Small Business Legal Checklist

July 2, 2013 | By | Reply More

Starting a business means you need to abide by the government’s rules and regulations. Before doing anything, you need to get hold of a legal checklist that your business may need.

Government requirements are not something that you can ignore; failure to comply with the rules may land your business — and yourself — in hot water. Remember, an ounce of prevention is better than a pound of cure. Know what is important enough to cost you large sums of money if you don’t pay attention to it.

legal checklist

While legal requirements vary in each country, state, and municipality, here is a general checklist of legal matters that U.S. entrepreneurs need to be concerned with when starting a business. The legal requirements will depend on the type of business you are going to operate: a daycare business will operate under a different set of guidelines as a handyman business.

Here is a legal checklist of common regulations and requirements for businesses:

1. Employer’s Identification Number (EIN).

Obtain an employer’s ID number with Form SS-4, if you have employees, are a partnership or are incorporated. Sole proprietorships can also obtain and use a TIN instead of the owner’s social security number on all business forms that ask for a “taxpayer identification number.” If a business is not a corporation this identification or Social Security number will be needed before a bank account can be opened.

2. Obtain a federal license if required by federal law.

Employers must obtain licenses, which are renewable every two years, and also keep a log of hours worked and products made so inspectors can judge whether wage laws are being met.

3. Legal form of your business.

Decide on the legal structure of your business. You can set up as a sole proprietorship, incorporate, form a limited liability company, or file a statement of partnership.

4. If needed, obtain seller’s permit – also known as Certificate of Authority or Resale Certificate.

Get a resale tax certification or state sellers permit if the operation will involve purchasing items for resale. This exempts the business from paying sales tax on some of its purchases.

5. Obtain any trademarks, copyrights, and patents as needed.

You need to think how you will protect your business, including your business name or any proprietary products that you will develop.

Trademarks are words, names, illustrations, or a combination of these used to identify products or services to distinguish them from items of other firms. Check with the Trademark Register of the United States to avoid using trademarks already used. Copyrights, on the other hand, protect artistic creations, literary writings, graphic illustrations, musical scores, computer programs, and published materials such as newsletters. A patent provides a seventeen-year exclusive right to make, use and sell an invention in the United States.

6. Obtain any required state licenses.

Some special licenses are issued to a business that will provide products or services requiring special regulation. Special licenses are issued to professionals, such as doctors, lawyers, barbers and others who have met a certain level of training or education, or who engage in an occupation the government considers risky for some reason.

7. Obtain occupational or health permits if required for your type of business.

Some businesses will require an occupational license or health certificate to operate. Operators of businesses such as hair salons or barbershops in some states require the passing of licensing examination before a license can be given.

Businesses such as daycares will need to pass sanitation and health requirements by their local governments. Food businesses will also need to pass strict health guidelines before getting a license to operate the business.

8. Acquire zoning approval, if necessary.

Zoning ordinances regulate how property can be used. These ordinances are tools of both state and local governments to regulate the safety, structure and appearance of the community. If you are operating a home business, make sure that the zoning rules in your area allow the operation of your kind of business.

9. Obtain a local business license.

Many municipalities or states require a permit to conduct business. The fee is usually based on gross sales, but volume from most part-time ventures falls below the minimum tax level, so, at least initially, it won’t be costly.

10. Business Name Registration.

Register your business name if using a name other than your own or a variation of your name. Check with the county clerk locally, and the secretary of state nationwide to determine if a certain name is legally clear.

Recommended Books on Small Business Legal Checklist:


George Rodriguez

George Rodriguez is a writer for An entrepreneur with experience in running several businesses, he writes on various topics on entrepreneurship and small business.

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Category: Startup Basics

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