Opening your small business is an exciting venture, but there are many processes you must follow to start and run it successfully. Although your excitement may dissipate just from thinking about them, they are essential. One such process is complying with all legal obligations of starting a small business. Legal requirements range from financial regulations, employment laws, and tax obligations, among others. Here are some legal decisions you should make before starting your small business.

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Decide on a corporation or LLC

As a new business owner, deciding on a business structure, either corporation or LLC (Limited Liability Company), is the first legal step you must take. A corporation is a business that legally separates the entity from you; it offers more protection than LLC but is more complicated and expensive. On the other hand, LLC protects you from personal liability; if your business goes bankrupt or gets sued, your assets, like your vehicle and home, won’t be at risk.

Get insurance

Insurance is of different kinds, such as employer’s liability, fire, and comprehensive. Sufficient insurance coverage protects you from incurring fines that could cost you your business, reputation, and personal assets. Protect yourself from liability claims by investing in professional indemnity or public liability, aside from the employer’s liability. Insurance also protects you from the vulnerability of employee and visitors’ compensation claims when they incur injuries or get sick within your business premises.

Register your company

After approaching 1^st Company Formations and deciding on a business structure, register your company name. A business name protects you legally at the state level, while a trademark protects it at the federal level. If you have a business website, register its domain name to claim your web address. Choose a company name that mirrors your brand and ensure it hasn’t been claimed already.

Apply for Federal and/or State Tax ID Number

Federal tax ID is also your EIN (Employer Identification Number) that allows you to hire employees legally, apply for licenses, open accounts, and pay taxes. State tax ID number may not be a requirement for your small business, but do your research to determine if it’s necessary. You only need it if the state where you’re running your business collects taxes; it varies from state to state. Check local laws by visiting your state website to determine employment tax and income obligations.

Obtain licenses and permits

You must obtain many licenses and permits before opening your small business, but they depend on the kind of establishment you’ll be running and your location. First, you must apply for permits and licenses at the state and federal government. Research the requirements needed at every level, such as the fees owed. Start your research on the licenses and permits you need from The Small Business Administration listing common federal business licenses and contact relevant government agencies to determine specific permits and licenses you need to run your business legally.Starting your business, although exciting, can be stressful; there’s always something that needs to be done. As you try to get your business seen, remember to direct some of your energy to the right tasks, such as legal requirements. Adhering to them is vital in protecting you, your business, and your employees.