Starting a business is no easy task. There are countless things to consider, from the products or services you offer to the branding and marketing strategy you employ. But before you even get to that point, you need to make sure you’re legally allowed to start a business in the first place.
Numerous laws and regulations govern businesses, from federal levels to those imposed by individual states. Depending on the type of business you want to start, you may need to obtain a license or permit from the government to operate legally.
Identify your legal business structure.
The first step in ensuring your business is compliant with the law is to choose the legal structure under which you will operate.
The most common business structures are partnerships, sole proprietorships, limited liability companies (LLCs), and corporations. Each type of entity has its own legal and tax implications, so it’s essential to choose the right one for your business.
A sole proprietorship may be the most straightforward option when you’re just starting. This type of business is owned and operated by one person, and there’s no distinction between the business and the owner.
If you’re starting a business with one or more partners, you’ll need to choose between a general partnership and a limited liability partnership (LLP). On the other hand, a corporation is a separate legal entity from its owners, meaning it has certain protections and benefits that other structures don’t offer.
Get the necessary licenses and permits.
Once you’ve determined the legal structure of your business, you need to obtain any licenses or permits required to operate legally.
The requirements vary depending on the type of business you’re starting and the state and local laws where you’ll be operating. Typically, companies that deal with the public, such as restaurants and retail stores, need to obtain a business license from the city or county of their location.
If you’re starting a business that will sell products, you may need to obtain a permit from your state’s tax authority. And suppose your company will be engaged in regulated activity, such as financial services or healthcare. In that case, you’ll likely need to obtain a special license or permit to operate legally.
Comply with environmental regulations.
If your business impacts the environment, you need to comply with all applicable environmental regulations.
For example, businesses that generate hazardous waste or discharge pollutants into the air or water may need to obtain a permit from the Environmental Protection Agency (EPA). If you’re not sure whether your business is subject to any environmental regulations, you can check with the EPA or your state’s environmental agency.
Follow employment laws.
Will you be hiring employees to help run your business? If so, you need to make sure you’re complying with all applicable employment laws.
These laws govern everything from how you can advertise open positions to the minimum wage you must pay your employees. The U.S. Department of Labor’s website is a good resource for businesses seeking to comply with federal employment laws. Here, you can also find links to the websites of state labor agencies, which can provide information on state-specific employment laws.
Comply with consumer protection laws.
Your consumers are entitled to certain protections under the law. For example, if you sell products, you must ensure that they are safe and fit for their intended purpose.
It would also be necessary to clearly and conspicuously disclose any material information about the product, such as its price, before a consumer purchase it. This way, the consumer can make an informed decision about whether to buy the product.
There are many other consumer protection laws that businesses need to be aware of, such as those governing advertising and marketing practices. The Federal Trade Commission’s (FTC) website is an excellent resource for businesses to learn more about their obligations under the law.
Get business insurance.
If you’re not sure whether your business needs any specific insurance, you can check with your state’s insurance department or an insurance broker. Many companies must have certain types of insurance, such as workers’ compensation and liability insurance.
Especially for businesses running regulated items such as firearms, alcohol, and gasoline, it is critical to adhere to these items’ state and local guidelines. Business insurance for firearms shops and other regulated businesses is essential to protect against risks. These firms go through a lot of trouble to get their license and should maintain comprehensive business insurance to limit their risks.
Starting a small business can be overwhelming, but knowing what laws and regulations you need to comply can help. You should know the legal structure of your business, obtain the necessary licenses and permits, and follow any specific laws and regulations that apply to your industry. Additionally, it would help if you got business insurance to protect your company from potential risks. By understanding the legal requirements of starting a small business, you can help ensure that your company is ready for success.