Starting a new business can be an exciting new adventure. However, it is important to know all the documents you’ll need before establishing your business. These documents may or may not apply depending on the type of business (local, regional, international) or size (small or LLC). This guide will describe various legal documents and their relevance to different types of businesses.
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It is important to register your new business and determine the type of business you will be establishing: corporation, limited liability company (LLC), partnership, or sole proprietorship. It may be beneficial to speak with a tax advisor before creating your business to make sure you are choosing the correct business registration for your needs. You must file a business registration with the secretary of state or county registrar.
Tax Identification Number
Small companies will usually register as sole proprietorship or partnerships. These businesses will use their Social Security Number of the owners as the tax identification number for the company. However, larger business entities will be registered as corporations or limited liability companies and must have a federal tax identification number which is obtained by filing an SS-4 Form with the IRS.
Some states may require franchise, sales, and unemployment tax fees under the federal employer identification number. Consult state requirements before filing for a tax identification number and business registration.
You may be required to obtain certain permits (i.e. permits for restaurants and bars) depending on the business you’re interested in launching. You can find information for state requirements online in addition to providing the correct forms. Your business will probably already need to be registered and tax identification number obtained prior to filing for permits.
Certain licenses may be required by federal, state, or municipal governments, depending on the business and jurisdiction. For example, insurance and financial service companies require state and federal licensing. Additionally, these corporations would need to obtain a life insurance agent or “Securities and Exchange Commission” licensing.
Determine which licenses are required for your business by contacting the secretary of state. The U.S. Small Business Administration website usually provides the necessary state licensing information.
These bylaws determine how your business will govern itself. These include the business structure and personal roles. Most states require businesses to keep a written record of these laws even though they do not need to submit to a state office. It is important to maintain and update these bylaws as your business grows to improve the flow of company decisions.
Non-disclosure Agreement (NDA)
Your business may have information that should remain private such as client contact information, finances, and other sensitive information. An NDA creates a confidential agreement between your business, clients, employees, or other contracted workers. This will protect your clients and ensure the professionalism of your business.
This contract allows you set the requirements and expectations of any employee. This agreement is useful to help ensure that future employees will remain with your company for a respectable period and not communicate confidential information.
Always have your attorney look over your contracts before you give them to your employees.
Things to include within your employment agreement are:
- wages and other compensation
- duties and responsibilities
- working hours
- non-solicit and non-compete clauses
- termination and notice period.
A business plan isn’t a legal document but it is required if you ever need financing or you’re planning on selling your business. There is no length requirement, but your business plan must include your opportunities and the guide to how your business will obtain those opportunities. In regards to receiving financing, your business plan should include everything a potential investor would like to know such as:
- Who manages your business
- Marketing and sales strategies
- Operation requirements
- Target market and plan
- Potential risks
- Delivery of products/services
You are legally required to provide documentation on how the information will be used if your business acquires any information from customers, clients, or website visitors.
These are just a few guidelines for preparing to launch your new business. Depending on the state in which you are operating there may be other requirements. It is important to consult with the secretary of state and experienced tax advisers about business licensing and employment contracts.
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