Building a successful business takes more than just a great idea or business plan. Making informed decisions during the startup process can put your business on the right track for success. The following information will help you recognize some of the important legal issues you will need to consider before starting your business.
LegalShield small business members have access to experienced lawyers who can help them make informed decisions when building their new business. Learn more about LegalShield small business protection.
There are a lot of options, including sole proprietorships, general partnerships, limited liability companies (known as Limited Partnerships in Canada) and corporations. Important factors to consider when selecting an entity include tax treatment and benefits, sale of interests in the business and limiting your personal liability. Consider that:
Taxation, record-keeping, sources of funding, ownership and the physical location of your business are all important factors to consider when selecting between an LLC and a corporation. The best way to determine which type of entity best suits your needs is to consult an experienced business lawyer.
Some businesses choose to register outside of the state or province where they are physically located for tax or regulatory reasons. Before you decide to register your business in another state, consult with an attorney. Registering out of state could end up costing you more in the long run. You are still required to register your business in the state or province where it is headquartered and you may be subject to additional taxes, fees and administrative costs.
Registering your LLC or corporation with the state or provincial authorities is not the same as obtaining a business permit or license. The city or county where your business is located generally issues business permits. Certain types of professional businesses also require a license to operate. Talk to a lawyer to make sure you have all of the appropriate permits and licenses before you start doing business.
Whether your labor pool counts as independent contractors or employees depends on your level of control over them. If you control where, how and when they work, the IRS (CRA in Canada) will consider them employees. Your number of employees will be a factor in determining your company’s taxes, as well as how healthcare laws and human resource regulations affect your business. Talk to a lawyer to ensure you understand the regulations that affect you and your business.
A certificate of good standing is official proof from your state that your business is registered and current on its requirements. Most lenders and agencies want a recent one, so it helps to know how to get it before someone asks.
Whether the goal is selling a company, bringing in a business partner, or passing it to a family member, the LLC ownership transfer often involves reviewing the LLC's operating agreement and the applicable state's rules.
If you want to do business under a name that isn't your own legal name or your LLC's registered name, you need a trade name, also known as a doing business as (DBA) name.
A consulting agreement is a contract between a service provider, such as an independent contractor, and a recipient.
Hold harmless agreements can help reduce a business's liability by having signatories accept a certain amount of risk.
Getting an LLC in New York generally involves choosing a business name, filing Articles of Organization with the New York Department of State, creating a written Operating Agreement, completing New York’s publication requirement, and handling tax and business setup steps, like getting an EIN.
