Complying with Start-Up Business Regulations
No matter what type of business you're starting or where you're located, you'll need to comply with some type of federal, state, and local regulation. If you take the time to understand these regulations before you launch your business, you can avoid later penalties—and headaches.
You'll first need to inform the relevant government departments that you are starting a business and find out if registration or licensing of your business is needed. You will need to consider financial issues, such as employee compensation law, withholding requirements, employer and employee insurance, and business taxes.
If you are building or renovating a physical plant, you may need to obtain building permits and approval from local planning authorities (city and/or county), which may involve lengthy processes. Depending on the nature of your business, you may need to apply for a patent, trademark, or copyright, which will also take time.
If your facility will be used by staff or customers, you will need to comply with health, safety, and fire prevention regulations, and you may need certain types of insurance. Your business will also need to comply with regulations for fair employment, family leave, and other matters. In all of these areas, you may want to consult with an attorney, accountant, state or local office for business development, or relevant trade and business associations.
The type of business you're launching will determine where and how the business must be registered with government authorities.
If you are a sole proprietor or in a partnership, you are considered self-employed and must apply to the Internal Revenue Service for an Employer Identification Number (EIN), although any income from your business will be reported on your individual income tax return.
If your business will be a corporation or limited liability corporation (LLC), you must register with the appropriate state office by filing articles of incorporation. While a LLC may be taxed either as a sole proprietorship, partnership, or corporation, depending on the circumstances, a corporation pays corporate income taxes.
Your state and local governments will also have registration requirements.
The legal name of the business will depend on whether the business is a sole proprietorship, partnership, etc. In some cases, the business may have a DBA ("doing business as") name (for example, the business Mary Mullins Inc. may have a business called Mullins' Marvelous Muffins).
Your business will most likely need to pay some combination of federal, state, and local taxes, which will differ depending on whether it is a sole proprietorship, partnership, or corporation. You may also be subject to regulations regarding employee pay and tax withholding. The relevant government departments should be able to help you understand your obligations, but it may also be worthwhile to consult with an accountant.
If your business is based on an invention or creative works or you adopt trademarks to identify your business, be sure to protect your rights in this intellectual property by obtaining the appropriate patents, copyrights, or trademark protection. .In addition, your business may generate intellectual property that may be of value and require protection. You may find the information you need through the web sites of the U.S. copyright and patent offices, but you may wish to consult with an attorney to ensure that your particular business needs are met.
Your business may be required to participate in a government worker's compensation program or other mandatory insurance program. Other private insurance coverage that you may need includes:
- Insurance to cover bodily and property injury to the public, if you have a walk-in retail business that receives many customers every day.
- Professional liability insurance to cover legal liability for professional errors or omissions (malpractice).
You may wish to review your business plans with a reputable insurance agent to determine what type of insurance protection you need.
It's well worth your while to research each area—business registration and licensing, physical plant requirements, taxes and insurance, employee regulations—before you begin doing business. Advance preparation will save you time and money and will help prevent violations and fines or other problems later. Ignorance of the law will never excuse you from costly penalties.
Gold, Steven K.
Root, Hal and Steve Koenig.
Internal Revenue Service (IRS): www.irs.gov
NOLO Law for All: www.nolo.com
U.S. Copyright Office: www.loc.gov/copyright
U.S. Patent and Trademark Office: www.uspto.gov
U.S. Small Business Administration: www.sba.gov