Start a Business On Solid Legal Foundations

Note: Links to our free templates are at the bottom of this long guide.
Also note: This is not legal advice

Introduction

Starting a new business is an endeavour that can be both exciting and rewarding, but it’s also important to ensure that everything is set up on sound legal foundations. From establishing the correct legal entity for your venture and obtaining the necessary licenses and permits, to protecting your intellectual property rights and understanding your responsibilities under employment law and taxation codes - there’s a lot to consider.

Here at Genie AI, we want to provide an insight into why starting a business matters so much, and why getting it right from the start is absolutely essential. To this end, here are our top five reasons why you should take great care when setting up your business:

Firstly, without determining which type of legal entity your company will use from the outset you could find yourself subject to different levels of tax as well as making yourself liable for any debts incurred by the company. It’ll also affect how courts perceive your organisation in terms of its legitimacy.

Secondly, depending on the kind of business you’re running you may have specific requirements in terms of licences or permissions before you can begin trading. Be sure to familiarise yourself with these before beginning operations so that there’s no confusion further down the line.

Thirdly, if you’ve created any logos or content for marketing materials then make sure that these are properly protected by registering trademarks or copyrights if applicable - plus don’t forget any potential contracts related to intellectual property ownership too!

Fourthly, all employers need to understand their obligations where employment law is concerned - be sure not only that you know what these involve but also make certain that they are adhered-to at all times by everyone working in your company.

Finally (but certainly not least!), familiarising yourself with relevant tax legislation will help avoid costly mistakes further down the road - again this includes filing documents correctly as well as paying taxes accurately according to regulations in force within whichever country/countries you are trading in.

These tips just scratch the surface when it comes to understanding what’s required when starting a new business legally - however making sure everything is done properly from day one will protect both yourself as well as those who interact with your venture going forward. That said? It isn’t necessary for anyone looking into setting up their own enterprise today (or indeed even those already established) having access to Genie AI account - instead we merely wish to provide our free community template library so that readers may draft & customise high-quality documentation without spending money on lawyers! Read on below for our step-by-step guidance & information on how you can access our template library today!

Definitions

Limited Liability: A legal structure that shields a business owner from personal responsibility for business debts and liabilities.
Permits and Licenses: Official documents issued by a government agency authorizing a specific activity.
Business Plan: A written document that outlines a business’s goals and objectives, as well as strategies for achieving them.
Risks: Potential harms or losses that a business may face.
Employer Identification Number (EIN): A unique number assigned by the IRS to identify a business for tax purposes.
Legal Documents: Documents, such as contracts, which are used to create legally binding agreements.
Taxes: Financial payments made to a government agency in order to support public services.
Health and Safety: Regulations meant to ensure the physical and mental well-being of employees, customers, and the public.
Environmental Regulations: Rules and laws set by a governing body to protect the environment.
Intellectual Property Rights: Rights related to the development and ownership of creative works, inventions, and ideas.
Suppliers: Companies or individuals who provide goods or services to a business.
Customers: Individuals or businesses who purchase goods or services from a business.
Employment Laws: Laws that govern the relationship between employers and employees.
Product Liability Laws: Laws that govern the liabilities and responsibilities of businesses related to product safety and the protection of consumers.

Contents

1. Choosing the legal structure of the business (e.g. sole trader, limited liability company, partnership, etc.)
2. Securing the necessary permits and licenses for the business
3. Obtaining a business license
4. Registering for any industry-specific permits
5. Applying for any other local or state licenses
6. Drafting a business plan and assessing the risks associated with the business
7. Registering the business with the relevant government bodies
8. Registering the business with the local/state government
9. Obtaining an Employer Identification Number (EIN)
10. Setting up a bank account and arranging the necessary financing
11. Choosing a bank and opening an account
12. Applying for a business loan or seeking other financing
13. Drafting the necessary legal documents such as employment contracts, terms & conditions, and privacy policies
14. Complying with relevant tax, health and safety, and environmental regulations
15. Registering for taxes
16. Meeting any health and safety requirements
17. Ensuring compliance with environmental regulations
18. Protecting intellectual property rights
19. Registering trademarks and copyrights
20. Obtaining patents
21. Setting up contracts with suppliers, customers, and other business partners
22. Researching potential suppliers
23. Negotiating terms with suppliers
24. Finding customers and negotiating contracts
25. Understanding the legal implications of hiring staff, selling products, and other activities
26. Researching relevant employment laws
27. Understanding product liability laws
28. Understanding any other applicable regulations

Get started

Choosing the legal structure of the business (e.g. sole trader, limited liability company, partnership, etc.)

