Entrepreneurship is booming in America. If you have recently decided to start a business, congratulations are in order – your business will be one of the 5 million business applications that get submitted each year. Of those businesses, 20% of them will fail within the first year – and that figure more than doubles within 5 years.
Those may sound like depressing figures, but the good news is that most of those failures can be attributed to poor planning and execution. Failing to plan is planning to fail, so instead of being a sad statistic, choose to get ahead of things by boning up on the legal requirements for starting a business in the United States.
Below are the top five legal requirements you need to know about:
- Business Structure
By law, your business structure needs to be defined. That is the only way to determine the nature of activities your business can legally undertake. Some of the most common types of business structures include sole proprietorships, partnerships, and limited liability companies.
Spend time with a legal business advisor to decide on which structure is best suited to your business vision.
Business registration requires a name for your company. That name will make it easy for customers to notice and remember your business. After you pick a name, register it to certify it as yours. That will protect your name on a state level and allow you to focus on gathering key business insights.
That means that no other business can be established under that name in the same state as you. Another thing to consider is trademarking the name – the difference with this is that no other business in the industry can use that name on a national level.
- Tax Number
A federal tax number identifies your business to the relevant tax authorities. That is called an Employer Identification Number, which is a requirement for making your new business legal. That number will allow you to pay taxes, apply for permits, open accounts, as well as hire employees.
This number is required for corporations and partnerships, as well as under other tax conditions. Consult James Goodnow for assistance with the legal requirements for your chosen business.
- Intellectual Property
Ideas are big business. Anything created by the human intellect can be protected by law from any unauthorized use. That will keep your business ideas and inventions as your own and enables you to be entitled to compensation or recognition whenever someone else wants to use your creations.
Some of the requirements for securing IP can be complicated, particularly when deciding if your unique product or service needs to be protected. Protection rulings can be applied to anything from music to industrial designs.
- Founder’s Agreement
A founder’s agreement is a legal contract that defines and governs the relationship between the cofounders of a company or organization. This contract outlines your rights, responsibilities, and roles as owners/founders.
Having this contract will clarify expectations and ensure that your vision is shared. A well-crafted agreement is essential to prevent confusion and disputes down the line.
Focus on the business side of your business and leave the legal side to the experts. They are experienced and knowledgeable. Besides, you have enough to worry about as a new business owner – the last thing you need is anything else taking your focus away from the vital elements.