Starting a business is not an easy process, if you are planning to start a small business then you must know the legal aspects of running a small business. You can not open any business without verifying it legally. The best advice for running a small business is that every business owner should verify its product, property, as well as himself also. In this blog we have discussed the legal aspects which you must follow to fulfill the needs for running a small business. So that you do not have to face any legal problem after starting a new business.
What is Legal Aspect?
Legal aspects refers to the laws, rules, regulations and legal principles that are set by the government for particular work or running a business. Which everyone has to follow so that social wellbeing is maintained and every business works legally. It is all about doing your business in the right way while following rules, regulation and paying taxes.
What are the Legal Aspects of Running a Small Business?
If you have a business idea which you want to establish then you must know the legal aspects for opening a new startup. There are some legal aspects we have provided you below which you can follow to save your small business legally.
Structured Business
Choose what type of structure you want, like.
- Sole Proprietorship: It is simply structured, if you want to make a business alone in which you have to pay loss and enjoy benefits individually.
- Partnership: A partnership structure is when a business has more than one owner they get the partnership and profit and loss is distributed among all the partners. In this structure the cost of startup for a single individual is divided among all partners, so the load of the business cost becomes slightly lower.
- LLC: Limited liability company protects your personal assets, like your house, car, etc. It means when your business falls and can’t make a profit, or when it is considered bankrupt. You can file your business income as part of your personal income taxes so that your personal assets are safe.
Register Your Business
After making the successful structure you have to register your business’s name but the name should be related to the business which is not used by any other organizations. If you have chosen sole proprietorship, then your business must include your name. For example, “Peter Finance” after that, you can register your business. You must register your company with the Ministry of Corporate Affairs. Registration plays an important role in the reputation of the business.
Trademarking
Trademark, unique slogans, and logos for your business, which make it an identifiable brand. This logo and slogans help your company to be distinct from other companies that have the same type of business or name. Always keep in mind that your slogan and logos should be simple and easy to memorize that shows what your business provides, and they should be easy to remember so that your customers or clients can remember your company by your logos.
Apply For a Federal Tax ID Number
If you want to know your federal tax identification, it is an Employer Identification Number. A federal tax ID number allows you to hire new employees legally, and it allows you to apply for business licenses and open a business bank account. From the official IRS website, you can apply for an EIN. You will definitely find an EIN important when you want to hire and pay employees, useful for filing employer tax returns, or operating as a corporation using a tax-deferred pension plan.
Obtain Business Permits and Licenses
You need to obtain a license for your business and a permit at both the federal and state government levels to operate it. The license is dependent on your type of industry you work in and its location. Here we have provided the three licenses and permits you have to look for depending on your type of industry.
- Federal Licenses and Permits.
- State Licenses and Permits.
- Local Licenses and Permits.
Open a Business Bank Account
You must separate your personal and business accounts before making payments to clients from a legal perspective. You can choose a bank to set up your business account according to your business needs. Choose the bank that offers lower bank fees for small business clients. While choosing the bank, you need to provide some information about your business to open an account, which includes your EIN, information documents of your business, your business license, and ownership agreement documents.
Hire and Classify your Employees Properly
Expert tips for hiring the best employees include properly classifying your workers, providing fair compensation and fulfilling your tax obligations correctly. The employees you hire will typically fall into one of four categories.
- Employees: The most protected category which includes part-time and full-time jobs. In this category you have to provide benefits and overtime to the employees. Their salary is based on their working hours.
- Contractors: Contractors just deliver their service to your business and are not considered a part of the business or workers.
- Interns: Interns may be paid or unpaid, depending upon your organization’s needs. They are hired based on a specific period of time to gain knowledge about the industry work. After gaining knowledge, they become employees.
- Volunteers: Volunteers have involvement in charitable work which are governed by specific rules. Your business may have to meet certain requirements to qualify for volunteers from volunteer agencies.
Consult the Professionals
You can ensure all the financial and legal activities by consulting professionals. The best tips for running a small business is to consult an accountant for managing all the financial works and consult a lawyer for managing all the legal works. These two tips can become your keys to running a successful small business, as accountant and lawyer they both will ensure your company has covered legally and financially before opening of your business.
Conclusion
For running a successful business there is a need to fulfill all the legal aspects before opening the company. With the help of which you can make your own reputation among the business industry, the business which has completed all the legal requirements builds the trust of the clients easily. These legal aspects lead to overall nation growth as every business owner pays regular bills which are used for the development of the nation.