How to Start a Business: Complete Legal Checklist

Starting a Business: Legal Checklist

1. Choose Your Business Structure

The first decision is your business entity type. Each has different legal and tax implications:

Sole Proprietorship: Simplest form. You and the business are legally the same. Easy to start but you're personally liable for debts.

LLC (Limited Liability Company): Provides liability protection. Profits pass through to your personal tax return. Most popular for small businesses.

Corporation (C-Corp): Separate legal entity. Best for raising investment. Subject to double taxation.

S-Corporation: Corporation that elects pass-through taxation. Limited to 100 shareholders.

Partnership: Two or more owners. General partners have unlimited liability; limited partners do not.

2. Register Your Business Name

Check availability with your state's Secretary of State

File a DBA ("Doing Business As") if using a name different from your legal name

Consider trademark registration for brand protection

3. Get an EIN (Employer Identification Number)

Free from the IRS at irs.gov

Required for hiring employees, opening business bank accounts, and filing taxes

Apply online — you'll receive your EIN immediately

4. Register with State and Local Government

File formation documents (Articles of Organization for LLC, Articles of Incorporation for corps)

Register for state tax accounts (sales tax, income tax withholding)

Obtain required business licenses and permits

5. Comply with Employment Laws

If hiring employees:

Register for workers' compensation insurance

Set up payroll tax withholding (federal, state, local)

Post required workplace notices (OSHA, FMLA, minimum wage)

Verify employment eligibility (I-9 forms)

Comply with anti-discrimination laws

6. Protect Your Business

Get business insurance (general liability, professional liability)

Create an operating agreement (LLC) or bylaws (corporation)

Set up separate business bank accounts

Keep meticulous records

Disclaimer: This guide is for informational purposes only and does not constitute legal advice. Consult a business attorney in your state.