• Research the different types of legal structures available for businesses in your area
• Consider the pros and cons of each type of legal structure (e.g. liability, taxes, cost, ease of setup)
• Consult a lawyer or legal advisor to ensure you are making the best decision for your business
• Make sure to register the business with the appropriate government agency
• Once you have chosen and registered the legal structure of your business, you can move on to securing the necessary permits and licenses for the business.

Securing the necessary permits and licenses for the business

• Research the permits and licenses required for your business type and location
• Apply for the necessary permits and licenses from the relevant government agencies
• Make sure you have all the documents required for the application process (e.g. business plan, articles of incorporation, etc.)
• Pay all required fees
• Once you have received the permits and licenses, keep them in a secure location
• You can check this step off your list when you have the necessary permits and licenses in your possession.

Obtaining a business license

• Research the requirements for obtaining a business license in your state or locality.
• Determine if you need any special licenses or permits.
• Submit the required application to your state or local government.
• Pay the applicable licensing fees.
• Wait for the government to approve the license.

You can check off this step when you have received approval from the government for your business license.

Registering for any industry-specific permits

• Research the industry your business will be in and find out if there are any specific permits or registrations that you need
• Check with the local government authority, such as the city or county, to find out what your specific requirements are for the industry
• Submit the necessary paperwork and pay any fees associated with the permits
• Once approved, you will receive the permit or registration and can proceed with the next step
• You will know that you have completed this step when you receive the necessary permit or registration.

Applying for any other local or state licenses

• Research the licenses and permits needed for your particular business, as requirements vary by state and municipality
• Determine if any professional licenses are required, such as for lawyers, doctors, electricians, etc.
• Go to the relevant government website and submit the necessary paperwork and fees to obtain the necessary licenses
• Track your progress and keep copies of all documents
• Once you’ve received all the necessary licenses and permits, you can check off this step and move on to the next one.

Drafting a business plan and assessing the risks associated with the business

• Research the business you are about to start and identify potential risks
• Develop a business plan that outlines your goals, strategies, and financial projections
• Consider any potential legal risks associated with the business, such as copyright and trademark issues
• Consult with a lawyer to learn more about the legal risks associated with the business
• When finished, you can move on to registering the business with the relevant government bodies.

Registering the business with the relevant government bodies

• Visit the website of your state’s Secretary of State or other relevant government body to learn about the process and forms needed to register your business
• Gather the appropriate documents needed for registration, such as a copy of your business plan, proof of your business’s address, and any other documents required by the state
• Fill out the registration forms and submit them along with the necessary documents
• Pay the required fees
• Wait for the registration process to be completed and receive the official documents confirming your business’s registration
• You will know you can check this off your list when you receive the official documents confirming your business’s registration.

Registering the business with the local/state government

• Check the requirements for registering a business in your state by visiting your Secretary of State website
• Research the legal structure that best fits your business’s needs and submit any necessary documents
• File the appropriate business formation documents
• Pay any applicable fees
• Once you’ve registered your business, you should receive confirmation within a few days
• Check your state’s website to make sure that your business is listed and that the information is accurate
• You can also check with your local county or city government to make sure that any additional registration is completed
• Once all registration is complete, you can check this step off your list and move on to obtaining an Employer Identification Number (EIN).

Obtaining an Employer Identification Number (EIN)

• Visit the IRS website or call 1-800-829-4933 to obtain an EIN
• Provide information such as your name, address, and other business information
• Submit the application and be prepared to provide your Social Security Number
• You will receive your EIN immediately, either by email or on the call
• Make sure to save the EIN for your records
• You can check this off your list when you have received the EIN and saved it for your records.

Setting up a bank account and arranging the necessary financing

• Make sure you have a good understanding of the type of financial institution that best suits your needs
• Research the various bank options available in your area and review the terms and conditions of each
• Consider the services offered, such as online banking, loan products, or business credit cards
• Gather the necessary documents to open a business bank account, such as a federal tax ID number, your business’s formation documents, and proof of address
• Make an appointment with the bank to open an account and arrange any financing you may need
• Once the bank account and financing are in place, you can move on to the next step.

Choosing a bank and opening an account

• Research different banks and their offerings to decide which bank is best for your business needs
• Consider the location of the bank, its fees and services, and its customer service
• Gather the necessary paperwork, such as your driver’s license and social security number
• Select a business account type and open the account
• Set up necessary services, such as online banking, credit or debit card processing, and payroll services
• Get familiar with the bank’s policies, such as overdraft fees and minimum balance requirements

You’ll know when you can check this off your list and move on to the next step when you have successfully opened the business bank account and set up the necessary services.

