Top 5 Legal Considerations When Starting a New Venture

Posted by Pierre de la Fortune on July 07, 2015 @ 12:01 a.m.

Written by Jackelyn Florez

Starting a new business venture is exciting. As an entrepreneur, you must be aware of significant legal issues which must be addressed. Some of the considerations include corporate composition, federal/state/local licensing requirements, tax, employment, and insurance coverage issues. Many new entrepreneurs forge ahead without adequate counseling and later pay the price. Apart from the product or service you are offering, a successful business must consider all aspects of the business, legal and non-legal, and remain in compliance.

It is advisable to consult with an experienced CPA to ascertain which corporate/business structure is right for you. There are many corporate structures such as sole proprietorship, C-corporation, S-Corporation, Limited Liability Company, Partnerships and others. Choosing the wrong corporate structure can result in lost profits, increased liability, unwanted tax consequences and time. Use resources provided by Federal, State and local agencies to obtain official responses to your questions.

There are many steps in registering a business. Check local and state requirements as they differ from state to state. For security, always check with local government

You need to ensure you have all the industry specific licenses and permits. Some local governments require a sign permit. Other licensing requirements may involve occupational licensing, business licenses, license and permits to sell certain products. Always check the licensing requirements for your specific business in the areas you plan to conduct business.

All businesses, including sole proprietors, are required to obtain an employer identification number (EIN) by the IRS. Registered with the IRS and state revenue agency is required. You are personally responsible for withholding and paying payroll taxes on federal/state and local levels.

"As an entrepreneur, you will become an employer. Employment issues are many and can be overwhelming. The number of employees will govern the laws you must follow. (i.e. child labor laws, affirmative action, Occupational Safety and Health Act, and Equal Opportunity Employment, to name a few).

Train management and supervisory employees in prevention of harassment, discrimination, retaliation, discipline and wrongful termination. When terminating an employee, carefully consider the legal issues that may arise (i.e. lawsuit for discrimination). It is important that you keep a documented employment history of disciplinary or performance problems in the employee's file.

Insurance is a must. Specific requirements vary based on industry requirements. Some insurance coverage you should consider are business, liability, fire, theft, credit (if you sell goods on credit), and any other insurance required by state and local government. If you have employees, state disability insurance and workers compensation are also required. Consult an insurance broker for policies that would service your business needs. Always ensure you have adequate coverage and dealing with a quality broker

Trusted advisors will be able to help you address legal issues in your business plan. I cannot stress the importance of obtaining the right legal and financial guidance. Don't skimp. It will make the process go more smoothly and without costly mistakes.

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