There are many challenges that new business owners need to prepare for. The initial stage of a business can lay the foundation and set it up for success. However, this stage also requires extra effort from the business owners. What are the considerations that you need to keep in mind to ensure the survival and success of your new business? These tips below will help you prepare for common issues when starting a business:
Registering your business entity
If you set up your business as a sole proprietorship, you are not required to formally register your business. However, by doing so you will put your home, assets and personal savings at risk. If your business is sued or if you cannot pay a business debt, your personal assets can be claimed by creditors. Similarly, with a partnership, your personal assets are also at stake. Worse yet, you can be held responsible for not only your actions but also those of your partners. As such, it is often recommended that you form an LLC or a corporation. Talk to a CPA or an attorney who can advise the best business entity for your business.
Choosing a business name
Potential clients and partners will learn about your business first through your business name. Therefore, you need to choose a name that best represents your visions. Aside from the creative aspect, you will also need to take care not to violate any registered trademark. Search for your business name using the search tool offered by the United States Patent and Trademark Office. You can also check the name availability for an LLC or Corporation through your secretary of state or state corporation commission. Check with your state to see if you can reserve a name before registering a business.
Small businesses often require financing at different stages, either as initial capital or additional investments for growth. Obtaining a business loan is a popular option. However, you need to be able to present appropriate documents and information as required by lenders. You can follow the Business Loan Checklist created by the US Small Business Administration. Small businesses can also raise fund through crowdfunding. With this option, you need to understand the difference between equity and non-equity funding, or contributions and reward-based funding.
Getting licenses and permits
Always understand and obtain all the licenses and permits required before starting a business. Such requirements can vary from state to state, and from one industry to another. Your local regulatory agencies can help you determine all the legal requirements before you open for business.
Obtaining insurance coverage
Depending on the nature of your business, the employees you hire, and applicable laws and regulations, you may be required to obtain certain insurance coverage. Even if it is not required, small businesses can better protect themselves with a general business liability insurance. Even a single lawsuit can sometimes shut down a young business. As the owner, you may have to deal with severe consequences, legally and financially. Therefore, it’s best to contact a qualified insurance firm that has experience working with your line of business.
Protecting your intellectual property rights
It may seem intimidating but you should always take proper steps to protect your intellectual property. There are different types of intellectual property. To protect artistic works, such as written text, paintings, designs, and photographs, you need to look into copyright law. Registered trademarks are to protect the name, words and phrases, and designs that can be used to identify your business or product. For innovations or inventions, you need to file a patent to prevent unauthorized reproduction.
Personal finance after starting a business
Many business owners prioritize business matters but overlook their personal affairs. In the transition from an employee to a business owner, you can lose certain benefits, including a health insurance and retirement plan. Look for a suitable health insurance policy so you don’t lose your coverage. As a business owner, you can qualify for a self-employed retirement plan. If you don’t have any full-time employee aside from you and your spouse, a Solo 401k offers high contribution limits and great flexibility.
Starting a business can be exciting but at the same time, new startup owners can get overwhelmed with so many to-dos and priorities. For legal consultation, contact a LegalShield representative to help you determine the right steps to take.