Starting a Business on the Right Foot

The building blocks of your business set the tone for your success. There are a few key considerations — and legal requirements — to address when starting a new company so you avoid trouble early on.

1. Structure Your Business

After deciding what kind of company you want to start, the first legal decision is your business structure. This impacts how you’re taxed and how you keep your accounts. The most popular legal structures include:

• Sole Proprietorship
• Limited Liability Company (LLC)
• Limited Partnership (LP)
• S-Corporation
• C-Corporation

To decide what suits you, consider the liability that may attach to your business and how it could impact you as an owner, as well as how each entity is taxed. A C-Corporation is subject to the infamous double tax, while Sole Proprietorship, LLC, and S-Corporation taxes flow through to your personal taxes.

2. Trademarks

Many people don’t consider that they may be infringing on trademarks when they choose their business or product names — usually from not doing the research. Before settling on any business, product, or service name or slogan, conduct a thorough search. Failing to do so may result in a trademark infringement action or cease-and-desist letters. An infringing business may be forced to change its name, branding, and marketing materials — far harder and costlier later.

3. Licenses and Permits

Owners often start small from home without considering licenses and permits. Most businesses need several before opening; the number depends on the type of establishment. At minimum, businesses typically need a business license, trading license, and sales tax permit. Research and contact local government agencies to learn what applies to you.

4. Health and Safety Laws

The health and safety of your employees and customers are your responsibility while they’re on your property or using your service — and can extend after they leave if they took something away, like equipment or products. Retailers should remember that strict liability for product defects doesn’t end with the manufacturer or supplier; it extends to the retailer who sold the product to the consumer.

5. Insurance

Look into policies including products liability, employer liability, property, workers’ compensation, and general liability insurance. What you need depends on whether you have employees or property, whether you sell products or services, your structure, and more.

6. Zoning

When choosing a location, make sure the area is properly zoned for your type of business. (For example, an independent car dealership in Arizona is limited to a C-3 zoned lot.) Research local zoning before acting — contacting local government is a good start. Don’t assume zoning is proper just because similar businesses operate nearby; the laws may have changed since they started.

7. Confidentiality and Non-Disclosure Agreements

Setting up a business means protecting valuable information. Working with other businesses, prospective partners, and suppliers may expose valuable details — a unique idea, your structure, financials, and more. Everyone exposed to such information should sign a confidentiality and non-disclosure agreement, including partners and employees involved in starting the company.

Frequently Asked Questions

What legal steps do I need to start a business?

Key steps include choosing the right business structure, clearing and protecting your name (trademarks), obtaining required licenses and permits, addressing health/safety and insurance, confirming zoning, and putting confidentiality/NDAs in place.

What business structure should I choose?

It depends on liability and taxes. Sole proprietorships, LLCs, and S-corporations offer pass-through taxation; C-corporations face double taxation but suit raising investment. The right fit depends on your goals.

Do I need to check trademarks before naming my business?

Yes. Choosing a name without a search risks infringing an existing trademark, which can force a costly rebrand. A clearance search before you commit protects you.

This article is general information from Accord & Shield Legal, PLLC and is not legal advice. Reading it does not create an attorney-client relationship. For guidance on your specific situation, please consult a qualified attorney.