8 Legal Things You Should Know Before Starting a Business

StrategyDriven Starting Your Business Article |Starting a Business|8 Legal Things You Should Know Before Starting a BusinessSo, you have successfully prepared your business plan, secured the needed finances, and are now ready to jumpstart your business.

In this case, starting your business the right way means ensuring that you understand and comply with all the requirements to operate legally.

After all, covering all the legal bases before launching a business helps avoid mistakes that could be detrimental to your business endeavor’s success. In fact, business owners unfamiliar with the required legal processes and documents to start a business are more likely to fail.

With that said, here are eight legal things you should know before starting a business to help you thoroughly prepare the requirements needed to start your business the right way.

Ready? Let’s get right into it.

Choose Suitable Business Structure

Your business structure is the first requirement you need to comply with before legally starting a company. In this case, startups usually choose between forming a corporation, Sole Proprietorship, or an LLC.

Of course, each of these structures has its advantages and drawbacks, so you need to pick one that’s the most suited for your business setup.

In general, many new business owners opt to form an LLC to protect their personal assets if the business declares bankruptcy. Plus, it is less expensive and less complicated than creating a corporation.

Overall, choosing a business structure is an essential step you need to protect your business and your personal finances.

Register Your Business

Once you have selected a business structure, the next step is to register your business name. Whatever business structure you choose, you need to file a name for your business or company in your state.

In most cases, there are four ways you can register your business:

  • A DBA (Doing Business As) works for sole proprietorship structures required, depending on your state. However, this registration does not offer legal protection.
  • An entity name lets your local government or state know that you operate a business under a fictitious business name. This registration protects your company at a state level.
  • A trademark offers brand protection in all 50 states and legally protects your business to places where your business is not registered within the US.
  • A domain name is your unique business web address to establish your business online and gain a solid digital presence.

Ensure You Are Not Violating Trademarks

When picking a business name, you need to make sure that it reflects your branding. Moreover, if you plan on providing online services or operate on a national level, it is best to get a trademark for your business name.

After all, trademark violations can mean damage and financial loss to your business, so it’s best to be prudent when ensuring that the business name you want is not yet trademarked. In this case, you can formally register your business name with the US Patent and Trademark Office.

Get a Federal Tax Identification Number

In general, an Employer Identification Number (EIN) allows you to apply for a business license, hire employees, open a bank account, and pay your taxes.

Known as the Federal Tax Identification Number, your EIN will separate your business and personal liability, thus giving you additional legal protection and keeping your social security number from data breaches and identity theft.

In this case, you can conveniently apply for an EIN online through the IRS website.

Obtain Business Permits and Licenses

You must acquire the required permits and licenses before you can start opening your doors to your clients. Of course, depending on your business, industry, and location, the necessary business licenses and permits vary from state or locality.

Moreover, some businesses require special permits and licenses or additional licensing requirements. Likewise, others require zoning approval, especially if you put up your business in a residential area or require changes in traffic patterns such as shipments and bulk deliveries.

Secure a Business Insurance

Aside from this, it would also be a good idea to talk to an insurance agent to help you with the type of business insurance you need and the amount required for such coverage.

After all, purchasing good business insurance protects your company from the potential risk of accidents, damages, and lawsuits.

In this case, general liability insurance is one of the essential coverage for any business to have. It protects your company from general wrongdoing claims and ensures your income is secured during maintenance and reworking.

Open a Business Bank Account

It is legally wise to separate your business bank account from your personal finances. Moreover, it’s also a significant step you can take for more intelligent money management.

In this case, opening a business bank account allows you to deposit the money earned from the business and secure funding for business-related expenses.

However, it’s best to choose a bank that offers friendly and convenient terms for business startups. In addition, you should also note that the bank may also ask you to provide your EIN, formation documents, business license, and proof of ownership before you can open an account.

Hire a Good Lawyer and Accountant

Lastly, it would be an excellent step also to hire professionals like a lawyer and accountant for your company. After all, consulting and hiring a professional lawyer and accountant ensures that your company is covered from legal and financial angles.

Moreover, having a good lawyer and accountant can guarantee that you have solid legal support during unforeseen situations. Aside from this, investing in a lawyer and an accountant can also help secure your business in the long run.

Starting a business requires dedication and passion. However, there are also many legalities you need to work through to stay compliant and profitable.

