There are many legal issues in starting a business. Every decision has legal implications, such as the name of the company, its structure, and how the business operates.

Legal Issues to Consider When Starting Your Business

The majority of businesses are regulated with both government and legal oversight in order to ensure that they are operating within the confines of the law. As a new business owner, you should be familiar with all the legal considerations as you start your new business. While many entrepreneurs have a basic understanding of the law, the majority of them do not consider the legal implications of starting a company.

Generally, a new company should have no legal issues in the initial stages of development. However, it is advisable to consult with an attorney to be sure that you are starting off as a legally sound organization. A knowledgeable attorney can properly advise you and offer advice that specifically correlates to your particular situation.

Legal Issues For Startups: Business Name

The first legality that you need to consider is selecting a name for your business. Some companies choose a name only to discover that another company already claimed it. You need to be sure that the business name you plan on using is not already in use by another company.

Verify with the appropriate state agency, usually the Secretary of State office, by completing a thorough name search. Check with local businesses in your surrounding area and online to see if the name you want to use for your business has already been registered. If so, an alternate name will have to be chosen.

If your desired name is not in use, you should reserve it with the Secretary of State's office. They will hold the name for a period of time, typically 120 days, while you complete any necessary paperwork. This may include:

  • Articles of Incorporation
  • Articles of Organization
  • A Partnership Agreement

A business should also complete an online trademark search with the United States Patent and Trademark Office (USPTO) to ensure that the business name is still available. At this stage, contacting an attorney can be helpful. They are trained to help new business owners:

  • Register the business name
  • Register the logo
  • Protect you against anyone trying to infringe on your intellectual property
  • Ensure that you have full and universal rights to your trademark

Remember that although you may have ownership rights for your specific brand name in the United States, another company may operate under the same name in other countries.

Legal Issues For Startups: Business Structure

You will need to determine which business structure will best suit your company. There are many business structures to choose from including:

  • Sole Proprietorship
  • Partnership
  • Corporation
  • S-Corporation
  • Limited Partnership
  • Limited Liability Company (LLC)

When deciding what form is best, you will need to consider which will provide the best tax structure for your company and what liability issues may be associated with your business. Consider the answers to the following questions to help determine how best to structure your company:

  • Are you interested in keeping your company private or will you want to go public in the future?
  • Are you anticipating working with investors or will you remain privately funded?
  • How much growth do you anticipate gaining in the future?

Carefully consider how you wish to proceed when you register your business. In the majority of states, registration is necessary in order to become a legal business and for tax liability purposes.

Legal Issues For Startups: Business Licenses

Depending on which business structure you choose, a variety of permits and licenses may be needed. At the very minimum, you will require a business license and tax registration. You will need to research the type of business licenses legally required to operate in the area you formulate your company.

Most municipalities have rules and regulations on what types of businesses can operate in specific areas. In addition, there will be particular licensing requirements before daily operations can begin. In order to avoid legal trouble and fines, be sure to obtain the appropriate business license for the specific type of business that you want to operate.

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