Taking care of the details when starting a business
For entrepreneurs thinking of starting a new business in Utah, you are in good company. Recent studies on current trends reported that the third quarter of 2020 saw highest number of applicants for new business formation ever seen in the United States. Overall, U.S. entrepreneurs filed 4.4 million business formation applications in 2020, which is a 24% increase in new business filings over 2019.
Many of these startups are predictably in online services, whether for purchase or delivery of goods or creating opportunities through an expanded online community. Many Americans who worked for large corporations have seen those at the top, especially in tech-based companies, doing better than ever while the rank-and-file employees get reassigned or are laid off. Taking the leap into business ownership has become more attractive for many.
It is important for entrepreneurs to take care of the details of running a business from the beginning, such as knowing local and state laws, potential liability or tax indemnification issues as well as proper licensing and compliance requirements. Having skilled and knowledgeable legal counsel serving American Fork to help with formation, drawing up of contracts, a business plan and other vital services will put your business on a solid footing from the outset.
Preventing costly mistakes
During startup, the entrepreneur should make sure to not make common legal missteps that could sink their business. To begin with, it might be a good idea to make sure the business’s name has not already been taken before filing the paperwork. Not only will the state not allow this, if both entities are offering similar goods and services, trademark issues could also be triggered.
When choosing a business entity, the entrepreneur should understand the level of liability or risk they are willing to take on. For example, a sole or joint partnership has higher personal liability than a limited liability company or corporation.
Some new business owners will try to incorporate or file an LLC in a different state that has lower tax rates, but this can come with complications. It can not only be an administrative nightmare, but the extra filing fees may eliminate that tax advantage.
Without an awareness of local licenses, permits or other requirements for running the business, the entrepreneur may face costly penalties, suspension or even business closure. State and federal employment laws cover compensation, taxes, worker’s compensation insurance and disability, and without knowledge and compliance of these laws, the new business owner can risk penalties and lawsuits.
Finally, the entrepreneur should be up to date on deadlines for filing annual reports and taxes, renewing licenses an updating business entity changes.