instead of the standard C corp, which allows for pass-through taxation. This means that your business earnings are passed along on your personal tax return, with no tax due at the corporate level. Review of C corp incorporation with promo code
>Legalzoom vs Incfile for Incorporations Review
>How Corporations are Taxed – C corp and S corp
LLC vs Corporations – Which is best for you?
Intellectual Property Protection
As a creative entrepreneur, you should know that business experts report that over 80% of your small business value is in non-tangible assets such as your intellectual property of company name, logo design, inventions, and trade secrets. So protect them with legal devices such as patents, trademarks, and copyrights – they are like locks to secure your possessions.
Patents
Trademarks
Copyrights
Business Name Infringement
Trademark Name Search
Copyright
Trademark Your Logo
How to Protect Your Business Idea
Business Finance Legal Issues
When you get a business loan or business line of credit, you are entering into a legally binding contract with the lender. Your loan agreement is a contract that is enforceable in court.
Loan Agreements
How to Write a Loan Agreement for Small Business
You Need to Read The Fine Print in Your Business Loan Agreement
Small Business Loans
Average interest rate for small business loans
Peer to Peer Lending – Right for your Small Business?
Alternative Financing
>Kabbage Review Working Capital Loans and Lines of Credit
>Factoring 101- Invoice Financing FAQ
>My Fundbox Review: Business Line of Credit
Personal Guarantees
Personal guarantees are one of the facets of funding a small company that entrepreneurs despise. If you are looking for a small business loan, then you may be requested to sign the personal guarantee for the loan, either in part or full. Actually, putting one’s own assets to secure loans is now a frequent expectation.
A personal assurance, almost by definition, is unsecured, meaning it’s a sum not tied to any particular asset such as a home. By signing a promise, however, you’re are placing yourself – and your resources – on the hook, by behaving as the loan’s cosigner. If your company dissolves, you’ll be liable for repayment. The business creditors will attempt to collect from you if your company fails to pay off the loan.
For banks, small business loans are very risky. The objective of the personal guarantee is to lessen the lender’s risk.
Should You Sign a Personal Guarantee for a Business Loan?
How to Get a Small Business Loan with no Collateral
Equity Investors and the Law – Venture Capitalists and Angel Investors
Perhaps you are considering bringing in outside investors to fund your startup, they are called equity investors. This person, group or company is actually “buying” a portion of your company in exchange for their money. Before you accept this form of business financing know that there are many legal concerns such as investors rights for company control of the board of directors, ownership partnerships and securities laws both state and federal.
>Facts Business Owners Need to Know about Investors Legal Rights
SMALL BUSINESS OPERATIONS
Leases
– Office, Warehouse, Retail Store, Restaurant and Factory Spaces
Before you begin looking for space to lease your business read about the intricacies of commercial leases. They are very different from residential leases, which generally favor the tenant. Office, store and warehouse leases typically favor the building owner. The average commercial lease is about 30 pages long as compared to two-page residential lease. All that fine print contains clauses that will cost you extra money and could bankrupt your business if you are not careful.
Do not sign any lease for your business without getting a professional attorney to review it and advise you on any issues. I recommend getting the legal professionals at Legalzoom for a legal document review at an affordable price that could save you thousands in the long run.
Office Leases – What you Need to Know
Contracts
Suppliers, Vendors
Customer Sales Contracts
Breach of Contract by You or Others
Debt Collections
Small business debt collection laws. Customers Debts and Unpaid Invoices & Late Payments – acceptable and legal practices
Advertising
Product Label Laws
Business Attorney and Lawyers
In-House Counsel
Business Legal Plans
Lawsuits
Getting Sued
Employment Law
Interview Questions – Legal and Illegal
Fair Hiring Best Practices – Discrimination
Firing Procedures
Background Checks – What you Can and Cannot Search
Felons and Criminal Records
Credit Scores Hiring Factor
Employment
Sexual Harassment
Fair and Equal
On Job Discrimination
Personal Injury
Workman’s Compensation
Unemployment
Employee Agreements – Confidentiality, Non-Disclosure, and Non-Compete
Employee Discovery – Assign rights to employer Patents
Employee Wrong Doing Your Liability
Cyber Security – Customer Data Protection
Website Privacy and Terms of Use Policies
BUSINESS OWNER PERSONAL LEGAL
Wills and Estate Planning
Divorce
Name Change
Power of Attorney
BUSINESS TRANSFER
Business Sale Assignments of Assets
Trademark and Patents
Inheritance and Family Succession.
