How to make sure your small business meets legal requirements

By Emma Sturgis

It is both thrilling and challenging to start a small company. After deciding on your services and target customers and creating a strategic strategy or roadmap, you’ll want to consider the legal requirements for launching a viable and compliant small business. Here are five critical legal requirements for small business startups to study and comprehend.

Select a business structure

The first legal obligation you’ll have to fulfill as a prospective business owner is to select your company’s structure. You must determine whether you can operate as a sole proprietor, a corporation, or a partnership. Each has significant consequences for taxation, liability, and succession planning, so conduct a thorough analysis before deciding on an organizational arrangement for your startup.

Register the company name

After deciding on your corporate structure, you must register your company name. Use a name that fits the brand and ensure it is not already in use. You can then proceed and register the business.

Submit an application for a federal tax ID number

Your Employer Identity Number is your federal income tax identifier. It allows you to lawfully recruit employees, pay federal taxes, register for business licenses, and open a business bank account. You can obtain it by visiting the IRS website. This number enables you to carry out the following activities:

– Hiring and paying staff

– Running as a corporation

– Submitting employer tax returns

– Using a tax-advantaged retirement account

Determine whether a state tax ID number is needed

Conduct any research to determine if your startup needs a state tax identification number. If the state in which you reside seeks taxes on businesses, you may only need one. Since tax responsibilities differ from state to state, it is wise to access your own state’s website to review the local legislation about your employment and income tax obligations.

Apply for business permits and licenses

You will have to apply for company permits and licenses at the federal and state levels. Still, the exact licenses you require will depend on the sector you operate in and the location of your company. The Small Business Administration has a list of standard federal licenses needed based on sector, which is a fine place to begin your research.

The permits and licenses required and the fees due at the state level will vary depending on where you live and what your main business practices are. Research regulations at the state and municipal levels in the areas where you operate.

There are several details, legalities, records, and paperwork to go with when launching a small business to stay compliant and productive. For certain businesses, anonymity in commercial operations is critical to growth. A mail forwarding service can provide the necessary privacy for commercial success in transactions and negotiations.

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Emma Sturgis is a freelance writer based out of Boston, MA. She writes most often on health and education. When not writing, she enjoys reading and watching film noir. Say hi on Twitter @EmmaSturgis2.

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