Starting a new business can be daunting. While you have to focus on your products and services, there are also legal requirements that you need to follow to establish it. If you are new to entrepreneurship, the formalities of setting up a new venture can seem quite confusing. In this post, we’ll make it easier for you to understand which documents are needed and which processes you should follow. At the core, establishing a business requires the selection of a relevant legal structure. Additionally, you will need relevant licenses, agreements, contracts, and other documents to formally set it up.
In this section, let’s take a look at all of the business requirements for you to set up your own business:
Before you begin with the formalities, decide on what you want to name your business. Ideally, it should be a name that is unique and can be remembered easily. You should check whether relevant domain names and social media handles are available for the chosen name. This can go a long way in boosting your online visibility. Once you find a name that fulfills these criteria, go ahead and get it registered. To avoid any scope for disputes later on, you should also get the business name trademarked.
You also need to pick a format for the business entity that you want to establish. It is a very important decision because your ownership structure and taxation will vary depending on the entity that you choose. Some of the commonly chosen entity types include Limited Liability Corporation (LLC), Corporation, Sole Proprietorship, Partnership, and Non-Profit Organization.
State and Federal Filing
The documents required for state filing will also depend on the business entity type that you choose. You need to file the documents with the Secretary of State’s office in the state where you are planning to set up your business. Additionally, you need to apply for an Employer Identification Number or EIN. Only after you get it can you start hiring employees, file taxes, and open a bank account.
Now, let’s discuss the overall legal requirements for setting up your business in the US.
Contracts and Agreements
It is necessary to create agreements and legal contracts to avoid conflicts at a later stage. Make sure you create detailed contracts for employees, freelancers, and vendors. Even if you have a good understanding of your business partners, it is necessary to spell it out in writing. So, prepare special agreements for that as well.
Business Bank Account
To keep your business finances organized, it is recommended that you open a separate bank account for your business. None of your personal transactions should be done via this account. Before you open a business bank account, make sure you have your EIN.
Permits and Licenses
Businesses in medicine, alcohol, transportation and some other domains need to apply for special permits and licenses to conduct business. If your business falls under any of these domains, you should check the requirements with the governing bodies in your state.