In spite of the economic bust that 2020 brought many American business owners, there was a concurrent startup boom that has left economists both bemused and optimistic. According to a study released this year, U.S. entrepreneurs filed 4.4 million business formation applications in 2020, which amounts to a 24% rise in new business filings over 2019 and also the greatest increase ever recorded.
The report, which used Census Bureau data in the analysis, included in the definition of entrepreneur everyone from part-time freelancers to tech billionaires. The report also charted a 15.5% increase in those businesses that are looking to hire, which will be good news for future economic growth.
When starting up a business in Ohio, it is vitally important to take care of the details so that the entrepreneur fully understands issues of liability and tax indemnification, as well as obtaining the correct licenses and permits or business compliance requirements. It is also wise to get knowledgeable legal counsel serving metropolitan Toledo to assist with critical filings and drawing up iron-clad contracts that will start things off on solid ground.
Avoiding costly legal missteps
There are many potential pitfalls to starting up a new business. First of all, before filing the paperwork, it’s a good idea to check to see if the chosen business name has already been taken. If it has, the state will likely not allow this if both businesses offer similar goods or services, and messy entanglements with trademark protections could also kick in.
The business structure chosen will affect the degree of personal liability the business owner will take on. For example, a sole or joint partnership has much higher levels of liability than a limited liability company or corporation. It is also important to be aware that incorporating or filing an LLC in a different state in order to take advantage of its lower tax rates can cause administrative complications, plus additional filing fees that may eliminate any tax advantage.
A business owner who does not know the local licenses, permits or other governmental requirements for running the business may face penalties, suspension or even closure of the business. When hiring and managing employees, business owners who do not comply with state or federal employment laws that cover compensation, taxes, insurance and disability requirements for employees can trigger penalties or lawsuits.
Finally, the business owner should be aware of local, state and federal compliance guidelines and deadlines for filing annual reports and taxes, renewing licenses or updating any business entity changes.