3 Legal Considerations to Make When Beginning a Business in DC
If you have ever tried to start a business from scratch, then you already know how challenging the whole process can be. From settling on the perfect idea to gathering funds and meeting all the state legalities, the entire process needs a ton of perseverance and dedication.
The legal requirements of setting up a business vary with each state in the US. Here are three legal considerations to make when starting a business in DC:
- Open a Physical Location and Hire Staff the Legal Way
All businesses with a physical location in Washington DC must apply for a Certificate of Occupancy (COA) or a Home Occupation Permit. The first is used for commercial office or warehouse space. The latter is used for residential spaces, as in the case of home-based businesses.
However, if you plan to rent an office space within DC, you don’t need to apply for the COA. Just check if the building owner has a valid COA and see if it allows you to use their building for office space.
If you will be hiring staff, an employment contract is a must-have. This often-overlooked piece of document can protect your business against any lawsuit in case an employee decides to sue you for whatever reason. You can look for experienced employment contract lawyers in DC to help you come up with a comprehensive contract that will ensure your business is always protected against lawsuits.
- Choose the Right Type of Entity
In Washington DC, you have four options:
- Sole Proprietorship. No separate entity is created. The state treats you and your business as one, making you responsible and liable for all business activities.
- Partnership. It resembles the sole proprietorship, except it entails two or more people. All the partners are accountable for all business activities and wrongdoings.
- Corporation. This is a separate legal entity owned by shareholders, a board of directors, and corporate officers. It is subject to a complex system of laws and taxation, but the individuals maintain no liability to business activities.
- Washington DC LLC. This is a separate legal entity owned by one or more persons.
The LLC is the best option for someone hoping to start a small business within the DC area. This is because of two main reasons. First, all your personal assets will be protected in case of a lawsuit. Secondly, LLCs are not subject to double taxation like corporations. Your business profits will be processed as your personal tax returns and taxes are paid once.
- Register Your Business Name Correctly
In DC, you must first determine if you will be using your full business name for marketing campaigns and advertisements. If that is the case, go ahead and register the business entity name. However, if you will be using a pseudonym for marketing, you have to register the other name separately as the trade name.
Also, when you start your business in DC, you must register your trade name in every city in which your startup does business. If you want to trademark your business name, you must go further and file for trademark rights. Remember to research tips on how to register your trademark because the government will not accept every trademark idea you may have.
