The Legal Checklist for Starting a New Business: What You Need to Know
Starting a new business is thrilling—it’s the chance to bring your ideas to life and turn your passion into profit. But let’s be real: while the creative part is exciting, the legal stuff? Not so much. Yet, without the right legal foundation, your dream business could run into trouble before it even gets off the ground.
Think about it. You’ve poured your heart and soul into building your business, but one wrong legal move could land you in hot water, or worse—out of business altogether. Whether it’s choosing the right business structure, protecting your brand, or navigating tax requirements, the legal aspects can feel overwhelming.
But don't worry, you’re not alone in this! In this article, I’ll walk you through the essential legal checklist for starting a new business. You’ll feel more confident knowing that you’re legally covered, allowing you to focus on what really matters—growing your business.
1. Choose the Right Business Structure
The first and most important legal decision you’ll make is how to structure your business. Should you form an LLC? A corporation? Maybe a sole proprietorship? Each option has different legal and tax implications. The right structure can protect you from personal liability, but the wrong one? It could expose your personal assets to business debts and lawsuits.
Here’s a quick breakdown:
• Sole Proprietorship: Easiest to set up, but no liability protection. You’re personally responsible for all debts and legal actions.
• LLC (Limited Liability Company): Protects your personal assets while offering flexibility in management and taxes.
• Corporation: More formal, but provides the strongest protection against personal liability and can help you raise capital.
Pro tip: Talk to a legal professional before making a final decision. We can help you choose the structure that best suits your business goals.
2. Register Your Business NameYou’ve come up with the perfect name for your business, but is it legally available? Choosing a name that’s already in use could land you in a trademark dispute, forcing you to rebrand after you've already invested time and money in marketing.
To avoid this headache, make sure to search for available business names and trademarks with your appropriate state agency. If your chosen name is clear, you’ll need to register it with the appropriate authorities—typically the state or county. This step might also include filing a “Doing Business As” (DBA) if you’re using a trade name.
Need help with the registration process? Reach out to us for guidance on checking name availability and filing your business name with the right agencies.
3. Obtain Required Business Licenses and Permits
Here’s a common mistake new business owners make: they forget about licenses and permits. Depending on your industry, you may need federal, state, or local licenses to operate legally.
For example, if you’re opening a restaurant, you’ll likely need food service permits, health department approvals, and possibly a liquor license. Failure to get the right permits can result in hefty fines or even business closure.
Your action plan: Create a checklist of licenses and permits specific to your industry and location. Better yet, we can help you navigate this process to ensure your business complies with all necessary regulations.
4. Draft Contracts and Agreements
Contracts aren’t just for big corporations—they’re essential for every business, no matter the size. Whether you're hiring employees, partnering with another company, or offering services to clients, you need clear, legally binding contracts to protect your interests.
Imagine this: you land a big client, deliver the work, and suddenly... they don’t pay. If you don’t have a solid contract in place, you might have no legal recourse. The right contract outlines expectations, payment terms, and how disputes will be handled, giving you peace of mind.
Common contracts you’ll need include:
• Employment agreements
• Service agreements
• Non-disclosure agreements (NDAs)
• Need contracts tailored to your business? Let us draft them for you to ensure you’re covered from every angle.
5. Protect Your Intellectual Property
Your brand is one of your most valuable assets, so protecting it legally should be a top priority. From your business name to your logo and unique products, intellectual property (IP) laws help safeguard what makes your business stand out.
Here’s a simple breakdown of IP protections:
• Trademarks: Protect your brand name, logo, and slogans.
• Copyrights: Cover original works, like blog posts, designs, and photos.
• Patents: Secure your inventions or unique processes.
Pro tip: Even if you're a small business, applying for trademarks and copyrights early can save you major legal headaches down the line.
6. Understand Your Tax Obligations
Let’s face it: taxes can be confusing, especially for new business owners. But misunderstanding your tax obligations can lead to costly mistakes. You’ll need to:
• Apply for an Employer Identification Number (EIN) from the IRS.
• Register for state and local taxes, including sales tax (if applicable).
• Understand the difference between income tax, payroll tax, and self-employment tax.
Setting up your tax structure correctly from the start can prevent a lot of stress when tax season rolls around. And if this feels overwhelming, that’s what we’re here for. Let us handle your tax setup so you can focus on running your business.
7. Get Insurance for Your Business
Even if you’ve done everything right, accidents happen. That’s why business insurance is non-negotiable. Depending on your business, you may need:
• General liability insurance
• Property insurance
• Workers’ compensation insurance
Insurance helps protect you from unexpected lawsuits or disasters, ensuring your business doesn’t go under because of a single incident.
What Happens If You Don’t Handle These Legal Steps?
We get it—legal matters aren’t the most exciting part of starting a business. But skipping these steps can lead to serious consequences. Without proper legal foundations, your business could face fines, lawsuits, or worse—shut down entirely.
Imagine pouring all your energy into building your brand, only to lose it because you didn’t take care of one crucial legal detail. You deserve better than that.
Let Us Help You Get Started
Starting a business is a big step, but you don’t have to go through the legal maze alone. At Beinhaker Law, we are here to help you every step of the way—from choosing the right business structure to drafting contracts and securing your intellectual property.
Need assistance? Contact us today for a free consultation, and let’s make sure your business starts on a solid legal foundation. Don’t leave your business’s future to chance—hire our firm to protect what you’ve worked so hard to build.
Conclusion
Starting a business is exciting, but don’t let legal missteps derail your dream. With the right legal foundation, you can confidently move forward knowing your business is protected. Follow this checklist, and if you need expert legal help, we’re just a phone call away.
Mitchell C. Beinhaker, Esq. is a business lawyer and estates attorney who runs a solo legal & consulting practice representing business owners, entrepreneurs, executives, and professionals. Through his 30+ years of experience, Mitchell has handled business development, marketing, firm management, along with business transactional work for clients of the firm. He has extensive experience with corporate governance, commercial transactions, real estate, and risk analysis. Using his years of practical experience, he drafts contracts, negotiates purchases, and can manage outside counsel for any corporate situation. For business owners and executives, he creates and implements estate plans, along with succession plans to help companies continue for future generations.
Mitchell is the co-author of 10 Ways to Get Sued by Anyone & Everyone: the small business owners guide to staying out of court, available in paperback and kindle from Amazon.