Applying for a business loan or seeking other financing

• Research potential lenders and consider the terms they offer
• Gather all the necessary documents to apply for a loan: business plan, financial statements, credit history, etc.
• Submit your loan application
• Follow up to ensure it’s being processed
• If approved, review the loan documents to make sure it’s the right fit for your business

Once you’ve submitted your loan application and followed up to make sure it’s being processed, you can check this step off your list and move on to the next step.

Drafting the necessary legal documents such as employment contracts, terms & conditions, and privacy policies

• Contact a lawyer to help you draft the necessary legal documents
• Understand the legal implications of each document and make sure you are following the necessary laws
• Research the laws and regulations that apply to the documents
• Ask for advice from other business owners who have gone through the process
• Draft the documents and have them reviewed by a lawyer
• When you are satisfied with the documents, have them signed and filed
• Once the documents have been signed and filed, you can check this off your list and move on to the next step.

Complying with relevant tax, health and safety, and environmental regulations

• Research the federal, state, and local laws that apply to your business, as well as any industry-specific requirements.
• Make sure you understand the requirements and are able to comply with them.
• Obtain the necessary licenses, permits, and certifications that your business needs to operate legally.
• Set up the necessary accounts with the relevant agencies, such as the IRS.
• Put in place the necessary processes and procedures to ensure compliance, such as filing the correct forms by the appropriate deadlines.

You will know that you have completed this step when you have the necessary licenses, permits, and certifications in place, and have set up the necessary accounts and processes to ensure compliance with all relevant laws and regulations.

Registering for taxes

• Determine what kind of business you will be operating: Sole proprietorship, partnership, corporation etc.
• Research the different tax requirements for that type of business.
• Register your business with the IRS by filing the appropriate forms.
• Obtain any needed permits or licenses.
• Set up a system to track expenses, income, and taxes.
• Determine how often you need to file taxes and set up a schedule to make sure they are filed on time.
• Speak with a tax professional to ensure you are following the correct tax requirements.

How you’ll know when you can check this off your list and move on to the next step:

• Once you have determined what kind of business you will be operating, researched the different tax requirements for that type of business, registered your business with the IRS by filing the appropriate forms, obtained any needed permits or licenses, set up a system to track expenses, income, and taxes, determined how often you need to file taxes and set up a schedule to make sure they are filed on time, and spoken with a tax professional to ensure you are following the correct tax requirements, you can move on to the next step.

Meeting any health and safety requirements

• Research what health and safety regulations are applicable to your business and the products and services you offer.
• Make sure you understand which licenses, permits, and certifications are necessary for your business.
• Create any safety protocols and policies needed for your business, and train your employees to ensure everyone knows and understands them.
• Look into any liability insurance coverage you may need to protect your business from any potential lawsuits.
• Verify that any products and services you offer comply with all relevant health and safety standards.
• When you are sure that you are in compliance with all applicable health and safety regulations, you can check this step off your list and move on to ensuring compliance with environmental regulations.

Ensuring compliance with environmental regulations

• Research the environmental regulations that apply to your business.
• Make sure you understand the regulations and how to comply with them.
• Implement the necessary environmental protections and procedures.
• Ensure that your staff are aware of the environmental regulations and are following them.
• Monitor the environmental impact of your business and make changes if necessary.

You will know you are compliant with environmental regulations when you have researched the regulations, implemented the necessary protections and procedures, and ensured that your staff are aware of them and following them.

Protecting intellectual property rights

• Identify which parts of your business need to be protected by intellectual property rights
• Research what kind of intellectual property protection may be necessary for your business
• Determine the best way to protect your intellectual property rights, such as filing for trademarks or copyrights
• Consult a lawyer or intellectual property expert to make sure you have the right protections in place
• When all of your intellectual property rights are adequately protected, you can move on to the next step.

Registering trademarks and copyrights

• Search the USPTO database to check the availability of the trademark.
• Prepare a trademark application and submit it to the USPTO.
• Monitor the status of the trademark application.
• If approved, file a Statement of Use and pay the required fees.
• Register your copyright with the U.S. Copyright Office.

You will know that you can check this off your list and move on to the next step when your trademark application is approved and your copyright registration is complete.

