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5 Legal Requirements for Startups to Know About

When you’re considering starting a business, you’ll already know there’s a lot of work involved. A lot of this revolves around the legalities of the process, which can feel overwhelming. There are plenty of legal requirements for startups to be aware of, after all.

It’s easy to see why this can get the best of so many budding entrepreneurs. You could feel this way already, and you might be feeling more and more stressed over it.

Knowing about some of the more notable of these is always recommended. That way, you can actually make a start on them and make sure they’re sorted. Since there can be massive implications if they’re not sorted, you’ve no reason not to put the work into them.

Five of these can be essential, and they’re more than worth diving into.

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Photo by Mango Matter on Unsplash

Legal Requirements for Startups: 5 Top Picks

1. Getting Insurance

Every company needs insurance, and there’s a legal minimum you’ll have to go for. It’s an area you’ll have to invest in from the start, but that doesn’t always mean going for the legal minimum. It might be worth investing in something a bit more comprehensive from the start.

You’ll be much better protected in case anything goes wrong later on. While you wouldn’t want to be in a position where you need to use it, it’s more than worth it if you do. It could end up saving more than a few financial headaches in the future.

2. Trademarking Slogans & Logos

Every business needs a logo, and a slogan can always be a great addition to your marketing. You could already know to get them, but you shouldn’t overlook the legal side of them. Trademarking your slogans and logos is always recommended. It lets you make sure nobody else can use them.

If they do, you’ll have a legal path to take to rectify the situation. When you’re filing the trademark, you’ll even find out if something similar is already trademarked. This gives you the time to find something else to use, which helps you avoid being in an unfortunate legal situation later on.

3. Obtaining ID Numbers

You’ll already know you’ll need to register your business to start operating it. A lot of this revolves around getting specific identification numbers. State and federal tax IDs are some of the more obvious of these, but there’s more to it than that. You’ll also need an employer identification number, for example.

That means knowing when to apply for an EIN and other IDs when you need to. Thankfully, this doesn’t need to be nearly as complicated as most people assume. In most cases, it’s just a matter of filling out the right paperwork, and you should be good to go.

4. Getting Permits & Licenses

You’ll need a permit to operate your business, and you could need several licenses, too. While this depends on the industry you’re entering, it’s still worth looking into exactly what you need. Thankfully, there are ways to figure this out relatively easily, so you shouldn’t have a problem getting started with them.

Some of these will be awarded by your state, while others will be federal permits and licenses. Take the time to find out exactly which ones you need and make sure you actually get them. It’ll be time-consuming, but it’s a step you need to take.

5. Classifying Employees Properly

At some point, you’ll need to hire employees for your startup. There are multiple legalities involved in this, like having a contract in place and taking care of employee-related taxes. Then there’s how you’ll classify the people who work for you. You can put them into one of several categories.

The four main categories are: employees, volunteers, interns, and contractors. Make sure the category you pick matches up with what they actually are. There are legal differences between each of these categories, and you’ll face consequences if you don’t classify them the right way.

Legal Requirements for Startups: Wrapping Up

There are countless legal requirements for startups to be aware of and sort out. These can have massive implications for your business, especially when they’re not properly looked after. You could end up facing massive fines and the closure of your business.

Nobody wants that to happen, and it’s worth avoiding at all costs. This can feel overwhelming, though. By focusing on a few particular areas, though, you shouldn’t have much to worry about. Get them sorted from the start, and you’ll have much less to worry about.

How to Get Money for Your Startup

Starting a business is not easy. It takes a lot of hard work, dedication, and, most importantly, money. Many people think that just because they have a great idea, investors will be lining up to give them money. Unfortunately, that’s not always the case. To get cash for your startup, you need to know where to look and what to do.

Look for Government Grants

The first place you should look for funding is the government. There are many different types of government grants available to small businesses and entrepreneurs. Do some research to see if you qualify for any of these programs. Go to the Small Business Administration website to learn more about government grant programs.

Find Private Investors

The next step is to start looking for private investors. This can be done in several ways, but the most common way is through pitching competitions. There are many pitch competitions held every year, so there’s definitely one that’s right for your business. First, research and find a few that you think would be a good fit. Then, start practicing your pitch!

Attend Startup Events

Another way to attract private investors is by attending startup events. These events are usually held in major cities and are a great way to network with other entrepreneurs and investors. Attend as many of these events as possible, and make sure you have your business cards ready!

Crowdfunding

Crowdfunding is a great way to raise money for your startup without giving up any equity. There are many different crowdfunding platforms available, so do some research to see which one would be the best fit for your business. Next, create a great pitch and video and promote your campaign!

Equity Release

Another option for funding your startup is through equity release. This is when you sell a portion of your company to an investor in exchange for money. This can be a great way to get the funding you need without giving up too much control of your company. Make sure you have a lawyer look over any equity release agreements before signing anything. Another type of Equity Release is through your home. You can do this by taking out a second mortgage on your home or by refinancing your current mortgage. This can be a great way to get the money you need without giving up any equity in your company. Be sure to shop around for the best interest rates before going this route.

Loans

One final option for funding your startup is through loans. There are many different types of loans available to small businesses, so do some research to see what would be the best fit for your company. Keep in mind that you will need to have good credit to qualify for a loan. SBA loans are an excellent option for small businesses because they offer low-interest rates and long terms.

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Photo by Karolina Grabowska: https://www.pexels.com/photo/person-holding-paper-bills-while-using-a-calculator-5900233/

Now that you know some of the different ways to get money for your startup, it’s time to start putting together a plan. Figure out which funding option is right for your business and start working on making your dream a reality!