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Legal requirements vary in each country, state, and
municipality.
Here is a general checklist of legal matters that you need to
be concerned about for your small business. 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. Depending on your type of business and your
state and local requirements you may need to:
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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.
Incorporate, form
a limited liability company, or file a statement of partnership
if not a sole proprietorship
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. 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.
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. 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.
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