By Hampton & Pigott
Posted on 9-19-2023
Starting a small business is a very personal experience. Most people start them out of ideas that they are passionate about. Don’t let all of your hard work go to waste by leaving yourself vulnerable legally. Here are some of the things you should do to protect yourself legally when starting a small business.
Selecting the appropriate legal structure for your business (e.g., sole proprietorship, LLC, corporation) is a critical decision. Each structure has different legal and tax implications.
Register your business with the appropriate government authorities. This typically involves obtaining the necessary licenses, permits, and an Employer Identification Number (EIN) from the IRS, if applicable.
Develop a comprehensive business plan that outlines your business goals, strategies, financial projections, and risk management strategies. A well-thought-out plan can help you avoid legal issues and secure financing.
If your business involves unique products, services, or branding, consider trademarking your company name, logo, or products. Additionally, ensure that you have clear agreements with employees and contractors regarding intellectual property ownership.
Draft and review contracts carefully. Whether it's agreements with suppliers, customers, employees, or partners, having written contracts can help protect your interests.
Understand and comply with federal, state, and local regulations that apply to your industry. This includes employment laws, environmental regulations, and licensing requirements.
Obtain the necessary insurance coverage for your business. This may include general liability insurance, property insurance, workers' compensation, and more, depending on your business type.
Maintain accurate financial records and separate your personal and business finances. This practice not only helps with tax compliance but also protects your personal assets in case of legal issues.
Understand your tax obligations, including income tax, payroll tax, and sales tax. Keep meticulous records and consider consulting with an accountant or tax professional.
Include clauses in your contracts specifying how disputes will be resolved. Mediation or arbitration clauses can often be more cost-effective than litigation.
Establish a relationship with an attorney who specializes in business law. We have attorneys at Hampton & Pigott who specialize in small and large business law. We can help you from the formation of your business as well as through the years as you need us. We will make sure that what matters most to you is protected.