Starting your own business is exciting. Thinking about the legal aspects of how to do it, less so. Nonetheless, firming up the nuts and bolts of structuring your new venture, protecting it and coming up with money to launch it are vital.
There are dozens of legal issues to pay attention to, but here are a few of the most crucial ones.
Choose a Structure
First, you must determine the best legal structure for your startup – that is, how it will be organized as an entity in the eyes of the law and the government. The three basic formats (for private for-profit entities) are:
Which you choose depends on three things: the nature of your business, your business's funding needs and the risk of liability involved in your products, services or transactions. If a startup needs liability protection – and many businesses do – LLC or corporation status can provide that.
Whether an LLC or corporation is a better fit depends on how the business wants to be taxed, who the owners will be and what form of internal governance best suits those owners. See Should You Incorporate Your Business? for details.
By default, if you don't designate an entity for your business, you're operating it as a sole proprietorship and don't have to take any formal action to create it. The debts and obligations of the business are your personal debts and obligations.
Read Entire Article: http://www.investopedia.com/articles/personal-finance/021216/top-legal-tips-starting-business.asp