Starting your own business is a dream-come-true that comes with a long list of disclaimers. Yes, it’s exciting, but as most of you are well aware, it can also be a rough ride. One of the biggest challenges of running a startup or a small business is meeting the diverse legal requirements for your specific trade. Whether you’re opening a health club or running an auto dealership, you need to prove to local and state authorities you are capable of doing your work. While the criteria can be tedious to get through, they ensure your compliance and are simply necessary.
What can help you in the process of satisfying all requirements is getting to know them well. Below are the top five compliance tips that aspiring entrepreneurs can benefit from learning in advance.
1. Get your business papers in order
Whichever trade venue you have chosen for your new endeavor, you must register a business entity. The list of options for new companies include sole proprietorship, general partnership, LLC, C or S corporation, or a limited partnership. It’s important to choose the right structure depending on your business needs, as this can save you unnecessary efforts and expenses later on.
Whether you’re seeking investments or not, you need to prepare a solid business plan. Most importantly, it must contain your company objectives, a thorough research of your market and your planned timeline for hitting milestones.
2. Obtain proper insurance
Insurance is a common legal requirement for many types of businesses across the U.S. It comes in different forms, but in essence, it’s there to protect your company. It also serves an important protection function for your employees, partners and customers.
In most cases, you’d need to obtain general liability insurance. It will provide you with financial compensation if lawsuits are filed against your business. Some typical cases include work injuries, medical payments and property damage. If you are planning to get people on your payroll, you will also need workers’ compensation insurance. It covers your employees for medical and other costs.
3. Post a surety bond
Getting bonded may also be required from your company. This depends on the type of business you are conducting, as well as the licensing criteria of local, state and federal bodies that regulate your industry. Some of the professionals that need to get bonded include auto dealers, contractors, retailers, health clubs, notaries, Medicare providers and many more.
The surety bond is an extra layer of protection for the licensing authorities and the general public. It safeguards the interests of your customers and the legal bodies against any misuse and fraud you may engage in.
4. Ensure you have appropriate employer documentation
In order to legally be able to hire employees, you need to meet a list of requirements from different authorities. First and foremost, you have to obtain a federal Employer Identification Number from the IRS.
Besides getting an EIN for your company, you need to compile other documents about your employees. They include application forms for each employee that contain a criminal background check and at-will employment notice, a company handbook, Fair Labor Standards Act (FLSA) employee classification, USCIS I-9 Employment Eligibility Verification Forms, and documents on tax withholding and benefits, among others.
5. Compliance with health and safety requirements
Last but not least, you have to make sure you satisfy the criteria of the Occupational Safety and Health Administration (OSHA). They apply not only to high-risk industries such as construction, but also to a number of other companies that hire employees. The OSHA New Businesses Fact Sheet can help you get started.
The most important requirements that you have to comply with include displaying OSHA’s Safe and Healthful Workplaces poster in your business location, informing and training your employees about health hazards and maintaining records of work injuries and illnesses if you have more than 11 employees. You also need to conduct timely inspections and create safety procedures for your workplace.
What are your top compliance tips for budding entrepreneurs? Share your insights in the comments below!