Starting a business is an exciting adventure and one you’ll want to get right from the outset. Without a governing board to guide you, it can be an overwhelming process. The good news is, you don’t have to go it alone.
The Thorwaldsen and Malmstrom legal team includes seasoned business attorneys to guide Detroit Lakes, MN area entrepreneurs. Here are few tips on how to start a new business that will make the process easier. Please call our office if we can be of assistance!
Meeting all of the legal requirements of opening a new business may not seem like all that much fun. But, it is extremely important to your company’s success and will allow you to focus on running your new company.
Starting a business first begins with deciding on a business structure. Thorwaldsen and Malmstrom can help you determine if your new company is better suited as a Sole Proprietorship, Partnership, S Corp, B Corp, Close Corp, Non-Profit, Cooperative or the more common LLC (Limited Liability Corporation) or Corporation. Both LLCs and C Corps have their distinct advantages and disadvantages. You can find additional information on them at Investopedia.
- LLC: In most situations, this setup shields your personal assets from personal liability in the event that you are sued. This includes your home or vehicle. When it comes to taxes, it may be possible to file your personal and business income taxes together. However, this setup may require you to pay self-employment taxes.
- Corporation: Although it is more complex and costly than the LLC, a C Corp gives business owners more personal liability protection. This is because it legally separates the business from the owner. Corporate and personal taxes are filed separately.
Business Name Registration
One of the first steps you likely took when deciding to become a business owner was to choose a name for your company. You’ll need to register that name to ensure that it’s not only already being used, but also so that no one else can claim it from you.
DBAs (Doing Business As) provide no legal protection, but may be required. It all depends on your business structure and where you are doing business. An entity name will safeguard your startup’s name within the state. Furthermore, a trademark will cover your business name across the country. A qualified business lawyer will be able to guide you to the proper registration model and assist you in setting it up.
Employer Identification Number (EIN) and State Tax ID Number
Next, you’ll need to apply for an Employer Identification Number (EIN), also called a federal tax identification number. You’ll also need a MN Tax ID Number. These are akin to social security numbers for businesses, enabling you to report your company’s income taxes. You’ll need an EIN if you operate as a corporation, hire and pay employees, pay federal taxes, use a Keogh Plan, apply for business licensure, open a bank account for your business, and more.
Business Licensing and Permitting
Business licenses and/or permits are often required on a state and/or federal level. This, again, depends on the type of business you operate and where it is located. Licenses confirm that a business, tradesperson or practitioner has been determined to be competent. They may also indicate that your business has passed all safety and efficiency requirements, takes proper environmental precautions, and the like. The qualified business attorneys at Thorwaldsen and Malmstrom will ensure that all of your Detroit Lakes area startup’s licenses and permits are in place.
While your business’s structure protects your personal assets, business insurance will help safeguard your company’s assets as well. Unemployment and workers’ compensation insurance are examples of insurances that are required by law. Other types of business insurance include commercial property insurance, product liability and general liability insurance.
Knowing what is required of your new company and how additional types of insurance will shield your assets are important in making the best choice for your situation. We’d be happy to help you understand business insurance and how it benefits you when you start a business in Minnesota.
Open a New Business Bank Account
Separating your personal and business bank accounts is an important step to take before you begin buying or selling goods or services. This enables you to keep track of your business costs and income. Shop around for a bank that pays a better interest rate on your checking account and savings account, and keeps its fees low or free.
To establish a business bank account, you’ll need your EIN and possibly ownership agreements, along with documentation of your business’s formation. Thorwaldsen and Malmstrom can ensure you have everything you need to take this important step.
Legal Advice for Starting a Business in the Detroit Lakes, MN Area
Starting a new business is a challenge to be sure, but you don’t have to navigate the process alone. The expert business attorneys at Thorwaldsen and Malmstrom would be happy to act as your experienced guide. Please contact us today to learn more about our new business services.