The creation of a new business is an amazing yet difficult task. After you've done your research, laid out a business plan, and figuring out the structure of your business, it would be of great importance to get familiar with all the legal parameters so you and your business are operating within the lane of the law.
It seems a lot of people that violate these laws do it unbeknownst to them. So here at Meraki we've decided to get you familiar with them so you do not get in any sticky situations. So without further ado, here are 5 legal parameters to know before launching your business:
1. Register Your Business Name
Since you are just starting out, you'll probably be registering your business as a “Fictitious Business Name” (FBN) or “Doing Business As” (DBA). Doing this is important to at least notify your state / local government . This type of registration does not unfortunately provide trademark protection, but it will however allow you the ability to use the business name you've chosen for brand purposes. with no need of incorporating.
Failing to register a DBA name, your legal name will be defaulted as the business name instead. I.e. Ben Scott forms a construction company, the legal name of said construction company will simply be 'Ben Scott' however if Ben wanted to name the business 'Mighty Construction' or 'Ben Scott Construction', he will have to register those as a DBA name. The Rule of DBA names vary state to state. Sole propietors and people who decide to operate under their own name, are the only ones that are not required to register A Doing Business As (DBA) name. Also If you do decide to establish an official business structure like let's say an LLC, the business name you choose will automatically register with the state.
2. Federal Taxes
Businesses that operate as corporations, partnerships or have employees will need an EIN (or Employer Identification Number) from the IRS. EIN's identify your business to the government for tax purposes--think of this as a SSN (Social Security Number) for your business. You can use this EIN to open business bank accounts, file taxes, as well as apply for business licenses. You can easily apply for an EIN online by going Any business that operates as a corporation or partnership or has employees will need an Employer Identification Number (EIN) from the IRS. An EIN identifies your business for tax purposes—think of it as a Social Security number for your business—and you can use to open a business bank account, file tax returns, and apply for business licenses. The easiest way to apply for an EIN is online by using this link here to go to the IRS EIN Assistant. A business operating as a sole proprietorship, is not required to get an EIN number, however getting one is a great way to separate business from personal liability.
3. State and Local Taxes
Additionally to federal tax, contractors are required to pay local and state taxes--self-employment, income, sales, payroll, and property tax. These taxes however, vary from state-to-state and as well on your business structure. Companies that have employees, will also be liable for paying their state unemployment taxes. Find information on these specific state tax obligations on the SBA website here.
4. Business Permits and Licenses
Independent contractors are required to obtain proper permits and licenses. Depending the industry and where your particular business is located, a Federal license may be also needed in addition to the state level. Businesses involved in activities that are supervised and regulated by any federal agency, fall under this category. Varying on the location you are in, state licenses and permits fall under different rules so be sure to do your research.
5. Business Laws and Regulations
Even though you may be a small business owner, you are still subject to some of the same laws that are applicable to large corporations. Including but not limited to, intellectual property, privacy laws, advertising, marketing and finance laws. Research and learn which laws may apply to your business or organization. Starting a small business is no easy feat, At Meraki Business Academy we are here to help! Contact us today for further info and a free consultation!