Starting a Business in the US: Legal Responsibilities
Across America, businesses have felt the impact of the latest economic downturn. The precedence through the crisis has been to cope with an ever-shifting landscape by finding innovative ways to do business. The number of self-employed people dropped by 20% in April 2020, when compared to the previous year. Many small businesses have since started showing signs of recovery, proving that business owners are resilient. Of course, in some industries, the recovery is better than others, and recent studies show that recovery is faster in non-metropolitan than metropolitan areas.
Legal Responsibilities of New Business Owners
New business owners need more than business acumen to ensure the success of their business. Starting a business in a competitive marketplace requires some research to ensure all legal responsibilities are covered.
Protection for Your Personal Assets
When starting a business, the protection of your personal assets is vital. Even though you should never think of failure, it could happen. Additionally, a successful business can easily find itself facing an unjust lawsuit.
The best way to protect your assets is by forming a limited liability company (LLC). This limits the degree to which a business owner is liable for any damages if the business is unsuccessful or sued for a huge amount. Forming an LLC is a straightforward and inexpensive process.
Follow State and Federal Rules
In the US, some professionals require licensing before opening, especially in some areas of specialization. Before starting a business, check to see the federal and state requirements, especially if you are a medical professional, legal adviser, financial advisor, etc.
Additionally, at least three states have newspaper publication requirements for new businesses. This is done with a statement published in a local newspaper, otherwise, the state won’t recognize your business.
Ensuring Your Employees
Smaller businesses with less than five workers are exempt from requiring workers’ compensation insurance in most US states. Check what your state requirements are for workers’ compensation and ensure that you don’t skimp on offering your employees this compensation.
Check for Trademark and Patent Violations
Choosing a name for your new business is important, especially for its marketing. However, if you don’t want to find yourself embroiled in a trademark or copyright violation, make sure to check that the name you have chosen is not already taken. Also, make the effort to formally register your business name with the U.S. Patent and Trademark Office, ensuring no one else can use it.
Paying State and Federal Taxes
Once you have filed for an LLC, you must also apply for an Employer Identification Number. This is the federal identification number for your business, and it is needed to open a bank account, hire employees, and for your business tax reporting.
Protect Your LLC with Insurance
A business does not only need to worry about worker’s compensation claims but must also ensure its assets, much like you ensured yours by forming an LLC.
Every business needs some type of insurance, simply because insurance protects the business financially should it suffer any damages. However, the type of insurance your business requires depends on the type of business you have.
There are several types of insurance policies that can help protect your business against certain liabilities. Some of the most common types of insurance include professional liability insurance, general liability insurance, and a business owner’s policy.
TRUiC is a business information company that helps business owners with the legal obligations for their business. This website shows the importance of insurance for your business, while also explaining the different types of insurance cover.
The main types of business liability insurance are:
Professional Liability Insurance offers errors and omissions coverage for business owners offering professional services. It protects business people in the medical, legal, real estate, financial, and other professional fields from any lawsuits resulting from professional mistakes.
General Liability Insurance protects an LLC from the financial burden from claims that may arise from the personal injury, property damage, or bodily injury of a customer. Often, businesses are required to have general liability insurance by their clients or owners of the property they are renting in.
Business Owner’s Policies have several common liability coverages in one policy. These include general liability, business interruption insurance, and property insurance. One of the main advantages of having a business owner’s policy is that it is easier to manage and is more economical.
As businesses start to recover again, many are considering how to protect themselves from any future business interruptions and other liabilities. As one of the legal responsibilities for your business, the average total cost of insurance is minimal compared to the cost of paying for certain damages. Something certainly worth looking at.