Many people want to establish their own business, but it’s easier said than done in the commercial world. Companies run by inexperienced people who are unaware of the legal criteria they must meet are especially vulnerable to failure. Despite this, many entrepreneurs enter the competitive market without completing an adequate study to ensure that their legal grounds are covered.
Start a business only after you’ve adequately prepared yourself. Here are four legal requirements you must meet when starting a business, as well as the fees involved with ignoring these critical considerations.
1. Keep your personal belongings safe.
When starting a business, the most crucial thing to think about is how you’ll preserve your personal assets. No new business owner wants to think about failure, but the reality is that many new businesses struggle to make a profit and eventually fail. Successful individuals may become the target of unjust litigation, which consumes time, money, and energy.
2. Determine whether or not you are required to market your business.
You may face additional challenges when incorporating an LLC or similar legal structure depending on where you live and where you plan to open your firm. Some states and cities require you to promote the formation of your business by, for example, publishing a statement in a local newspaper. Failure to do so could result in a hefty charge or state officials refusing to recognize your new company.
Arizona, Nebraska, and New York are among the states that compel newspapers to be published. Residents of those states should pay particular attention to the regulations.
3. Recognize that you must insure your employees.
Most states require business owners (especially those with more than five employees) to insure their employees in a variety of ways. In most of the United States, giving worker’s compensation insurance to persons who are injured on the job and unable to provide for themselves is mandatory. Many inexperienced business owners try to minimize costs by lowering their insurance premiums, but it’s important to remember that skimping on worker’s compensation can backfire and cost you a lot of money.
4. Don’t overlook federal taxes.
It seems only logical that you should get down to business now that you’ve confirmed that your name is legal and obtained expensive insurance. However, before you can open your doors, you must resolve the problem of how you will pay federal taxes. If you don’t want the IRS to come knocking on your door, you’ll need to file for an Employer Identification Number (EIN) online through a holding company. This will allow the US government to distinguish between your company and others when collecting taxes. If you haven’t already done so, go to the IRS website and look up your EIN.
If you have more questions about business planning or taxes give us a call. Our business experts are ready to help you plan your business, work on your books, or plan your taxes.