5 Legal Requirements to Fulfill When Starting a Business

Rohan Mathew

Updated on:

Laws were created to protect us. Today, a few legal formalities may feel like extra work, but they will save you and other people from bigger problems in the future. Many people ignore legal requirements because they know they are never going to grow. However, if you are ambitious, know that sky’s the limit and prepare accordingly. 

Once you learn how to scale a business, you will start to see things clearly and the steps you need to take. As someone who has built her own business, now considered a number one seo company, I know that fulfilling legal requirements at the beginning help you build a strong foundation for your business.

Secure Your Trademark

Two businesses can’t operate with the same name and trademark. Every company wants to build a brand that is recognized and respected by its industry and prospects. If someone else starts operating with the same name, it could damage the business of the first company. That’s why every business is legally obliged to register a unique name and trademark before starting its operations. Furthermore, make sure you get all the necessary patents and copyrights for your intellectual property. 

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Register Your Business Structure

Although many small businesses follow sole proprietorship or partnership, they are not efficient for long term. Partnerships usually don’t end up well, and you have to bear all losses of the business as a proprietor. If the business goes bankrupt, the assets of the proprietor will be sold to pay off debts. You can avoid this issue by adopting one of the following business structures. 

Limited Liability Company:

LLC protects your personal assets, and you can file business income as your personal income tax. Nonetheless, you will be required to pay self-employment tax. 


C Corp is considered a separate entity from its owner. It’s the most expensive and complicated of all business structures, but it also provides the best protection of personal liability. When you form a corporation, you are required to file separate income tax from the profits of a corporation.

Learn About Licenses and Permits

Depending on your industry and work, you may have to get a license to start a business. Different countries and states have different requirements and laws when it comes to permits. If you are a manufacturer, you may need a permit to buy and use a specific ingredient in your production. This is to ensure your qualification and public safety. After all, an unregistered self-proclaimed surgeon could wreak havoc. 

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Get a Tax ID Number

Consult a lawyer or do some research to see if a startup needs a tax ID number in your country or state. Tax laws and obligations vary from state to state, but you will have to pay tax for profit earned by your business. You may not be fined or prosecuted for it, but you will have to pay higher taxes if you don’t get all requirements right. 

Insure Your Business and Employees

Although it’s usually not mandatory, it’s wise to get insurance for your business. It protects the business from big losses it might face in the future. Some basic commercial insurances include General Liability, Product Liability, and Commercial Property.