With that said, investing time and money in ensuring that all the legal phases of your business are covered ensures that you are starting your company on the right foot.

Creating My Own Business

StrategyDriven Starting Your Business Article |Creating a Business|Creating My Own BusinessStarting your own business means the beginning of an incredible journey. Creating your company can bring joy and satisfaction from many points of view. So, you saved some money, gathered motivation, and you’re ready to take the first steps in creating your own business. Good financial and legal decisions are essential. However, passion and determination are the most important things in the long run. It would be best to realize that you’ll face many problems and hiccups along the way. That’s why the strength of character is fundamental in pushing through issues and adapting along the way. The world of business is a dynamic arena in which only the fittest survive.

The following piece will provide you with a basic planning framework to start your firm from scratch:

Research the market and examine your competition

First of all, you’ll have to understand your target market. Ask yourself a couple of questions:

  • Who are my clients? What’s their age, gender, social status, etc.?
  • Who’s my competition? What’s their business plan, and what can I learn from them?

Understanding the market is necessary if you want to get straight into business once you open. Consider the level of demand for your product/service. Also, gauge the market size, the location in which you operate, pricing ranges, and other economic indicators such as population income and employment rate. In other words, market research means analyzing the conditions in which you’ll work. It’s a way of observing and adapting to fit the needs of the market.

Create a business plan

The business plan helps you understand your business’s structure, operation, and future needs. This document will also help persuade collaborators and investors into working with you. There are a few free templates and guides available online. Don’t worry if you don’t know how to start. Download the sample that represents your company type the most and start filling it up.

There are two main styles: traditional or lean start-up. The traditional style is more extensive and detailed. On the other hand, the second kind allows a brief summarizing of the vital points.

Invest capital in your company

The next move is to calculate how much money your business needs to take off. This way, you can figure out how much capital you need to raise through personal funds, investments, or bank loans.

Self-funding is everybody’s dream. Unfortunately, that’s not possible in most cases. So, you’ll need to think about a few options:

  • Crowdfunding is an excellent outside-the-box choice that can work wonders for certain types of businesses.
  • Small business loans through banks are classic ways of starting and are safe.
  • Other programs to consider are Small Business Investment (SBA) loans through Lender Match.

Decide on your business location

Location, location, location. The area in which you operate establishes the tax range, zoning laws, and business regulations. You’ll have to analyze various states, cities, and even neighborhoods. When calculating start-up expenses, make sure to:

  • Include area-specific expenses such as minimum wage, property value, rental value, insurance rate, utilities, and government licenses/fees.
  • Include zoning laws regarding buying, renting, building, and operating out of a physical building.
  • Include local and governmental incentives such as tax cuts, utility cost reductions, urban redevelopment motivations, and technological support.

Choose your firm’s legal structure

Your business’s legal format determines day-to-day activity, license requirements, tax ranges, and personal liability. Selecting the proper structure means efficiency, legal protections, and benefits.

First, you’ll have to review, compare, and understand the main business structures:

  • Sole proprietor;
  • Partnership;
  • Limited liability company (LLC);
  • Corporation;
  • Cooperative.

Next, you must decide if you’re going to combine various structures for tax benefits. Although somewhat uncommon, combining different legal designs can yield tremendous advantages but are generally harder to set up.

Select your brand name

Choosing your company’s name seems the easiest point of the list, but that’s not entirely true. You must decide on a captivating title that echoes your brand spirit. Also, you’ll have to make sure the name isn’t already registered.
Once you’ve done your research, it’s time to register your brand name under:

  • State-level entity names, which offer protection within state borders.
  • Federal-level trademarks, which offer protection within national borders.
  • Doing Business As (DBA); it’s not always required, but some legal structures need it to open a bank account.
  • Website domain name.

Register your company

Once you’ve decided on the business name, it’s time to register it legally. Registration is especially required if you’re conducting business without using your legal name. In this case, you’ll need to register federally and even locally.
Suppose your company plans to conduct business in more than one state. In that case, you’ll need a foreign qualification from the Certificate of Authority.

Obtain federal and state tax ID

Alias Employer Identification Number (EIN), the tax ID works as a private social security number. It allows businesses to pay taxes, pay employees, file tax returns, etc. Once you’ve set up your tax ID, don’t forget to update it in case of changes in names, addresses, ownership, management, or tax status. This IRS digital assistance tool will help you apply for an EIN.

