Setting up a business requires you to follow the legal procedures that have been put in place by the government.

It’s important to adhere to these processes to ensure that your business is established smoothly. 

What are the legal requirements that you need to follow?

Let’s take a look…

1. Business Name Registration

The first step in establishing your business is that of naming it. Without a business name, your business won’t have a separate identity. 

So, you need to pick a unique name for it.

But that’s not all…

You need to register this business name with the Secretary of the State’s office. It’s also recommended that you buy a trademark to ensure that the business name isn’t copied.

2. Decide on Your Legal Entity Type

After you’ve registered your business name, you need to select a type of legal entity for it. There are numerous options when it comes to business legal entities and each one has different features. You need to select the one that’s the most appropriate for you.

The most popular legal entities for businesses are:

• Sole Proprietorship
• Partnership
• Corporation
• Limited Liability Company (LLC)
• Trust
• Non-Profit Organization (NGO)

3. Complete Your State Filings

Selecting the legal entity type isn’t enough. You also need to do the state filings to register this legal entity and formally establish your company. 

For each type of legal entity, you need to follow a different process for state filings. 

The different filings that you need to do are:

• Articles of Incorporation for Corporations
• Articles of Organization for LLCs
• Fictitious Business Name or Doing Business As for Sole Proprietorships and Partnerships

4. Get Your Tax ID

After registering your business, you need to get a tax ID number for it which is also called the Employer Identification Number or EIN. 

It’s critical that you get this number because, without it, you won’t be able to do basic things like opening a bank account, hiring employees, or even earning and reporting income.

5. Create Contracts and Agreements

When you’re establishing your business, it’s essential that you also create the most important agreements and contracts.

But why?

If any disagreements or conflicts arise in the future, these contracts and agreements can help you resolve them. 

As a result, you’ll be able to save a lot of money that you would have to otherwise spend on legal fees.

Here are some of the essential contracts and agreements you should consider creating:

• Employment agreement
• Operating agreement 
• Corporate bylaws
• Independent contractor agreement
• Unilateral or multilateral NDAs (Non-disclosure agreements)

6. Set Up a Bank Account for Your Business

Finally, you need to create a separate bank account for your business to separate your personal transactions from those of your business.

To open a bank account, you need to submit your state formation documents, EIN, business license, and other supporting documents.

Want to learn more about the various legal requirements of setting up a business? Check out the infographic below designed by GovDocFiling.