Starting your own business is a dream for many Americans. Turning that dream into a reality is more involved than many entrepreneurs anticipate. After developing an idea, efficient implementation is a priority. As detailed by the American Bar Association, State and Local laws can affect your business. Therefore, it is important to familiarize yourself with them or hire an attorney with experience counseling start-ups.
(1) Deciding On and Registering a Name: Proper planning and research can avoid expensive and time consuming mistakes or litigation (for example, picking a name which is already registered with another company or infringes on an existing trademark). Aside from the headache of starting from scratch, this mistake could be expensive. Imagine throwing away 1,000 business cards and a personalized sign bearing another company's name. Or worse, getting a letter from another company's attorney stating that a lawsuit is pending against you for infringing on their trademark. Other associated issues include registering your business with the Secretary of State, applying for a Employer Identification Number (EIN) and registering with the Kentucky Treasurer.
(2) Licenses and Permitting: All states, including Kentucky, have statutes and regulations governing business. Many professions require licensing. While some like medical doctors seem obvious, others are not. My father was a small town barber in Northern Kentucky for most of his life. After school I would visit his barber shop and framed on the wall was - you guessed it - his Kentucky Board of Barbering license. Some industries are more heavily regulated like health care, businessfood preparation, alcohol or weapon sales, construction and transportation. Most counties and cities also require Occupational Licenses (which are functionally a tax on revenue). Even those fields which do not require licensure, may require permits. Sanctions for improperly conducting business without the proper license or permits can range from fines, public reprimands, stop-work orders, etc.
(3) Choosing a Business Entity: For in state businesses, Kentucky allows over ten business entity types, including sole proprietorships, general partnerships, limited partnerships, limited liability companies, a professional limited liability companies and business corporations, just to name a few. Each are unique and provide different liability protection and tax treatment. For example, I have owned and operated three business entities: my first company was a sole proprietorship, my second was a limited liability company and my third is a professional limited liability company. I decided on these entity types based on carefully considering multiple factors including difficulty and expense to file, administrative efficiency and expense to operate, potential risk of liability, number of parties involved and the most favorable tax treatment.
As a small business owner myself, I have gone through the process multiple times. While necessary, it can be cumbersome and time consuming and mistakes can be costly. Contact me at Kloeker Law, PLLC, today so you can worry about growing your business instead of dealing with paperwork.
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