Starting a Small Business? Here's What They Don't Tell You About the Legal Stuff


Starting a small business can be an exciting adventure, but it can also be a bit overwhelming. This is especially true when it comes to the legal aspects! There are so many legal documents to fill out, regulations to follow, and laws to abide by. It can be easy to overlook some of the most important legal considerations when starting a small business.

In this blog post, we will go over some of the most important legal must-haves that you should keep in mind when starting your small business, including insurance, business licenses, resale certificates, and the different types of legal structures you can choose from.




When starting a small business, it's important to think about insurance. Why? Because insurance can protect you and your business from unexpected events and financial losses.

For instance, general liability insurance covers any damages or injuries caused while on your business property. It’s important because accidents can happen, and without insurance, you could be held liable for the costs.

Property insurance is another type of insurance to consider. It covers any damage to your business property caused by theft, fire, or other types of disasters. You don't want to be caught off guard by unexpected damage to your property without the right coverage in place!

Professional liability insurance is also essential for small business owners who provide professional services. It covers any claims of negligence or mistakes made by your business. This can help protect your business from financial losses and maintain your professional reputation.

Workers' compensation insurance is required by law in most states if you have employees. This type of insurance covers any medical expenses and lost wages if an employee is injured on the job. It's important to have this coverage to protect yourself and your employees in case of any accidents.

TLDR; getting insurance coverage for your small business is essential to protect yourself, your employees, and your business from unexpected events and financial losses!

What about licenses or certificates? What does your small business need to get started?

Business Licenses

In order to legally operate your small business, you may need to obtain one or more business licenses. The requirements for business licenses vary depending on the type of business you're starting and the location where you're operating. Some common types of business licenses include:

• General Business License: This type of license is required by many states and municipalities in order to operate a business.

• Professional License: If you provide professional services, you may need to obtain a professional license in order to legally operate your business.

• Industry-Specific License: Depending on the nature of your business, you may need to obtain an industry-specific license. For example, if you're starting a restaurant, you may need to obtain a food service license.

Resale Certificates

If you plan on buying goods or services to resell, you may need to get a resale certificate. This certificate allows you to purchase goods or services without paying sales tax, as you'll be charging your customers sales tax when you sell your goods or services. So save some small biz $$$ and apply for a resale certificate! Just go to your city or county's website to get started on your application.

Sole Prop, Corp, or LLC: What does it all mean?

Legal Structures

Choosing the right legal structure for your business is a really important decision that can have significant legal and financial implications. Here are some of the most common types of legal structures for small businesses:

• Sole Proprietorship: This is the most common type of legal structure for small businesses. A sole proprietorship is an unincorporated business owned and operated by one person! This means that the owner is personally liable for all debts and legal issues that arise.

• Corporation: A corporation is a separate legal entity that is owned by shareholders. There are two different types of corporations, S-corp and C-corp. Basically, they're both types of corporations, but the big difference is how they're taxed. S corps are "pass-through" entities, meaning the company's income is passed through to the shareholders to be reported on their personal tax returns. C-corps are taxed at the corporate level and then again when profits are distributed to shareholders as dividends. So, if you want to avoid double taxation, an S-corp might be the way to go! 

• Limited Liability Company (LLC): An LLC is a hybrid legal structure that combines the benefits of a corporation and a sole proprietorship. An LLC offers limited liability protection for its members, but it is taxed like a sole proprietorship.

Which is right for you?

Overall, there are many factors to consider when choosing the right legal structure for your business, including your personal liability, taxes, and ownership structure. If you're the only owner, a Sole Proprietorship might be the right choice for you because it's simple and doesn't require a lot of paperwork. However, if you're planning to expand your business and hire employees, a Corporation or LLC might be a better choice because it can protect your personal assets and give you more options for raising capital.

Ready, Set, Build!

Don't let the legal jargon scare you! Remember, getting the right insurance, licenses, and legal structure in place is crucial for setting your business up for success. And with the right legal considerations taken care of, you can focus on the exciting stuff – like growing your brand, connecting with your customers, and making those sales! Remember risks are part of the reward journey, be confident, and don't be afraid to seek advice when you need it. You've got this!

Once you have the above set up, contact us at Ouu i love to take your business to the next level and gain your very own extended creative team:

Post Date: 4/25/23


Disclaimer: We are not lawyers, this information is based on our own experiences. If you have any more in depth questions, please talk to a small business lawyer.