The Legal Checklist For Startups and SMBs

It’s exciting to decide to get a startup and or small to medium business up and running. However, it’s not like you can just give your company a name and start raking in the money. There are certain steps you need to take before you can truly get off the ground. Legally, you need to follow a checklist to protect yourself and your business. If you don’t, you could suffer from fewer sales, fewer customers, and even legal repercussions. 

Choose What Kind of Entity Your Business Will Be

There are several types of business entity structures. There is a sole proprietorship, partnership, enterprise corporation, or small corporation, or a limited liability company. Many startups and small businesses begin as sole proprietorships and grow over time. What type of entity you have will have an effect on your taxes, your permits, and how much risk you personally take on. Make sure to research your options and choose one that makes the most sense for your business. 

Choose Your Branding and Get Trademarks

For your business to be a success, you will need to stand out from your competitors. Your brand is a big part of that. It’s what consumers will recognize when they are choosing where to make their purchases. It communicates the type of brand you have, how you run your business, how trustworthy you are, and what you want people to associate with you. As soon as you have a name and logo, talk to a San Diego trademark attorney to make sure that you have ownership over them. This will also prevent others from using your brand to make money unless they get a license from you. 

Make Sure Your Founders Agreement is in Writing

If your startup has more than one owner, then you need to get an agreement in writing about everyone’s rights and responsibilities. The type of paperwork you do for this will depend on what type of entity your business is. For example, as a corporation you need to have articles of incorporation and shareholders agreements in place. If you are a limited corporation, then you will need an LLC operating agreement. All involved parties must understand what their relationship to the company is, and what they are expected to do to fulfill that position. 

Apply For An Employer Identification Number

Are you planning on having employees? If so, then you are legally required to have an employee identification number (EIN). This number makes it legal for you to employ people in your business. You can do this very easily through the IRS website. To get your application approved, a signing authority from your business will need to provide their SSN and answer questions about the company. 

Classify Your Employees

Once you have your approval to hire people, you will need to classify them properly. What does that mean? It means deciding on what type of employees you will be hiring. Will they be independent contractors or full-time staff? The type of employees you have is a factor in determining how your taxes are calculated. 

Ensure That You Are Following All Applicable Laws

Depending on what type of business you are running, there may be local, state, and federal laws that dictate how you operate. Make sure that you are prepared to meet all these obligations, or else you could find yourself in legal trouble. For example, in the banking and financial services sector there are many requirements to keep you compliant with homeland security laws. Even if it’s inconvenient or expensive, you have no option but to follow the law. If you don’t, your business could be in big trouble. 

Check for Regulations and Zoning Requirements

If you are running your business out of a location other than your home, then make sure that it is zoned for the work you want to do. For example, if you start a retail shop out of a house, then you may be going against zoning requirements in a residential neighborhood. If you have a great location picked out, but the area is not zoned for it, then you can always petition your city council to try for an exception. 

Hire The Right Attorneys

If you miss any steps when going through your legal obligation checklist, it could be disastrous for your business. In fact, you may end up not getting things off the ground at all. It is in your best interest to hire an experienced attorney for help. They will make sure that every detail is taken care of. All you need to do is worry about getting our business off the ground. 

As you can see, there are many legal considerations when opening a startup or SMB. Every step must be taken, or else you could be risking your business. Go through this checklist to make sure you don’t miss anything and that your business can find the success you want it to. 

Also Read: How To Choose The Ideal Legal Business Structure For Your Tech Startup?