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Legal Information for Entrepreneurs

Business can be undertaken in various forms. Entrepreneurs learn quickly that there are many legal issues they must face in setting up and running a new business, establishing a nonprofit organization, bringing a product to market, or financing the venture.

Developing a business plan first forces you to think through your business idea, including its financial feasibility. The top priority for any entrepreneur starting a new business should be to develop a solid business plan. New business owners often worry about details such as getting a business license or negotiating a lease before they have figured out whether their new business can be profitable.

Develop a Business Plan
At the time of starting up of business, decide what products or services you are going to offer. Be as specific as possible. Think about your target customer, possible locations for your business, what type of marketing you will need, and how you'll gain an edge on the competition.
Then do some financial projections. Estimate how much you will have to spend on your business and compare that to how much you think your business can bring in over the same time period.

Take Care of the Details
After you complete your business plan and are comfortable that your new venture can be financially successful, you can turn your attention to the more bureaucratic tasks of starting a business.

Choose a legal structure. In the initial stage of the business, you will have to choose a legal structure for your business proprietorship, partnership, limited liability company, or corporation and take any necessary steps to form your entity, including choosing your business name.

Obtain the necessary tax documents and permits. All businesses must obtain a tax registration certificate by registering with their local city or county tax collector's office. You may need other permits, such as:

  • federal and state employer identification numbers
  • a seller's permit, which allows you to collect sales tax and also obligates you to periodically remit those taxes to the state, and
  • a specialized permit or license, such as zoning or environmental or vocational.

Evaluate liability and purchase insurance. Before opening your doors, evaluate your liability exposure and determine your insurance needs.

Establish a bookkeeping system. Set up a reliable and easy-to-use system for tracking your business's money. Establishing good bookkeeping habits from the start will make running your business infinitely easier; don't let receipts pile up.

Consider Consulting Professionals
You should be able to handle these tasks mostly on your own, with the help of business books and online resources as needed. But even the most avid do-it-yourselfers will be well-served by consulting an accountant or other financial or tax professional at least once a year. This will help you keep your books organized, make sure you file your taxes on time, and avoid the fines and penalties that can result from mismanaged finances.

 

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