Starting your own business can be very exciting. Being your own boss and providing people with products they will use is an incredibly attractive prospect. Truly, the opportunity to do so is the purest fulfillment of the American dream.
However, if you want to do this in the modern world, the government must be involved. While laws constrict what a business is able to do, they are also necessary to stop unscrupulous dealings and malpractice. Without the regulations currently put in place, competing in the market would be a nigh insurmountable challenge.
These laws exist as guidelines for entrepreneurs to register businesses, ensure employees are safe, and to pay their share of taxes. Taking care of these will provide a safety net for your organization and employees.
Before making your entrepreneurial journey public, it’s necessary to consider the legal requirements for startups. These laws know no bias and apply to every new business, from fast-food restaurants to private practice medical facilities. Here are the things you need to consider first when legally setting up your organization:
- Business type (LLC, sole proprietorship)
- Legal positions of each partner
- Records of capital and funding
- Asset protection
- Intellectual property protection
Carefully researching some of these business structures will help you in forming an LLC or sole proprietorship. The process may get more complicated if your business is centered around a new invention. You obviously do not want somebody else to have legal claim to a product or concept you’ve come up with. You need to file for a patent quickly because they are generally granted on a first-come, first-served basis. This becomes further complicated when considering who will file for the patent, because that may change depending on the agreement you have with your business partners.
Considerations like these that can feel tedious when starting your own company, but they are essential. In addition, you must keep documented proof of each transaction and agreement — but more on that later.
A company is only as successful as its workforce allows it to be. Within a supply chain, there are a number of hands that guide a product from inception into the hands of a customer. If anyone is unable to do their job properly, the entire operation may crumble.
Because of this, employee wellness is vital. The medical and wellness benefits offered to employees often fall on the backs of their employers. Health insurance, worker’s compensation, and workplace safety measures all must be provided. If an employee is hurt while fulfilling their work duties, the company is likely going to be liable for the medical bills. This also applies to customers at store locations and can extend beyond your premises as well. In healthcare, for instance, physicians can be responsible for the suicide of their outpatients.
This goes to show how seriously the government takes employee and customer safety. Thus, the dangers of the job need to be established with employees and all possible precautions need to be taken to reduce on-site incidents. Worker’s compensation and OSHA inspections can bring liability lawsuits to a business’s front door, so it’s good to get ahead of them. Adequate safety planning for a business site may include:
- Regular equipment maintenance
- Employee emergency training (such as fire drills)
- Clear entryways and walkways
- Accessible doorways and paths
- Protective equipment for dangerous machinery
- On-site first-aid equipment
- Routine walk-throughs
- Thoughtful operations supervision
The importance of financial documentation goes far beyond wellness and liability. Once tax season is upon us, small businesses can be the subject of the IRS’s wrath, should they incorrectly report how much they’ve made. Filing looks different for businesses than it does for individuals, so small businesses need to ensure that they have clean financial documents and have withheld all necessary amounts.
Luckily, however, there are significant tax write-offs that small businesses can take advantage of as well. It may require some digging to find what exactly you can write off, but chances are it’s more than you think. Some common ones are:
- Travel costs
- Equipment costs
- Advertising costs
- Green energy costs
Additionally, a large part of how your taxes are filed will depend on the aforementioned startup legalities. Keep in mind that as your company grows, the way you handle these may change. For instance, once your business starts growing more, it may be wise to change from an LLC to an S Corp for tax flexibility purposes. To properly analyze when these changes should be made, you may want to consider a midyear legal check-up.
Knowing the law and how it affects your new business will be important for your success. If you’re just starting out, hiring new employees, or getting ready for tax season, the best precaution you can take before moving forward is to know the law. If you want to stay out of trouble and continue to thrive, do your research and make sure everything you need is in order.