A Step-by-Step Guide to Legal Procedures to Start a New Business

Not sure about the legal requirements to start a business in the United States of America? Many entrepreneurs who are navigating these procedures for the first time get confused. 

It isn’t surprising considering that there is a lot to do. From getting the right business licenses to making agreements, you need to take care of it all.

To help you out, let’s take a look at all of the procedures involved in starting a new business.

Step 1: Choose a Suitable Business Name

The first step is to pick a suitable name for your business. Ideally, your business name should be relevant, unique, brandable, and scalable. 

Also, it is a good idea to check if a domain name and social media handles for the chosen name are available. Regardless of your niche and industry, establishing a strong online presence is a necessity to get more leads and grow your business.

Additionally, it is also a good idea to get a trademark for your business name. That way, nobody can copy it. If you want to trademark your business in china, you may need to get help from a registration service as the process can be complicated.

Step 2: Complete State and Federal Filing 

To get authorization to conduct business in the USA, you need to form a legal entity. For this, there are multiple structures that you can choose from. 

Before you finalize a business structure, invest some time into understanding how each type impacts taxation, ownership, and the operational needs of your business.

Here are some of the popular business structures that you can choose from:

  • Limited Liability Corporation (LLC)
  • Sole Proprietorship
  • Corporation
  • Partnership
  • Non-Profit Organization

Choosing an entity type is a crucial decision for your business. So, make sure you think it through. If you aren’t sure which is the best business structure, get help from a knowledgeable professional.

Once you have chosen an entity type, the next step is to file the necessary documents with the Secretary of State. You need to file the documents at the office of the location where you are planning to run your business.

In addition to this, you also need to acquire your Employer Identification Number (EIN). If you want to hire employees, open a separate bank account for your business or pay taxes, getting an EIN is necessary.

Step 3: Create Contracts and Legal Agreements

Professional disputes can be ugly and expensive. If you want to avoid all the hassle involved, it’s a good idea to create binding agreements and contracts beforehand. Invest some time into making sure that they are thorough and non-ambiguous. 

Ideally, you should make contracts and agreements for your vendors, employees, business partners, stakeholders, and anyone else you are going to conduct business with.

Step 4: Open a New Bank Account For Your Business

Never mix personal finances with professional expenses. Not only is it easier to track your professional expenses this way, but it also makes the process of taxation smoother. 

That’s why you should open a separate business bank account for professional transactions. It is recommended that you start accepting payments from clients only once you have completed this step.

Step 5: Get Special Permits and Licenses

Some types of businesses require special business permits and licenses to conduct business. The laws for the same industries also vary across different states in the USA. 

Make sure you check with your local governing authority if your business needs them. You may face a heavy penalty and issues with taxation if you don’t have the required permits.

Want more details on what kind of documentation you need to start a business in the USA? Check out the infographic below by GovDocFiling.

Starting Your Own Business: A Quick Guide to the Essential Requirements
Image Courtesy: GovDocFiling

Brett Shapiro is a co-owner of GovDocFiling. He had an entrepreneurial spirit since he was young. He started GovDocFiling, a simple resource center that takes care of the mundane, yet critical, formation documentation for any new business entity.