Let’s Get Legal! – Legal Considerations For Small Businesses
For most of us, the legal component of business is a necessary evil – and not exactly the most “fun” part of launching a new small business.
However, it’s definitely one of the most IMPORTANT parts.
To help you navigate the murky waters of business law, we’ve listed the 10 biggest legal considerations most small businesses encounter.
Legal Requirements For Small Businesses
In the early stages of developing and launching a small business, you’ll want to iron out the following legal components…
1. Business entity (or structure)
The first legal step you have to take when starting a small business is deciding how to classify your business entity. Whether you are a sole proprietorship, a corporation, or an LLC will determine everything from company ownership to personal liability to business taxes.
2. Registration, licenses, and permits
Depending on your business structure, you may need to register a DBA name for your business. And before you launch your business, you’ll need to receive all the necessary federal, state, county, and city licenses and permits required to operate. This can include building permits, local business licenses, health and safety permits, liquor licenses, and so on.
3. Intellectual property (IP) protection
Protecting your intellectual property gives you and your investors peace of mind knowing you’ll maintain all the proper rights to your business venture. Consider trademarking your business names, logo, and slogan(s) with the U.S. Patent and Trademark Office. And act fast to secure any necessary patents – the process can take over five years!
4. Employer Identification Number (EIN)
If you have (or plan to have) any employees or have chosen a corporation or partnership business structure, you’ll need to request a (free) employee identification number from the IRS. You’ll use this number to open a business bank account and file tax returns.
5. Local and state business taxes
Business taxes don’t work quite the same as personal taxes. (And you thought regular taxes were complicated.) Most small businesses can’t wait until April to pay taxes. To ensure tax law compliance, develop a habit of good record-keeping and hire a professional accountant.
6. Employment laws
There’s a laundry list of federal laws in place to protect employees and employers. You’ll want to make sure you understand and comply with regulations set in the Fair Labor Standards Act, National Labor Relations Act, and more. Furthermore, you need to have a clear understanding of employee classification. That means knowing the difference between a regular employee and an independent contractor.
7. Security & marketing laws
To ensure a fair market, federal and state security laws require you to provide accurate information about your business. And certain marketing techniques – particularly email marketing – are riddled with tricky rules that restrict how you can use customer data, who you can target, and what you can promote on certain platforms.
8. Company privacy policy
Your privacy policy is a detailed explanation of how you intend to use and protect customers’ personal data. Violating privacy laws is a criminal offense. So, before you interact with your first customer online, you’re going to need a carefully crafted privacy policy.
9. Business insurance
Business liability insurance is crucial for everyone involved – you, your employees, your clients, your investors. Without the proper insurance, you could find yourself in some serious legal and financial trouble if things go south. Some of the most common types of business insurance are workers’ compensation insurance, general liability insurance, and errors and omissions insurance. But there are a range of other insurance policies required (or recommended) for specific industries or business structures.
10. Investor accreditation
While it’s not necessarily “required,” general investor accreditation is important if you want to ensure your investment relationships are legally sound. To be accredited, an investor must have at least $1 million in their bank account, at least $200,000 in yearly income, and understand and be willing to take the investment risk.
Fayetteville-Cumberland Regional Entrepreneur & Business HUB – Small Business Resources
Have more questions about launching your small business?
We have answers! The Fayetteville-Cumberland Regional Entrepreneur & Business HUB team is committed to helping small, disadvantaged business enterprises, minority, women-owned and veteran-owned businesses grow, and thrive in the following North Carolina counties:
- Bladen County
- Columbus County
- Cumberland County
- Harnett County
- Hoke County
- Moore County
- Richmond County
- Robeson County
- Sampson County
- Scotland County
Learn how we can help propel your business expansion.
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