According to the SBA, as of 2018, there are 30.2 million small businesses representing 99.9% of all businesses in the United States. Whether you are an office-based business or home-based business, there are many local, state, and federal regulations to comply with. Do not avoid these regulatory details. While it may not seem much of an issue in the beginning, as your company grows it can become much more of an obstacle. Taking the time to research the applicable regulations is just as important as knowing your target market. You should carefully investigate all the laws and regulations affecting your industry. Consulting with a legal attorney may also be useful. Being out of compliance can leave you unprotected legally, lead to expensive penalties and jeopardize your business.
Register your business name with the state and county or city where your company is located. Registering your business has two main advantages: increased credibility and protection from personal liability if you are sued. For many small businesses, registering as an LLC is a great option. Compared to other business entities, LLC’s are easier to set up and have tax benefits. In the state of Utah, you can register an LLC for as little as $70. Registration is required so that the state has a comprehensive list of all businesses and corporations. This list is available for public reference.
Business Licenses and Permits
Most businesses are also required to obtain a business license from the federal or state agency where they are located. It is best to contact your city or county office to know the exact standards that you are required to obtain licensing as a business. The requirements and fees vary based on your business activities, location, and government regulations. For further information, visit the SBA Launch Your Business website.
Employer Identification Number (EIN)
Most businesses must register with the IRS and acquire an Employer Identification Number (EIN), also known as a Federal Tax ID Number. An EIN is used to identify a business in its federal tax filings. Without an EIN you are unable to hire employees or open a bank account. Obtaining an EIN is free and takes just a few minutes. It allows you to keep your social security number private and can reduce the risk of identity theft. Consult irs.gov/businesses for more information and resources.
Every business owner is legally required to pay taxes. This includes income tax, self-employment taxes and for some businesses, sales tax. It may be useful to hire an accountant or tax advisor to ensure you are compliant with all tax laws. Most small businesses are required by the IRS to follow a pay-as-you-go tax schedule. This means you are required to pay estimated taxes on a quarterly basis. Make sure to check the IRS requirements for your business type to avoid any fees and back taxes.
In most states, any business with employees is legally required to obtain workers compensation insurance. Coverage must begin the first day an employee starts working. This insurance covers medical and legal costs associated with work-related injuries and illnesses. State laws about workers compensation vary, so make sure you check with your state’s rules.
Starting a business can be a daunting task, but if you are meticulous about getting the legal pieces together it can save you from serious headaches and legal disputes in the future. Locate and talk with individuals that work at a small business development centers near you. Use this link.