Legal

• Business Entity

Many factors come into play as decision criteria for choosing an organizational structure: LLC, corporation, partnership, sole proprietorship or another variation. Some are straightforward and simple in terms of effects on your business and personal finances; others are subtler. There's no such thing as the "perfect" form for your business. Your choice will be a balancing act among the various factors, advantages and disadvantages. To a large degree, it will reflect what you're most comfortable with, as well as the size and type of your business and your plans for the future. Find an attorney to do this for you, don’t do this on your own with forms you found on the internet.

Sole Proprietor
A majority of the small businesses in the United States are operated as sole proprietorships. This type of business organization is the simplest and is the form usually chosen by the one-person business, in which the owner and worker are the same person (although sole proprietorships can have employees). Its primary advantage is its ease of formation; its most important disadvantages are (1) it can have only one owner and (2) the owner is individually responsible for all losses of the business.

Partnership
There are two types of partnerships: general partnerships and limited partnerships. A general partnership is created when two or more individuals agree to create a business and to jointly own the assets, profits and losses. A limited partnership may be created only by following certain steps set out in each particular state's statutes. The primary advantage of partnerships is that they can have more than one owner; the most important disadvantage is that the general partners are personally responsible for the losses and other obligations of the business.

Corporations
The stock corporation is more complex than the sole proprietorship or the partnership, but it has certain advantages that may make it worth considering as a business form.

A corporation is considered a separate legal entity; because of this, the owners of the corporation (known as its shareholders or stockholders) are not personally responsible for the losses of the business. Although a corporation usually has more than one owner, it is possible for only one individual to create and own 100 percent of a corporation.

A stock corporation may elect Subchapter S status for tax purposes. Once such an election is made, the corporation is referred to as a Subchapter S corporation. This election is discussed in the section on taxes.

Most states also recognize non-stock corporations, which are commonly used for nonprofit organizations, community associations, etc. There are no owners in a non-stock corporation, although there may be members. Because this form of corporation is rarely used by small businesses, it will not be further discussed in this booklet.

LLC - Limited Liability Company
A limited liability company (LLC) combines the corporation's protection from personal liability for business debts and the pass-through tax structure of a partnership or sole proprietorship. And, while setting up an LLC is more difficult than creating a partnership or sole proprietorship, running one is significantly easier than running a corporation.

Like shareholders of a corporation, all LLC owners are protected from personal liability for business debts and claims. Because only LLC assets are used to pay off business debts, LLC owners stand to lose only the money that they've invested in the LLC. This feature is often called "limited liability."

• License / Permits

Business licenses and permits can range from the general (a basic license to operate a business within a city or county), to the specific (a state permit to sell alcohol or firearms). Bear in mind that regulations vary by industry.

You may need to obtain a number of licenses and permits from federal, state, and local government. Since licensing and permit requirements for small businesses can vary among jurisdictions, it is critical that you contact your state and local government to determine the specific obligations of your new business. Keeping this in mind, below is a quick checklist covering the different federal, state, and local licenses and permits you may need to acquire prior to opening for business:
• Basic business operation license from the city in which your business will operate, or from the local county (if the business will be operated outside of any city's limits).
• Federal employer identification number (EIN), also called a tax identification number (required for almost all types of businesses). Note: your business may also need to acquire a similar tax identification number from your state's department of revenue or taxation.
• Fictitious business name permit (also called "dba" or "doing business as" permit; required for almost all types of businesses), unless you use your name.
• Zoning and land use permits, especially for new manufacturing businesses and certain home-based business operations.
• Health department permits, especially if your business involves the preparation and/or sale of food.
• Sales tax license for the selling of some products and services.
• Fire department permits, especially for businesses that will attract large numbers of customers (i.e. nightclubs and bars).
• Special state-issued business license or permits, if your business will involve the sale of the following types of products:
• Liquor
• Lottery tickets
• Gasoline
• Firearms

• Copyrights - Provides protection to the creators of “original works” including movies, books, software, photographs, etc 

• Trademarks- A trademark is a word, name, symbol or device which is used in trade with goods to indicate the source of the goods and to distinguish them from the goods of others.

• Patents - A patent is the right granted to an inventor that permits the inventor to exclude others from making selling or using the invention for a period of time. 

• Contracts – There are different contracts that you might need, based on the type of business that you have. You might need a contract with a client before you start a job or a contract with an independent contractor.