Setting up a shop is in by no means a walk in the park. Difficulties come with it, especially when an owner is relatively new in the world of business. Problems involving capital, daily expenses, collecting business funds, and other financial matters are only a few of the things an aspiring business owner will face.
It’s every business minded person’s dream to put up a business. Not having to be employed by anyone else, people feel it’s a blessing being one’s boss. No tight schedules, no more cramming to meet deadlines, no more pressure, and a lot more. These reasons are what makes putting up a new business, so irresistible.
With all the pleasantries aside
Legal Matters, believe it or not, are also one of the hurdles a new business owner has to face. A lot of times, many people fall prey to the temptation of handling it all by themselves. Some may succeed, but others will certainly fail. To prevent this, never disregard the advantages of hiring a lawyer for such cases.
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With that in mind, here are some things related to the legal structure to keep in mind when putting up a new business:
Evaluate and Develop Business Ideas
Every great thing came from an idea. Nurturing that idea becomes an advantage when one finally goes through with it. Determining the right business that suits the owner’s personality is a must. Another important thing regarding ideas is about including plans like cash flow analysis and profit and loss forecasts.
Whenever a business is put up, one must identify the owners of the firm so as to avoid any legal problems in the future. Each of the owners must decide how much they are responsible for any personal liabilities regarding the business. Consider also how much the company would profit from selling its stock. A lawyer can even help decide the method of collecting taxes from ventures.
Do not be intimidated by the paperwork that comes with the business. Lawyers, Accountants, and Brokers are assets that will be of great use. Buy-Sell Agreement or Buyout Agreement and Partnership Agreement are for companies with several owners. This paperwork protects individuals in the company should they decide to sell their “shares or interest” to other qualified entities. Details included in such paperworks are allocation of profits, losses, how much capital an owner is required to give to the company, etc.
Perhaps one of the most underrated parameters a business owner can ignore is the market area. One must know the area in which he/she wants to build a business. Regions with a lot of population could cater large scale retail. In connection with populated areas, targets or specialized products intended to particular customers are also good ideas.
It is also a good idea for entrepreneurs to start a business within their reach, instead of settling in uncharted areas which they lack knowledge. Also, certain ventures can sometimes have restrictions on where it conducts business. For example, Gun shops may not be permitted to operate near schools and daycare centers.
Whenever a “shop is being set up,” choosing a name can also become a chore for some. Carelessly selecting a name for a business can be disastrous as it may violate copyright claims and become the legal basis for filing lawsuits. Doing searches on the internet can help by showing names that are available for naming a business. Of course, these names are with the Secretary of State; one should not be worried about the legality of it.
Federal Tax IDs
For one to make a business a legal and separate entity, obtaining a Federal Tax ID or an EIN (Employer Identification Number) is a must. The Internal Revenue Service or IRS is the one that issues these figures and is comparable to a person’s personal social security number. If a company only has a sole proprietor, then it isn’t necessary to get one. However, it is good practice for people to acquire a Federal Tax ID so as to prevent showing personal social security numbers for business matters.
The legal obligation on Employees begins when one officially hires an employee. In this case, business owners need to consult with lawyers specializing in employment laws to further understand responsibilities and obligations for special procedures. These particular methods include self-employment taxes, unemployment insurance, wage and hour requirements, OSHA regulations, etc.
Business Permits and Licenses
Depending on Business types and location, some people are required by law to acquire more permits before operating. Some of these permits are Zoning permits, Health Department permits, and other professional licenses.
By law, people are not required to file for trademarking. Using a name instantly gives the owner common law rights, even without formal registration. With that said, Trademark laws are downright complicated and require professional help.
Some people put so much effort in brainstorming and thinking of quality ideas for a name that they forget to file for a trademark. In such cases, branding allows the owners to have an advantage in reclaiming any infringements on their names when a situation surfaces. An example of this is when some people use company names for Twitter handles. The owners of these businesses can contact Twitter because of trademarking laws and can quickly move forward with the necessary steps in getting back that name.
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For business owners, decide on whether to use cash or accrual system of accounting. Choosing a fiscal year can also be of great help when the natural cycle of the business does not follow the calendar year.
Hiring bookkeepers or accountants can significantly help. Some people always commit the mistake of thinking that they can handle complicated figures without having background knowledge beforehand. Bookkeepers can set up a recordkeeping system for all payments concerning the business. Another big help is purchasing small business accounting software.
A business or a venture is the frontier in the road to making riches. It comes with great rewards, should the risks be taken. However, starting up a shop isn’t as easy as it sounds. A sense of pride often becomes the reason why business fail even before they open.
Don’t be afraid to ask for help. Legal advice for a new business is always welcome, especially if it comes from experts such as lawyers who specialize in it. Accountants and Bookkeepers can keep track of how well or bad a business is doing.
Essentially, getting help is crucial in starting and maintaining a thriving business. With certain risks and tons of paperworks involved, one cannot handle it alone.