This article builds upon “Navigating Different Business Entities.”
Embarking on the journey of launching your own business is an exhilarating time, a period that’s often a culmination of months or years of planning, preparing, and dreaming. Before you can introduce your products or services to the world, however, you’ll have to navigate a number of legal steps that, if done successfully, will set you up with a solid foundation for your business.
As an entrepreneur with firsthand experience maneuvering through the legal intricacies of setting up a small business—I first did it in 2013 when I established Briogeo—I want to share my insights and experiences with the process to help you be successful. Let’s dive into some of the legal steps you’ll need to take when setting up your business.
Register Your Business
By registering your business, you’re essentially bringing it to life in the eyes of the law. In order to do this, you’ll need to have already chosen the legal structure of your business. Registering your business may involve meeting a set of local, state, and federal regulations that will ensure your business is recognized as a legal entity. Keep in mind that these regulations depend on your location. Here are the steps you’ll need to take:
1. Make sure your business name is available
There’s no doubt you’ve thought long and hard about the name of your business. Before you can register your business, however, you’ll need to make sure the name isn’t already taken. To do this, search “business entity search, state name” and you’ll find a directory for business names in your state. Make sure that the directory you’re searching is on a website ending in .gov. (Otherwise, it’s not a government website.) For example, this is the directory for the state of New York. You can also use this Secretary of State directory to check multiple or all U.S. states.
2. Register the name of your business
Now that you’ve confirmed that your business name is available, it’s time to officially give your business its identity. There are a few different ways to register your business name and, depending on your business, you might need to do some or all of the below.
• Depending on your location and business structure, you may have to register a legal entity name with your state. To check whether you need to do this, search “register business name, state name”.
• To legally protect your business and products/services on a national level, you’ll have to register a trademark. You can find all the information you need about registering a trademark here.
• Most states require you to register a DBA, which stands for “doing business as.” Also called a trade name or fictitious name, a DBA lets you conduct business using a name that’s different from your personal name or formal business entity name. You can use this search tool to see if this is required in your state, but make sure to also verify using your state’s official website.
• Assuming you’ll be setting up a website for your business, you should also register a domain name. You can use this directory to search available domain names. Keep in mind that your domain name doesn’t have to be identical to your business name.
3. Register your business with the IRS
When you register your business with the IRS, you’ll receive state tax ID and federal tax ID numbers, known as an Employer Identification Number (EIN). This is like a social security number for your business and will let you pay both state and federal taxes. To get a federal tax ID, start here. For a state tax ID, look up your state’s specific requirements.
4. Secure the necessary permits and licenses
Depending on where you live, where your business will operate, and the kind of goods and/or services you’ll offer, you might have to obtain certain permits and licenses. These may include a seller’s permit (which allows you to sell goods online or in person) or industry-specific licenses and permits (such as professional licenses or certifications, or zoning permits). Check here for federal licenses and permits and head to your state’s website for requirements specific to your area.Because Briogeo is in the business of selling products online–and we do so across the U.S.,–we had to apply for the appropriate sales-tax registrations in states where we met the minimum requirements for doing so. Whatever your business involves, make sure to stay up-to-date on changing federal, state, and local requirements as it grows.
Tax Obligations for Small Businesses
Once you’ve registered your business, obtained an EIN, and taken care of the necessary permits and licenses, it’s time to delve into tax obligations. Understanding the tax obligations associated with running a small business will be crucial for its long-term success, helping you avoid costly mistakes and stay in good standing with tax authorities.
Take the time to familiarize yourself with tax laws, including income tax, sales tax, payroll tax, and self-employment tax. These laws differ based on state and even the local area, so I recommend you consult with a tax professional to make sure you’re complying with tax laws and have identified all the potential deductions or credits that can benefit your business. When setting up Briogeo, I consulted with a tax specialist and an organizational lawyer to ensure we were filing all the appropriate paperwork, paying taxes in the right states, and were aware of how requirements would change over time as the company grew both financially and from an employee-count perspective. To do some initial research, consult this starter guide from the U.S. Small Business Administration.
Protect Your Intellectual Property
When you see the words “Just Do It” or “Eat Fresh”, you know exactly which businesses are being advertised. That’s because these taglines are trademarked by Nike and Subway, respectively, and legally belong to those businesses. If you have a tagline or any other kind of intellectual property (a work or invention resulting from creativity) that you want to keep yours, it’s crucial to seek legal protection.
Trademarks protect branding elements like logos or taglines, while copyrights protect original works and patents protect inventions. Carefully consider your business’ identity and the products/services you offer. Are there unique elements that need to be protected by law? If so, you should partner with an intellectual property attorney to fully understand the legal protections that are available, navigate the registration process, and ultimately safeguard your exclusive rights to your property.
About to embark on the journey of setting up your business? Download our helpful checklist outlining the legal steps you’ll need to take.
By registering your business properly, understanding tax obligations, and protecting your intellectual property, you’ll be more prepared to handle future challenges that may arise. As you progress through each legal step, I encourage you to seek professional guidance, taking advantage of the wealth of resources available to you. With the proper planning and execution, you can turn your small-business dreams into a thriving and sustainable reality.
If you’ve already been through this process, did you hit any roadblocks along the way? If you’re getting ready to set up your business, do you foresee any challenges? Share your thoughts in the comments!
