How to Ensure Your Business is Legally Sound
“The way to get started is to quit talking and begin doing.” Walt Disney
Welcome back to the DE Blog! Today we’re covering Part 2 of our Entrepreneurship Week Blog Series: Getting Started. Today, millennials are starting businesses at twice the rate Baby Boomers did at the same age, earning the title “Millennialpreneurs.” Additionally, Millennials are the most educated generation to date. As Millennials chart their own course, rather than falling in line with the traditional 9 to 5 model, more and more are deciding to strike out on new paths. Millennials aren’t the only group embarking on the entrepreneurial journey, as the number of entrepreneurs is up across all demographics. However, starting a business just because everyone else is doing it, is NOT a good idea. If you decide to become an entrepreneur, the question remains, “Where do you start?” Since our team wants your start-up to be successful, we came up with 4 helpful tips for getting your business off the ground, running and law-abiding.
Choose a Name. Once you decide on a name you must make sure you can legally use the name. If you can use it, you must then legally protect it. Even if the name of your business has part of your name, product, or locale, you should still check to ensure that it’s not already being used.
Additionally, for branding purposes, you don’t want confusion in the market between your company and another because it may hurt your business and if hurts a preexisting business, it could lead to a costly lawsuit. To help prevent this, visit the Secretary of State’s website in the state in which you plan to start your business and search the registered business names to ensure there is no overlap. Also, visit the U.S. Patent and Trademark Office (USPTO) website to ensure that there are no name, logo or trademark conflicts.
Activate Business Formation. The next step is to create your business entity and register that entity with the proper state agency (typically the Secretary of State) in the state where your business will be located. Each state has separate laws, but a simple Google search will assist you in figuring out your state’s business formation laws. You also need to ensure that you select the most advantageous type of business entity, one that will provide you with the best and most comprehensive legal protection. The filing procedure typically requires:
- Paying a filing fee;
- Submitting articles of incorporation/organization; and
- Identifying a registered agent who is designated to receive formal correspondence from the state, federal government and other legal notices.
Protect the Brand. Once you have selected a name (and a logo if you like), you need to protect it from thieves, intellectual property (“IP”) trolls and pirates (the last one isn’t a thing but the first 2 certainly are). IP refers to creations such as inventions, designs, written, artistic or musical works, and other similar items. When protecting your brand, you want to register with the state in which your business will be located and register your name and logo with the USPTO. Yes, it can be a bit costly up front but, in the end, the protection is worth it. By registering your trademark, you can prevent people from using your name, logo and other intellectual property, without your permission; sue people and win money damages if they do; and strengthen your brand. The most important aspect of establishing a brand identity is protecting it so you can market and manage it. While it may be more money expended up front, trust us, it is money well spent.
Contact Uncle Sam. When you start a business, you will need to obtain an Employee Identification Number (EIN), which can be obtained by visiting the IRS website. Your company’s EIN, much like an individual’s social security number, is used by the IRS and federal government to identify your business. Also, you’ll need this number to open a business account with your bank.
On the To-Do List. These 4 steps provide only a snapshot of some of the items new entrepreneurs need to address at the beginning of their entrepreneurial journey. However, here is a list of other legal items entrepreneurs must keep on their radar as they continue their new business journey:
- Obtaining business licenses and permits (if required)
- Creating a business bank account
- Registering to do business in other states where you want the company to operate
- Registering as a minority owned business (women/people of color, if applicable)
- Creating a business plan
- Meeting and complying with all state and federal filing deadlines (annual tax filings, personal property filings, business filings, etc.)
- Obtaining legal documents required to protect the company (non-disclosure agreements; employee contracts; contracts with web designers and other service providers; agreements with investors; confidentiality agreements, etc.)
- Creating an employee handbook
While you don’t absolutely need an attorney to tackle these projects, we highly recommend hiring and consulting one to help ensure that everything is done properly, timely and with as few headaches as possible. At Diplomatic Enterprises, one of our specialties is working with small businesses and entrepreneurs to form and brand their businesses. We have a team of legal and branding experts who’d love to help you turn your passion into your profession. So, if you’re an entrepreneur and need a team to handle the heavy lifting, we’re always here to help. Come back tomorrow for Part 3 of our Entrepreneurship Week Series: “What Have I Done?”