What type of business is considered a small business may vary greatly. Generally, small businesses are privately owned and operated and have less than five hundred employees.
What is considered a small business in the United States varies by state as well as by industry but it is often defined by a relatively low volume of sales. Due to the relative ease of operation of a small business as well as the availability of certain tax deductions, small businesses are gaining popularity.
Other examples of reasons why small businesses are becoming more popular include, but are not limited to:
- The amount of creative flexibility an owner is allowed;
- The amount of control the owner has over their work-life balance;
- The owner’s financial independence; and
- Starting incentives, such as financing options.
A small business is typically structured as a corporation, a partnership, or a sole proprietorship. Another term which is commonly used is a start-up.
A start-up business is a business which has recently started operations. It is typically on a smaller scale until the owner has earned enough revenue to move forward.
A start-up business can remain a small business, or it can grow in size past the criteria for defining a small business. A small business in a manufacturing industry employs less than five hundred employees. For a small business that is not in a manufacturing industry, the criteria is usually less than $7 in annual income.
Do I Need a License or Permit from the State to Run My Business?
Whether an individual needs a business license or a permit from the state to run their business depends on two aspects of their business, including:
- What the business specializes in; and
- What state or states the company plans to primarily conduct business in.
A state may regulate different types of businesses and may require the businesses, the owners, or the employees, to obtain a permit or a license. Obtaining a license or a permit from the states enables a business to market and sell products or to perform services.
It is important for an individual to check with their state to determine if they or their business are required to obtain any of these permits or licenses. If a license is required, it is important that an individual begin the procedure as soon as possible.
If a business does not obtain the proper license or proper permit, it may lead to their business being:
- Considered illegitimate;
- Fined;
- Suspended; or
- Permanently shut down by the state.
What Do I Need to Do if I Want to Sell Shares of Company Stock to Potential Investors?
In addition to federal security laws, an individual should also be aware of the security laws in their state. State security laws will provide additional regulations regarding how and when a business can issue shares of stock to investors.
The structure of a business will also impact which state regulations the business is required to follow. There are numerous different types of business structures a business can choose.
The most common business structures include:
No matter what structure a business chooses, it will most likely be required to file with the appropriate state office. In most cases, the proper state office will be either the Secretary of State or the Department of Corporations.
What Do I Have to Do if I Am Going to Have Employees Working for Me in My Business?
There are several steps a business must take if employees will be working for the business. The business will require an employer identification number similar to with the federal tax authorities.
The business owners must also ensure that a certain percentage of payroll checks are used to pay the various required state and federal taxes. The most common required taxes are income tax and Social Security tax.
These withheld taxes must be paid to the IRS and the state tax authorities. The business is required to tell the IRS, the state, and the employees how much was withheld from each employee’s paycheck and the purposes of the amounts that were withheld.
A business owner also needs to check and see if they are required to register with the office in the state that handles unemployment and workers’ compensation. In most states, it will likely be the State Department of Labor.
In addition, business owners must ensure that their businesses are complying with state and federal health and safety requirements.
Are There Any Other State Regulations I Need to be Aware Of?
Whether or not there are other state regulations which a business needs to be aware of depends upon the nature of the business and what state the business is located in.
There are many states which have specific environmental regulations for certain types of businesses.
What Type of Lawyer Do I Need to Start My Business?
There are several different types of lawyers that may be helpful and beneficial to a start-up business. Examples of the types of attorneys that may be helpful include:
- General business attorneys;
- Contract attorneys; and
- Tax attorneys.
A local attorney will be familiar with what laws apply to what industries in the area as well as the specific licensures an individual will need to obtain in order to start their business. In most cases, a business lawyer will probably be the best fit to assist with a start-up business.
This is because business lawyers are knowledgeable regarding a variety of topics which will likely apply to the start-up small business. They will be able to assist individuals who are looking to start their own businesses or who are facing disputes involving a small business they currently own.
A business lawyer can also assist in the following ways:
- Finding applicable tax breaks for the small business;
- Identifying special financing for that specific business;
- Applying for a tax identification number;
- Providing guidance regarding structuring the business in a way that limits the owner’s liability; and
- Protecting the intellectual property of the business.
A business attorney can also handle cases related to a small business, including:
- Business disputes;
- Issues involving the sale and purchase of securities, including stocks;
- Issues with business property;
- Adhering to business regulations and laws;
- The misuse of protected business information, which includes trademarked and copyrighted materials; and
- International and interstate business issues, which may include the transportation of goods.
Other examples of tasks which are handled by small business attorneys may include:
- Assisting with the negotiation, drafting, and review of business contracts;
- Helping with business startup and incorporating filings;
- Addressing issues which are related to business transfer or termination; and
- Helping the company shift organizational structure.
As can be seen from the lists above, a small business attorney can provide many benefits to a start-up small business. A business owner can have peace of mind knowing their business is beginning in accordance with all legal requirements and that their interests are being protected every step of the way.
Should I Hire an Attorney to Help Me with My Business Regulations?
It is essential to have the assistance of a corporate attorney for any questions or issues you have related to business regulations. When you are trying to start a business, there is enough stress without attempting to figure out all of the state laws that you are required to follow.
Your lawyer can help you with all aspects of a start-up business. Your lawyer can also help you determine which laws apply to your business and what requirements you are required to fulfill.
