Starting a Business on the Right Foot

The building blocks of your business will set the tone for your success. There are a few key considerations that you must consider when starting a new company and legal requirements that must be fulfilled to avoid trouble early on. 

1. Structure Your Business

The first decision, after you figure out what kind of company you want to start, is tied to creating and registering your business. The issue is the legal structure of your business. This decision will impact how you will be taxed and how you keep your accounts.

The most popular business legal structures include: 

• Sole Proprietorship

• Limited Liability Company (LLC)

• Limited Partnership (LP)

• S-Corporation

• C-Corporation

To decide on what best suits your needs, you should consider all the liability that may be attached to your business and how it may impact you as an owner. You should also consider how much tax each company is subject to. For example, a C-Corporation is subject to the infamous double tax, while Sole Proprietorships, LLCs, and S-Corporation taxes flow through to your personal taxes. 

2. Trademarks

What many people don’t consider when starting a business is that they may be infringing on trademarks when they choose their business or product/service names. This is generally a result of not doing the research associated with picking a name. Therefore, before picking any business, product, or service offering name or slogan, a business must conduct a thorough online search on the name or slogan. Failing to do so may result in a trademark infringement action or the threat of legal action in the form of cease and desist letters. If it comes to that, infringing businesses will be required to change their product or business name, all its branding and any associated marketing material, which is a much harder and potentially quite costly to do.

3. Licenses and Permits 

Small business owners often start a small operation out of their home and don’t consider the legal requirements to start a business, such as licenses and permits. However, business owners generally need several types of licenses or permits before opening a business. The number of licenses required depends on the kind of establishment they intend to form. At the very least, businesses need a business license, trading license, and sales tax permit.

Prior to starting a business, entrepreneurs should conduct some research and contact local government agencies to find out about the requirements applicable to their business. 

4. Health and Safety Laws 

As a business owner, the health and safety of your employees and your customers are your responsibility whilst on your property or in your service. These protections also extend to your employees’ and customers’ after they’ve left the premises if they’ve taken something away from the workplace, whether it’s equipment or products. Retailers should also remember that strict liability for product defects doesn’t end with the manufacturer or the supplier, it extends to the retailer who sold the product to the end consumer. 

5. Insurance 

Business owners should look into acquiring a number of insurance policies, including products liability insurance, employer liability insurance, property insurance, workers’ compensation insurance, and general liability insurance. The types of insurances required depend on if the business has any employees or property, if it sells products or services, the business structure, and more.

6. Zoning

When looking for a place to set up shop, entrepreneurs must make sure that the area is properly zoned for the applicable type of business. For example, an independent car dealership in Arizona is limited to operation on a C-3 zoned lot. In order to find out what local zoning restrictions apply to a specific type of business, do the research before taking any actions. Contacting the local government is usually a good place to start. Don’t assume that zoning is proper because other businesses of the same sort are operating in the same area or even on the same street. Zoning laws may have changed since the other businesses started operating.

7. Confidentiality and Non-Disclosure Agreements 

When setting up a business, access to and protection of valuable information must be considered. Working with other businesses, prospective partners, suppliers, etc. may expose information that may be valuable to a business, whether it’s a unique idea, business structure, financials, and more. Everyone that may be exposed to such information should sign a confidentiality and non-disclosure agreement. It is also wise to ensure that everyone involved in starting up the company, whether they’re partners or employees, should also sign non-disclosure agreements. 

For more information on any of the above considerations when starting your business, Contact Us.