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Legal Compliance Checklist for a Start-Up Business
Forming a business can feel overwhelming.
You worry about all the things you know, and you worry about
all the things you don’t know. I write this checklist
to fill in the great unknown. This checklist gives you
a bird’s eye view of legal compliance for your start-up
business.
Let's
start at the beginning - incorporation.
Form a Corporation or LLC. Your
basic choices are a C corporation, S corporation, or an LLC. Get an
attorney to help you choose among the entities, and in which
state to incorporate. Also see my article
Should You
Incorporate Your Business?
Shareholders / Buy-Sell Agreement.
If your business has more than one owner, seriously consider
getting a shareholders / buy-sell agreement to govern your
relationship with your partner. These agreements save
you a lot of money if partner relations go bad. A buy-sell
agreement resolves disputes between the partners, including
exit provisions if the partners can’t work together anymore.
I call this the partners’ economic divorce. For more
info, see my article
Buy-Sell Agreements.
Get a
Federal Employer Identification Number (EIN).
You can call the IRS for your EIN or get it from the IRS’
website.
Bank Accounts.
Once you have your company’s articles of incorporation plus EIN, you can open bank accounts.
Choose a Location.
First decide on a general location, then check local zoning
requirements to be sure you can operate your business there.
Visit your local planning / permits department for this and
other local requirements for your chosen location.
Real
Property Lease.
One of the most important contracts you’ll sign is the lease
for your company’s offices. The lease will bind you
for years to come, and you’ll have to continue paying rent
even if the business doesn’t perform well. This is
another area where you need a lawyer.
Trademarks.
Does anyone else have prior rights to use your business
name? Search the internet to see if anyone is using your
name in your industry and in your geographic scope. Your
geographic scope relates to how far you look for customers.
A local retail store might have a local geographic scope,
but an internet business can have a worldwide scope. If your
internet searches come up clean, consider getting a trademark on your name. If your
searches show problems, talk to a lawyer about what to do
next.
Patents / IP.
If your
business depends on patents or other intellectual
property, talk with an attorney about protecting your IP.
Fictitious Business Name.
If your company uses a
fictitious name (that is, a dba or some name other than the
company’s legal name), you must register the name in your
county.
State
Business Licenses. There are many types of state and local licenses that could
apply to your business. For example, you’ll need health and
sanitation licenses if you have a restaurant. Call the CA Department of Commerce,
Office of Small Business, for information about the state
licenses that might apply to you.
Local
Business License. Get
a license to do business from your city.
Seller’s Permit.
If you sell merchandise, get a seller’s permit from the California State Board of Equalization.
Employer Filings and Withholdings.
If you have employees, file form DE-1 with California EDD.
This starts the never-ending process of employment law
compliance. Hire a payroll company to handle your employee wage withholdings.
Workers Compensation and Other Insurance. Once you have employees, get an insurance broker for workers
compensation insurance. Workers comp is required by law. And now that you have an insurance broker, look into property and liability
insurance to cover risks associated with your operations (note that the landlord in your lease might require this
insurance).
That’s it for this bird’s eye view of the start-up of your business. I hope this checklist has been helpful to you. Call me
if you want to talk more.
Call
me to schedule a legal consultation:
510-796-9144
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