When launching a new business, you have to do more than decide which products or services you will offer, find an office building and hire a few employees. You also have to get your legal ducks in a row and make sure that a number of processes and plans are in place. With this in mind, check out the following tips:
1. Look into Liability Issues
As a new business owner, you naturally want to do everything you can to keep your employees and customers safe. If you plan on producing products that contain a potentially hazardous substance, you may want to consult with a legal professional who specializes in liability-related law.
A classic example involves exposure to asbestos; if this will be an issue in your new company, it is paramount that you consult with an attorney well-versed in this type of law to make sure you are taking all of the proper safety precautions to protect your employees, and avoid any settlements that can destroy your business.
2. Research LLCs and Corporations
No matter what type of business you open, it is in your best interests to choose a type of structure or form for the company. For instance, there can be benefits to forming a limited liability company (LLC) or corporation; this can protect you when it comes to your personal assets, taxation and personal liability.
Most states have government websites devoted to explaining this process and helping you decide which option is best for you; for example, as the Business Services Division for the State of Indiana notes, a sole proprietorship refers to someone who conducts business for profit and who also assumes complete responsibilities for debts and liabilities — in other words, if a customer is injured while visiting your company, you would be potentially liable for paying the person’s medical bills. After doing your research on the government website devoted to your state, you can consult with an accountant or legal team to get any questions answered and make sure any necessary documents are filed.
3. Business Taxes
Business owners must understand their local, state and federal tax requirements. This will allow you to file your taxes on time and accurately, and avoid getting a “love letter” from the IRS asking for an audit.
The aforementioned business structure that you choose will impact the types of taxes to pay and when you should send in your checks; for example, if you have employees, federal tax laws require you to pay employment taxes like Social Security and Medicare taxes, federal income tax withholding and federal unemployment tax. You will also need to pay state workers’ compensation insurance and unemployment insurance taxes.
Since taxes can be a tricky topic for most business owners, consult a local accountant who is knowledgeable in your type of company and be sure you have everything set up correctly.
In addition to purchasing an insurance plan to cover the structure of your business and the equipment and supplies, you may also need to look into workers’ compensation insurance and unemployment insurance. Business liability insurance may also be recommended, depending on your type of company and how you set it up as an LLC or other form. Consult with an insurance agent who is well-versed in business insurance to ensure you are crossing all of your insurance-related T’s and dotting all of the policy I’s.
Making sure that you have all of your legal bases covered may seem overwhelming, but fortunately once they are in place, they don’t usually require ongoing work. By understanding all of the legal points that make up opening a business, doing your own research and then consulting with as many experts as possible, you can rest assured that your new company is following the letter of the law.