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New entrepreneurs should be wary of certain legal considerations when starting a small, home-based business. It is important to ensure compliance, or your business can fall before it even establishes completely. Various legal obligations, like tax obligations, financial regulations, and employment laws, should be understood and complied with.
If you are emerging as a new business owner, you should consult with an Olympia, WA business law attorney to ensure you do not make grave legal mistakes. An attorney can take care of the legal responsibilities so that you can focus on growing your business. The sooner you check the complicated obligations off your list, the better.
Important legal considerations before starting a home-based business
- Designate the proper business entity.
The specific type of business entity or structure you choose determines your liability, your taxes, and your fundraising ability. Examples of business structures include sole proprietorship, C-corporation, S-corporation, general and limited partnership, and limited liability company. Once you establish a business entity for your organization, you must designate it to the government authority or secretary of state.
- Register your business name.
Choosing a name for your business is one of the most important parts. Pick a name of your choice and ensure it has not already been claimed. You can then register your business in the following four ways:
- An Entity Name
- A Domain Name
- A Trademark
- A DBA
- Get an Employer Identification Number (EIN) from the IRS.
Any business with employees or operates as a partnership or cooperation must get an employer identification number from the IRS. With an EIN, you can understand your business tax obligations, open a business bank account, file tax returns, and apply for business licenses.
You can apply for it offline, or the easier way would be through the online portal via the IRS EIN Assistant. However, if you operate as a single-member LLC or sole proprietorship, you are not legally required to get one. Although, it is recommended as it provides several protections.
- Do proper bookkeeping.
Set up a proper bookkeeping system for your business’ finances. Maintaining records starting the first day will help you do taxes down the line and prevent you from running into other legal troubles. Your business may require a specific accounting method. Find out what it is in terms of your industry and locations.
- Trademark your slogans and logos.
If you have developed unique and catchy slogans and logos for your business, the last thing you want is for someone to steal them and use them as their own. Without trademarking them, you would not be able to prove that you came up with the idea before them.
