May 6th, 2025
National Small Business Week: Legal Essentials Checklist
Posted in: Business Law Tagged: Nidhi P. Patel
During National Small Business Week, we recognize the critical role entrepreneurs and small business owners play in our economy. You are the innovators and contributors in your local community – your business deserves the strongest legal foundation. While you focus on growing your business, use the below checklist to protect your hard work and investment.
These ten legal considerations help establish a strong legal foundation and protection that every small business needs to operate confidently and grow sustainably in today’s competitive marketplace.
Use this guide as a reference point to ensure your business has the legal framework it needs to succeed, allowing you to concentrate on what you do best – running your business.
1. Ensure Proper Business Structure and Monitor Annual Compliance Obligations
Choose the right legal entity structure (Limited Liability Company, Partnership, Corporation, Professional Corporation) and tax status (Partnership, S-Corporation, C-Corporation, etc.) based on your business activities, ownership, tax needs, and goals. Monitor your state’s deadlines for renewing your business registrations or filing necessary periodic reports.
2. Establish Appropriate Operating or Partnership Agreements or Bylaws
Proper internal governing documents clarify how your business operates, how decisions are made, profits are distributed, and how ownership can change. Without these documents in place, you risk internal conflict that could severely impact your business operations.
3. Obtain an EIN (Employer Identification Number) and Maintain Separation of Finances
An EIN from the Internal Revenue Service is required to open business bank accounts, hire employees, and for certain tax purposes. Just as important is to maintain a strict separation of personal and business funds and expenses to maximize the liability protections that a separate legal entity offers.
4. Obtain and Renew Business Licenses & Permits
Many local, state and federal laws will impose licensing and permit requirements for your business activities. Make sure you have obtained all necessary licenses and permits to ensure you are operating legally in your industry and location, and track renewal obligations for such licenses and permits.
5. Establish Clear Written Contracts
Clear, written agreements will protect your business from legal issues. Clear contracts should define key terms, such as scope of services to be provided, payment timeline, termination, necessary legal provisions to protect your business, confidentiality protections, and dispute resolution procedures. You want to ensure that you are clearly tailoring your contracts to your specific needs instead of relying on generic online templates.
6. Prepare Employment or Independent Contractor Agreements & Enact Policies
If you hire employees or engage independent contractors, you should have a written agreement that outlines the roles, responsibilities, and expectations surrounding such employment or engagement, as well as key legal protections, such as confidentiality clauses, for your business. You should also consider creating an employee handbook that sets forth important company policies and standard of conduct for your employees.
7. Prepare Website Terms and Conditions and Privacy Policies
Whether you’re selling your goods or services online or even just showcasing your business online, if you have a website, you will likely need a Website Terms and Conditions and a Privacy Policy that governs website visitors and your consumer’s conduct and other business terms. These documents are necessary for transparency and legal compliance purposes.
8. Secure Trademark Protection
Your business and brand name, logo, and slogan are your brand identity. Secure a legally protected trademark for your intellectual property to build brand recognition and value. Without the appropriate trademark protection, you risk losing the ability to use them—or worse, being forced to rebrand.
9. Explore Insurance Coverage
Legal entities protect you, but they are not a magic shield. You might still face risks that insurance policies can help with. Depending on your business activity, general liability, professional liability insurance, or even cyber insurance policy might be valuable. Ensure that you are reassessing your coverage annually as your business grows.
10. Consult with a Business Attorney at Stein Sperling
Professional legal guidance can help you navigate complex business matters and ensure your business is properly protected. Many businesses assume they can wait until they are “bigger” before worrying about these issues. But the truth is, legal problems don’t wait. A small issue can derail your business quickly if you do not have basic protections in place. The earlier you lay a legal foundation, the easier it is to grow safely and sustainably. The business attorneys at Stein Sperling offer comprehensive legal support tailored to your specific business needs and goals.
