A Legal Checklist for Starting a Business

Specific laws and regulations may vary depending on the industry and state. But there are certain fundamental legal procedures that all business owners must accomplish in order to have smooth operations and successful future.

1.         Choose an appropriate legal form for your business entity – sole entrepreneurship, general partnership, limited partnership, limited liability partnership, Limited Liability Company, corporation, S corporation. Find the Pros and Cons of each here.

2.         Choose the state of incorporation. If the state of incorporation is different from the state where the principal office of the company is located, qualify the company to do business in that other state.

3.         Obtain Employer Identification Number (EIN) from IRS.

4.         Enter into a formal written agreement with your co-founders or partners (that can be done before or simultaneously with forming a company).

5.         Ensure that you have all required licenses to run your business. If not, apply for those licenses to appropriate government agencies. 

6.         Establish Intellectual Property ownership, assignment and licensing matters in writing.

7.      Put certain measures in place to protect your company’s confidential information and trade secrets. Make everyone who has access to company’s inner information execute a Non-Disclosure Agreement.

8.         Register your trademark, copyright, or patent with appropriate government agencies. Do not trust your assistants to do it for you.

9.       If your business has a website, publish a proper Terms of Use. Advertisement and puffery may become an enforceable contract. Therefore, it is important to expressly disclaim any and all undesirable liability.

10.      If you need additional help, decide whom to hire – an employee or an independent contractor. Be sure to familiarize yourself with laws and regulations that govern your relationship with either. Execute an Employment or Independent Contractor Agreement in writing with every person who performs services for you. 

11.     If you are going to rent a commercial space or equipment, read leases carefully or have a business attorney review them. You are entering into a long-term relationship with your lessor; take this matter seriously.  

12.       Prepare a standard Service Agreement and/or Sale Agreement to be provided to your clients/customers.

13.       Consider buying certain business insurance policies depending on the nature of your business.

14.       Determine what laws and regulations apply to your industry and establish a regulatory compliance program in advance.

15.      If you are looking to raise funds for your venture, be careful not to violate SEC regulations. Do not pay anyone a commission for finding investors for you unless they are a registers broker-dealer.

16.      Always use your own lawyer and accountant. Do not use lawyers and accountants of the parties you are dealing with.


None of this is difficult to implement at the initial stages of business establishment. But if postponed, the consequences may be costly or even irreversibly damaging in the worst case. Good legal foundation is one of the main components determining future success and profitability of the business.

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