Why is gaining the legal presence of a startup in the world important after setting it up? In this article, I would like to tell you why legality is important for any business setup. Also, we would talk about how to legalise your startup.
Entrepreneurship is a word that is quite common nowadays. It is the name given to an activity performed by intellectuals and passionate people, and that activity is a startup.
A startup is a risky venture between two or more people. Its primary aim is to raise a substantial amount of money to further develop the product. At the first stage, it might not return the expected revenue but as it gains more traffic, it starts generating revenue. It reflects a self- employment type of business. It focuses not only on revenue but, on a larger part, it focuses on diversification of startup from a solo founder.
The best startups generally come from somebody needing to scratch an itch -MICHAEL ARRINGTON
A startup should be legally registered, as it is an engagement of more than two people. There develop chances of legal intervention. By legally registering the startup, the owner and the business itself will get an individual existence. People, sometimes, misconceptualise that the act of legally registering a company is a very difficult job but, by following the correct direction, it can be registered with less effort.
But first, why is registration important? My business has just started, why would legal stuff be necessary? Let’s find out.
Why should we legally register a startup?
One of the most important reasons for incorporating a business is “increasing goodwill “. By having a legal existence, the firm’s credibility in front of vendors and customers increases.
After incorporating the business, a lot of tax benefits are enjoyed by the firm itself. It helps the business to avoid double taxation of profits. It, also, reduces the chances of tax evasion.
Protocol for Growth:
By registering your business as a legal entity, you start building trust in the minds of people. They are going to invest in your business only if they are satisfied with your business’s characteristics. Hence, registration becomes a protocol for growth.
Personal assets protection:
By legally incorporating, the business assets, also, becomes legally acceptable, which protects it against any claims and lawsuits as there is a presence of proof. No other company could think about acquiring your assets through unfair means.
Steps to get your startup legally approved:
Name of your company:
Having a name is the fundamental step that gives you individualism and existence. The name should be such that matches your concept of a startup, as the motive, the vision, work of area, etc. of your startup. It should be brief and illustrative.
Register your fictitious business name:
For acquiring a legal existence, you must register the DBA (Doing Business As), which is the name by which you are doing business to show that it is different from your name.
Incorporate or form an LLC:
Everyone wants to gain revenue in their startups. You should adopt an LLC, it’s a great option for a startup that wants legal existence and protection.
Acquire a federal tax ID number:
To distinguish your startup as a separate legal entity, you need to have a Tax Identification Number or Employee Identification Number to become unique.
File for trademark protection:
To get the legal acceptance, you need to file for trademark protection, to publicize the unique name.
Information about Employee laws:
Full knowledge or information about Employee laws should be there to apply in areas of need. Those areas are self -employment, unemployment, anti-discrimination laws, OSHA regulations.
Obtain Permission for doing business:
For gaining a legal presence, the business should be permitted and must have licenses from the state, local (city and country), or even federal level.
As it is a risky setup, there arises the need for insurance, which is a pool to cover such uncertain risks. It is very important for business, as there is a risk at every step. It serves as compensation at times when no means of finance is available.
I hope that you found some interesting and helpful tips from this article. We all hear often that Startup is Better than 9-5 Jobs.To create a successful business model, your startup should be legal in your region’s laws.
After reading this blog, you might have your answers to why one needs to register one’s business in terms of the law. It is very important to gain a legal presence for our startups. Also, we explained some simple procedures to make your startup legal.