Legal Requirements for Starting a Business: What You Need To Know
Starting a business involves more than a great idea. In this video, learn the key legal requirements for starting a business across the federal, state, and local levels. Explore how a business structure can affect taxes and liability, why an Employer Identification Number (EIN) is an important part of establishing many businesses, and how state and local tax registrations can vary based on where you operate. You will also learn why business licenses and permits depend on your industry and location and when outside support may be valuable. As your business grows, Paychex Startup Services, Paychex Payroll Services, and Paychex HR solutions can provide additional resources and support. For a deeper look at the complete eight-step process, explore the Legal Requirements for Starting a Business Guide.
Topics:
- 0:00 - Federal, State, and Local Legal Requirements
- 0:27 - Choosing Your Business Entity
- 0:41 - Obtaining Your EIN
- 1:06 - Registering for State and Local Tax Accounts
- 1:18 - Applying for Business Licenses and Permits
- 1:42 - Knowing When To Bring in Professional Help
- 2:04 - How Paychex Helps
- 2:20 - Wrap-Up
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Federal, State, and Local Legal Requirements
0:00 Starting a business takes more than just a great idea. Before you open your doors, here are the legal steps you can't miss. Let's begin with the big picture. Legal requirements for starting a business move through three layers: federal, state, and local. Get the order right and you save weeks of waiting. Get it wrong and you're stalled before you even open.
Choosing your entity
0:27 So, first up, choosing your entity. Are you forming an LLC, a corporation, or staying a sole proprietor? This choice shapes your taxes, your liability, and everything that follows.
Obtaining your EIN
0:41 Next, your federal EIN. Every business needs one along with the right employer tax account. You'll need your entity details, a taxpayer ID, and a description of what your business does. One thing founders often miss, if your structure changes down the road, you may need a brand-new EIN. Worth checking before you file anything else.
Registering for state and local tax accounts
1:06 And once your legal entity is formed, it's time for state and local tax accounts. These vary by state, so confirm exactly what applies to your business before you register.
Applying for licenses and permits
1:18 The part that trips people up, licenses and permits. A general business license is only step one. Restaurants need health department approval. Contractors need state licensing and bonding. And professional services like CPAs need board issued credentials. Your industry decides what's needed for this step.
Knowing when to bring in help
1:42 And you don't have to do this solo. In fact, you shouldn't. Multi-owner LLC's often need an attorney. Multi-state payroll runs smoother with a payroll partner. And growing teams lean on HR support for hiring and compliance. Knowing when to hand something off is often just as important as knowing how to do it yourself.
How Paychex helps
2:04 And this is exactly where Paychex comes in. We offer the startup resources, payroll, HR tools, and compliance support to help you handle it all with confidence so you can put your time back where it matters most: building business.
Wrap up
2:20 That's four of the eight steps to starting your business the right way. Get the other four, plus the full breakdown at the link below. And if you found this helpful, hit subscribe for more startup guidance.
Launch Your Business With Confidence
Get the complete breakdown of legal considerations, from choosing an entity and obtaining an EIN to licensing, insurance, payroll, hiring compliance, and ongoing requirements.