Obtaining patents

• Research the U.S. Patent and Trademark Office website to learn about the different types of patents and how to apply for them
• Submit your patent application and pay the associated fees
• Wait for the patent office to review your application and issue a patent
• Once your patent is issued, you can move on to the next step of setting up contracts with suppliers, customers, and other business partners

Setting up contracts with suppliers, customers, and other business partners

• Decide on the type of contracts you need to create
• Draft the contracts with the help of a lawyer, or use online templates
• Negotiate the terms of the contracts with each party
• Have each party sign the contracts
• Ensure that each contract is properly filed and stored
• Check that all the contracts are up to date and relevant

Once all the contracts are finalized, you can check this step off your list and move on to the next step.

Researching potential suppliers

• Make a list of potential suppliers that offer the goods or services you need.
• Start researching the suppliers you have listed, focusing on their products, pricing, delivery times, customer service, and any relevant reviews.
• Make sure to check each supplier’s legal documents, such as their terms and conditions and privacy policies.
• Contact the suppliers and ask any questions you may have.
• When you have a few potential suppliers that match your criteria, compare them side-by-side to make sure you’re selecting the best one for your business.

Once you have selected a supplier and have checked that they meet your legal requirements, you can check this off your list and move on to the next step.

Negotiating terms with suppliers

• Make sure to understand the terms of the agreement before signing any contract with a supplier.
• Negotiate prices, payment terms, delivery timelines, and any other potential issues.
• Make sure to include a clause in the contract that allows you to terminate the agreement at any time with reasonable notice.
• Review the agreement with a lawyer before signing to ensure it’s legally binding.
• Once the agreement is signed, keep the supplier informed of changes in your business such as new products or services.

How you’ll know when you can check this off your list and move on to the next step:

• Once you have negotiated the terms of the agreement and signed the contract with the supplier, you can move on to finding customers and negotiating contracts.

Finding customers and negotiating contracts

• Identify target customer segments and create a customer acquisition plan
• Research competitors and their pricing and service offerings
• Develop a pricing strategy that is competitive, but also profitable
• Use online and print marketing materials, cold-calling, and networking to reach out to potential customers
• Research and use customer relationship management software and other technology that can help you reach and keep customers
• Negotiate contracts with customers, including payment terms, delivery, and service agreements
• Ensure that all customer terms comply with all relevant laws and regulations

When you can check this off your list:

• When you have identified customer segments and created a customer acquisition plan
• When you have researched your competitors, developed a pricing strategy, and created marketing materials to reach out to potential customers
• When you have negotiated contracts with customers and ensured compliance with all relevant laws and regulations

Understanding the legal implications of hiring staff, selling products, and other activities

• Learn about local, state, and federal regulations for hiring employees, selling products, and other business activities.
• Consider consulting with an attorney to ensure that you are following all applicable laws and regulations.
• Understand the tax implications of running a business and learn about filing requirements for federal and state taxes.
• Review the applicable laws for any industry-specific regulations that may apply to your business.
• Determine if you need to register with any government agencies or obtain any permits or licenses.

Once you have reviewed all applicable laws and regulations, you can move on to the next step.

Researching relevant employment laws

• Read up on relevant employment laws and regulations in your state, such as minimum wage, overtime, and leave laws
• Research other federal laws, such as the Fair Labor Standards Act, Family and Medical Leave Act, and Equal Employment Opportunity Commission
• Talk to a local lawyer or legal representative to get a better understanding of the legal implications of hiring staff
• Use online tools, such as the U.S. Small Business Administration, to get additional information on employment laws in your state
• When you have a better understanding of the employment laws in your state and have talked to a legal representative, you can check this off your list and move on to the next step.

Understanding product liability laws

• Research product liability laws in your state or locality
• Understand the scope of product liability and the laws that govern it
• Understand the potential risks and liabilities associated with product liability
• Become familiar with the roles and responsibilities of the seller, manufacturer, and distributor
• Research product liability insurance policies and determine the best option for your business
• Understand the process for filing product liability claims
• When you have a comprehensive understanding of product liability laws and insurance policies, you can move on to the next step.

Understanding any other applicable regulations

• Understand which other regulations might be applicable to your business, such as health and safety regulations and environmental regulations
• Identify the federal and state regulations that apply to your business and research what is required to comply with them
• Make sure you can comply with all applicable regulations and, if necessary, apply for the necessary permits and licenses
• Check with local authorities to make sure you are aware of any other regulations that apply to your business
• When you have completed your research and are confident that you are in compliance with all applicable regulations, you can move on to the next step.

FAQ

John - How do I choose the legal structure for my business?

