7 Tips on Making Your Startup Legal


Having a great business idea may be the spark that will ignite the flame of your future success; however, without proper care and work around it, this fire might soon get extinguished on its own. Even the best of ideas is completely useless without an elaborate business plan and a proper legal infrastructure to back it. Sure, some startups operate for years without one, but this is A) illegal and B) a horrible long-term solution. With this in mind, here are seven simple tips to make your startup completely legal from day one.

#1 Talk to someone in your industry

As soon as you have an idea and an outline of a business plan, it might be worth your while to talk to someone in your (future) industry and ask them for a couple of tips and pointers. While some people may be reluctant to help their competition start out, others will see this as a valuable opportunity to gain allies. To you, this will be an opportunity to learn more about the nature of the industry, as well as an opportunity for early networking.

#2 Come up with an original name

To some, this may seem as but a formality; however, things usually run much, much deeper than what’s on the surface. Your company name is one that will be on all your promotional merchandise and might even serve as your domain name. Needless to say, the wrong choice might significantly harm your digital marketing efforts, seeing as how some of them come out as unintentionally inappropriate. Furthermore, in order to avoid a world of legal trouble later on, you need to ensure that the company name you’re aiming for isn’t already taken.

#3 Come up with a structure

Before you even register your company, you need to figure out its structure. Based on the number of owners of the business, it will most likely fall under one of three categories: sole proprietorship, partnership or limited liability company (LLC). The importance of figuring this out lies in the fact that different structures pay taxes according to different schemes. Think about it, while running a sole proprietorship, all the expenses and profits fall down to you. On the other hand, it is a truly grievous mistake to treat funds of a partnership or an LLC as your own. Therefore, this needs to be one of the first things you figure out.

#4 Get your Federal Tax ID number

While we’re still on the topic of taxes, you need to apply for your Federal Tax ID number as soon as possible. Fortunately, this process really doesn’t take long and you really have to answer just a couple of simple questions. These questions inquire about your full name, social security number, as well as the reason why you’re acquiring the ID number. Once you get the number, it is vital that you keep the document with it. Sure, losing your number is not the end of the world, but it does require a multi-step process of identity verification before you can reclaim it.

#5 Registering your company

Once you have the name and the structure and the business plan, you need to start looking for a way to register a company. Luckily, in the age of the internet, even this can be done online. In fact, this method is recommended for first-time entrepreneurs, seeing as how it helps you avoid messy paperwork while providing you with verified legal documents. While some may consider skipping this step as a cheat or even argue that it robs you of some of the necessary experience for future dealings, there’s really nothing preventing you from repeating this step for your next project, as well.

#6 Protection, protection, protection

One of the major parts of running a business lies in being able to protect what’s yours. So, you need to protect your premises and property by taking out insurance, provide protection for your customers by offering warranties and surety bonds and, most importantly, your intellectual property. The reason why we place intellectual property at the top is due to the fact that the first-mentioned two can be replaced/mended while letting others appropriate your million-dollar idea might be a blow your business never recovers from. According to the nature of intellectual property you want to be protected, you can either trademark, copyright or patent it.

#7 Industry-specific permits and licenses

Finally, while the above-listed tips mostly focused on enterprises in general, depending on the niche you choose, you might be forced to take out a number of industry-specific permits and licenses. For instance, those opening a restaurant or a bar may need to apply for a liquor license, while construction businesses may need a zoning license and a building permit. Overall, there is no one-size-fits-all when it comes to this issue.


While all of this may seem a bit confusing, what’s important to remember is that each of the above-listed items is absolutely vital for making your startup completely legal. In other words, while skipping one of these steps may seem like an easy way out, this is, beyond doubt, a decision that will come back to haunt you later on. Think about it, you don’t want your first company to rest on a shaky foundation, do you?

My name is Alex Williams. I am a journalism graduate and a rookie blogger trying to find my luck. Blogs are the perfect opportunity for presenting yourself to a wider audience, getting the chance to showcase my expertise and receiving recognition. I am a regular contributor at Bizzmark Blog.

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