Risk is a scary word indeed. For those seeking to open their small business, risk can often be what holds them back. But risk should not paralyze you from acting. There are proven methods to help lower your risk and increase your chance of success. As with many of life's endeavors good preparation, careful research, sound planning, and foresight will help ensure you get from point A to point Z with minimal risk and lots of reward. Along the road to success there are a few key steps you will need to take.
First, you should sit down and start charting out what kind of business you will run. What is your mission? How will you achieve that mission? What is your target market? All of these questions will help you formulate a plan for your business that will assist you greatly in the business development process. Since this is a legal blog, we will focus on the legal aspects of getting your business up and running. To that end, there are a few basic steps you will need to take.
First, you need to select a business structure. Texas has a range of business structures from LLCs, to non-profits, to corporations. The structure you pick is a decision based on tax considerations and based on the type of business you are setting up. You should not hesitate to speak with an accountant and an attorney to discuss which structure is best for you. Business structures are not one size fits all, what you choose will make a difference. It is possible to change your structure, but it is typically more costly than starting out with the right structure from day one. Once you determine your structure, in most instances, you will need to file your business with the secretary of state. To do this, at a minimum, you will need to know the name of your business, your address, and the address of your registered agent, as well as who will serve as your registered agent.
Second, you will need to research and be aware of the tax responsibilities your business will face. There are taxes at the federal, state, and local level. Many taxing authorities will provide specific guidance on your tax responsibilities if you contact the right office. You do not want to run afoul of the taxing authorities, as this is a sure way to increase your risk of getting into legal trouble!
Third, find out what licenses, permits, registrations, certifications, and authorizations are necessary at the federal, state, and local government levels. This is another complex area that will be driven by the type of business you are starting, whether you are building an establishment, selling alcohol, or providing food. Failing to comply with permitting and other such laws can get you shut down quickly, so you will want to ensure that you cover all of your bases.
Fourth, if you are going to start out with employees you will need to understand the local, state, and federal employer requirements. We have discussed this at length in other posts, but suffice it to say there are a host of requirements. There are tax considerations, compliance issues, workers compensation matters, and internal business policies to consider. Here again good planning will go a long way towards heading off legal trouble down the road.
Finally, you will want to educate yourself on your rights as a business under federal, state, and local law. Can you refuse service to people? If so, for what reasons? Lately the news has been inundated with discussion about the laws related to refusing service to people. In some states it is okay to turn people away for reasons that are not allowed in other states. Whatever your belief system, you need to be aware of what the laws are so that you do not run afoul of them.
There are other legal matters to consider when launching your new business, but these are the big five. Certainly, some of these issues are easier to navigate without help than others. New business owners shouldn’t hesitate to seek the guidance of a tax advisor, accountant, and/or attorney to help verify that all legal requirements are met before opening up for business. While you might save money on the front end by avoiding talking to professionals, you increase your risk that costly mistakes will crop up down the road.