Get your license and permit

To grow your business into a success story, you need to stay legally compliant. Obtaining all the licenses and permits is an obligatory step to remain legally protected and do business. They vary by industry and are slightly different from state to state.

Generally, the more “dangerous” a business is, the more permits it needs to function. For instance, a firearms shop will encounter more scrutiny than a TV company. Likewise, fisheries or agricultural firms need more permits compared to a clothing shop.

Open your business bank account

A company bank account is almost mandatory for most sectors. A checking account helps handle transactions, taxes, and much more. Additionally, it’s a protection method against fraud or other malicious activities. Having a bank account means transparency, professionalism, and purchasing power.

Opening a bank account is pretty easy with the right paperwork. Just make sure you compare different institutions to get maximum benefits for you and your business.


Creating your own business is the ultimate capitalistic dream. Building a company means hard work and personal sacrifices, but the potential rewards are well worth it. Let’s recap the main points of starting a firm:

  1. Market and competition researching;
  2. Creating a business plan;
  3. Gathering and investing money;
  4. Picking a location;
  5. Choosing the legal structure;
  6. Naming your brand;
  7. Registering the company;
  8. Obtaining federal/state tax ID;
  9. Getting licenses and permits;
  10. Opening a bank account.

About the Author

StrategyDriven Expert Contributor | Tiffany HarperTiffany Harper is an experienced corporate sector writer, who sometimes helps as an expert to ninjaessay. She specializes in entrepreneurial development and start-up strategies. If you need essay help or business advice, don’t hesitate to contact her. When Tiffany is not working she is writing her book about self-growth and self-motivation.

4 Signs You’re Ready to Start Your Own Company

StrategyDriven Starting Your Business Article |Start your own company|4 Signs You’re Ready to Start Your Own CompanyA lot of people are now choosing to start their own businesses, either as a small side venture to make some extra money from, or with a view to running their new companies full time and escaping from employment. Technology makes it easier than ever for people to bring their ideas to market, and to find customers and clients for your new business. If you are someone who likes the idea of becoming your own boss and starting a business, then you may be wondering how you will know if the time is right to take the plunge. Here are four signs that you’re in a good position to start making things happen as an entrepreneur:

1 – You Have a Good Idea

An idea for a new business doesn’t have to be revolutionary to be viable. You don’t necessarily need to be bringing an entirely unique idea to the marketplace. However, you do need to be clear on a business that will provide either products or services that you are in a good position to offer. If you have an idea that you can see good market potential for, or you have skills that you currently use working for another company that you could start up on your own with, then you are in a good position to begin planning how to formally set up your new business and begin looking for your first customers.

2 – You’ve Researched the Practical Side

Starting any kind of commercial venture will require you to understand the tax and regulatory aspects relevant to your location and industry. If you are planning to do business online, particularly internationally, you’ll also need to know how laws around the world such as GDPR will affect how you do things. If you are serious about starting up and have begun to find out what you need to know, then this will stand you in good stead.

You should also know what you need to do to set up an LLC, or incorporated company, and which type of formal business registration is most appropriate to your plans. Starting your company doesn’t need to be difficult, and there are plenty of online resources to help you find out what you need to do, but having taken the step of doing that research is a good sign that you’re ready to move forward with your idea.

3 – The People in Your Life are on Board

If you have a family or other people you support, then it is important that they are supportive of you making moves to start your new venture. Starting a business can be intense, especially if you are going to be keeping your current job while you are first starting up, and so having people around you who believe in what you are trying to do will be a big boon.

4 – You Know the Current Market in the Industry You’re Entering

We live in very unusual times, and so business ideas that may have been excellent just 18 months ago may be poor ideas now – businesses focused around live events or tourism are a good example. If you have kept up with the news in the industry you want to join and are able to tell whether now is a good or bad time to enter, then this shows that you’ll be committed to keeping on top of trends and shifts once you’re in business. You can’t predict everything, but having your ear to the ground and basing your decisions on the best and most recent information already is a good sign that you’re ready to begin operating in a given market.

Are these all things you are already doing? If so, then you could well be ready to begin actioning your plans for your new venture. If not, then it may be a good time to think about starting to lay some more of the groundwork and doing more of the research.