Small Business Legal Checklist

If you are thinking about starting a small business, it iscontractors" and as such do not require workman's
very important to see an attorney. What follows arecompensation coverage. If you are thinking about going
some basic concerns that you should think about asthat route, talk to an attorney or your insurance agent
far as legal matters, but it is not intended as legalabout exactly what your employees are going to be
advice.doing and how you are supervising them. Often times,
Now that I got that simple disclaimer out of the way, itthe "independent contractor" defense only works until
is important for you to think about legalities when yousomeone get's injured on the job. When that happens,
start any small business. The first and perhaps mostand they file a claim, you can be liable for the entire
important thing you should think about is whether or notcost of the injury plus you could face potential fines for
you should form a legal entity to use to conductnot having insurance.
business. There are few disadvantages to having aGet a good bookkeeper or some good accounting
corporation or LLC to run your business and there aresoftware so that you can keep track of every
many advantages.transaction you do in your business. Income is often a
The main advantage to run a business in a legal entitymore difficult thing to track than expenses. For every
other than your own name is that it shields you fromexpense, there is usually a canceled check or debit
liability. Properly structured, it is very difficult forcard transaction record which can make it fairly easy
creditors and other potential litigants to sue youto properly categorize expenses if you do not keep up
personally. Since there are literally millions of things thatwith your books. Income, however, can really mess
could happen that could result in liability from youryou up if you don't know who it came from and what
business activities, it is smart to have some protectionit was for. Characterizing income becomes very
from the beginning.important when you need to know whether it was for
There are also massive tax benefits for having aa product or service and if there were any discounts
corporation or other legal entity. These tax benefitsinvolved in that transaction. Do not be sloppy with your
are normally significant enough that they far outweighbooks or you will spend a ton of time trying to
the cost of hiring an attorney or even figuring out howreconstruct what should have been done a long time
to form the corporation or LLC yourself.ago.
Another vitally important thing that you must do is getYou should also be certain that your business will not
a separate bank account and credit or debit card forviolate any local laws. If you are running your business
your business. You do not want to mix the funds fromout of your home, there may be local ordinances that
your business with your personal spending money.govern what types of businesses can be run out of a
Using the same account results in massive confusionhome. In most cities that have such ordinances, you
when you try to figure out expenses and profit andcan usually just apply for a permit and everything will
loss, but it also can result in people piercing throughbe ok. If your business is outside of your home, make
your business in a lawsuit and getting to your ownsure that it will comply with any zoning ordinances.
private accounts.These are just some of the most important basic
Virtually every business needs to have some type ofthings for a small business legal checklist. If you have
insurance policy. If you hire any employees at all, youserious plans to build a significant business, it highly
need to get workman's compensation insurance - it'srecommended that you consult with an attorney to
the law. Many contractors try to get around this bycome up with a complete checklist that is unique to
saying that their workers are "independentyour situation.