The initial stages of a business can be hectic, and it’s easy to overlook the legal aspects of the start-up process. However, to comply with local and national laws, it is important for a startup to follow the proper legal guidelines. The following checklist will help entrepreneurs know what steps to take to avoid feeling overwhelmed.

1. Deciding whether to form a corporation or a partnership

A corporation is an entity where only one person makes decisions about the future of the company. A partnership is an entity that involves two or more people in the decision-making process. Which of the two entities you create will be based on the expectations and goals of the company. You will also need to register a business name at this point. Check with trademark registries to make sure you’re not infringing on any trademarks with the name you choose.

2. Apply for a federal tax identification number

All transactions made by the company are tracked through a tax identification number. It serves as a kind of social security number for your company. You will want to register this as soon as possible to comply with the law.

3. Make sure all the proper paperwork is completed and filed with the proper authorities.

For both litigation protection and tax purposes, it is vital that you file the correct forms with your local legal authority. This is usually the city government or the local court. There is usually a fee associated with the onboarding process that averages around $500.

4. If you work in a partnership, determine how much equity and responsibility belongs to each partner

Determining ownership and other important issues ahead of time can prevent future stress and discomfort. Many associations fail to agree on the terms of the association ahead of time, resulting in oversights later on. Determine how ownership is determined, the expected time commitment, and the type of salary each partner is entitled to.

5. Make Sure Employees Are Correctly Classified

Labeling an employee as an independent contractor can lead to legal repercussions and fines from the IRS. If someone is an employee, you must provide him with benefits if he works more than a certain number of hours per week.

6. Establish a proper business plan and ensure policies are in place

A business plan and operating policies will help establish your business and a roadmap for the future.

7. Make sure all permissions are valid

Depending on the type of company formed, certain permits will be required. These can include zoning permits, liquor licenses, sales tax license, and more. Certain regulations may be stricter than others depending on the type of business.

It is always in your best interest to consult with a business attorney during the formation of a startup. A business lawyer can help you ensure that he complies with all laws, including more obscure regulations that you may not be aware of. Following these seven guidelines and seeking legal advice will help ensure that your startup is fair in the eyes of the law.