Choosing the right legal structure for your business is an important decision. Depending on the country you are operating in, your options will vary. Generally speaking, most businesses in the UK and US are either sole traders, limited companies, or limited liability partnerships (LLPs). Each of these structures come with their own advantages and disadvantages when it comes to taxation, liability, and administrative requirements. Therefore, it is important to consider your specific needs and objectives when selecting a legal structure for your business.

Jessica - What are the differences between UK, US, and EU laws?

The laws of each country vary considerably. In the UK, business owners benefit from a range of statutory protections (such as health and safety regulations) which are not always available in other jurisdictions. In the US, businesses must comply with a range of federal laws which may not be applicable elsewhere. The EU also has its own set of laws which must be adhered to by businesses operating within its member countries. It is important to understand the differences between these laws to ensure your business is compliant.

Ryan - Are there any special considerations I need to make when starting a SaaS business?

Starting a Software as a Service (SaaS) business brings a unique set of challenges and considerations. For example, you will likely need to consider copyright laws in order to protect your software from infringement. Additionally, you may need to consider data protection regulations if your software handles personal data of customers or users. Finally, you should ensure that you have appropriate contracts and agreements in place with customers and suppliers in order to protect yourself from liability.

Ashley - Are there any particular industry-specific laws I should be aware of?

Depending on your industry or sector, there may be additional laws or regulations which apply that you need to be aware of. For example, if you are operating in the finance sector then you will need to consider relevant banking regulations. Or if you are manufacturing products then you may need to consider health and safety regulations which apply in that sector. It is important to ensure that you understand all of the relevant industry-specific laws before starting any business activity so that you can remain compliant with them.

Emma - Is there any way I can protect my intellectual property?

Yes. Intellectual property (IP) can be a valuable asset for any business so it is important to ensure that it is adequately protected. The most common way of protecting IP is through registration with relevant authorities such as patents or trademarks offices in order to obtain official recognition for your IP rights. Additionally, you may wish to consider entering into non-disclosure agreements with any third parties who may have access to your IP in order to protect it from misuse or unauthorised disclosure.

Matthew - How do I get finance for my business?

There are a range of options available for financing your business depending on your specific needs and objectives. For example, you could apply for a loan from a bank or other financial institution if you require a large amount of capital upfront. Alternatively, you could look into crowdfunding platforms or grants if you require smaller sums over a period of time. Additionally, there may also be government-funded schemes available which could provide financial support for starting up a business in certain industries or sectors.

Sarah - What taxes will I have to pay as a business owner?

Taxes can vary significantly depending on the country and jurisdiction in which your business operates as well as its legal structure and activities. Generally speaking though, most businesses are subject to income tax on their profits as well as corporation tax on their turnover (if applicable). Additionally, there may also be other taxes such as value added tax (VAT) or payroll taxes which businesses must pay depending on their particular circumstances.

Daniel - What insurance do I need for my business?

Insurance is an important consideration when starting any business as it can help protect against potential liabilities arising from certain activities or events. The types of insurance policies required will depend on the specific risks associated with your particular business model but some common policies include public liability insurance and professional indemnity insurance amongst others. It is important to speak with an insurance broker who specialises in commercial policies so that you can get tailored advice on what type of cover would best suit your particular needs and objectives.

Example dispute

Suing a Business for Unfair Competition

• Determine if the business is engaging in unfair competition, such as false advertising, defaming a competitor, or misappropriating trade secrets.
• Gather evidence to prove the claims of unfair competition.
• File a complaint in the appropriate court alleging violations of civil law and/or relevant regulations.
• Seek an injunction to prevent the business from continuing the unfair competition.
• Seek damages to compensate the plaintiff for any losses incurred because of the unfair competition.
• Negotiate a settlement to resolve the dispute without going to court.
• Have a court or jury decide the case if settlement is not possible.

Templates available (free to use)

Certificate Of Amendment Of Certificate Of Formation Corporation Texas
Certificate Of Amendment Of Certificate Of Formation Limited Liability Company Texas
Certificate Of Amendment Of Certificate Of Formation Limited Partnership Texas
Certificate Of Correction Of Certificate Of Formation Corporation Texas
Certificate Of Correction Of Certificate Of Formation Limited Liability Company Texas
Certificate Of Formation Delaware
Certificate Of Formation For Profit Corporation Texas
Certificate Of Formation Limited Liability Company Texas
Certificate Of Formation Limited Partnership Texas
Certificate Of Formation New Jersey
Certificate Of Formation Professional Corporation Texas
Certificate Of Formation Tennessee
Certificate Of Formation Washington
Restated Certificate Of Formation Corporation Texas
Restated Certificate Of Formation Limited Liability Company Texas

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