Starting a business in 2025 is easier than ever — but skipping legal steps can cost you dearly in taxes, fines, or lawsuits down the line. Whether you’re opening a coffee shop, building a tech startup, or freelancing full time, there are key legal steps every entrepreneur must take to launch legally in the United States.
Here’s your complete legal checklist to start your business the right way in 2025.
1. Decide on a Business Structure
Your first step is to choose a legal structure for your business. Each type comes with its own benefits, liability protections, and tax treatment.
The main options:
- Sole Proprietorship – No legal separation between you and your business. Simple, but risky.
- LLC (Limited Liability Company) – Popular for small businesses; protects your personal assets.
- S-Corporation – Offers tax savings but has strict IRS rules.
- C-Corporation – Ideal for startups planning to raise venture capital.
💡Most small businesses start as an LLC for simplicity and liability protection.
2. Register Your Business with the State
Once you choose a structure, you must officially register your business with the Secretary of State in the state where you’ll operate.
LLCs:
- File Articles of Organization
- Pay a state filing fee ($50–$500 depending on the state)
- Draft an Operating Agreement (outlines ownership and management)
Corporations:
- File Articles of Incorporation
- Appoint a Board of Directors
- Create corporate bylaws
Some states require you to publish a notice in a local newspaper (e.g., New York).
3. Choose a Business Name and Check Availability
Your business name must be unique in your state and not infringe on another company’s trademark.
Steps:
✅ Search your Secretary of State’s business name database
✅ Check the U.S. Patent and Trademark Office (USPTO.gov) for registered trademarks
✅ Lock down domain names and social media handles
✅ Consider registering a trademark for brand protection
4. Get an EIN (Employer Identification Number)
An EIN is your business’s Social Security number — required for taxes, hiring, opening a bank account, and more.
✅ Get it for free at irs.gov
💡 Even sole proprietors benefit from an EIN to keep business and personal finances separate.
5. Apply for Business Licenses and Permits
Many cities, counties, and states require specific licenses based on your industry and location.
Common licenses:
- General business license
- Seller’s permit (if you sell goods)
- Health permits (food service businesses)
- Zoning permits
- Professional licenses (barber, accountant, contractor, etc.)
🔍Search your city or county’s website for local requirements.
6. Open a Business Bank Account
Never mix business and personal finances. Open a separate bank account using your EIN.
✅ Benefits:
- Protects your personal liability
- Easier accounting
- Required for LLCs and corporations
Pro tip: Choose a bank that offers free business checking and integrates with accounting software.
7. Set Up Your Accounting System
Even if you’re just starting, keeping clean financial records is essential for:
- Tracking income and expenses
- Filing accurate taxes
- Staying audit-proof
Options:
- Hire a bookkeeper or CPA
- Use software like QuickBooks, Xero, or Wave
Consider a separate credit card for business-only expenses.
8. Understand and Pay Your Taxes
Businesses are taxed differently based on structure and location. Know what you owe and when.
Key types of taxes:
- Income tax – Federal and state; based on your profit
- Self-employment tax – For sole proprietors and LLCs
- Payroll taxes – If you have employees
- Sales tax – If you sell products or taxable services
- Franchise/Business privilege tax – In some states
💼Hire a CPA or tax advisor — especially if you’re unsure about S-Corp elections or deductions.
9. Get Business Insurance
Even with an LLC or corporation, lawsuits and disasters can still hit your business hard.
Must-have insurance:
- General liability insurance – Covers bodily injury and property damage
- Professional liability (E&O) – Covers mistakes or bad advice
- Business property insurance – Protects equipment and inventory
- Workers’ compensation – Required if you have employees (varies by state)
Ask an insurance broker to tailor coverage to your industry and size.
10. Hire Employees Legally (If Applicable)
If you hire staff (even part-time), you’ll need to follow federal and state employment laws.
To-do list:
- Get a Federal and State Employer ID
- Verify workers’ eligibility (Form I-9)
- Report new hires to your state
- Provide workers’ comp insurance
- Comply with minimum wage and labor laws
- Set up payroll with tax withholding
📝 Also consider creating an employee handbook to protect yourself and clarify expectations.
11. Create Foundational Legal Documents
Avoid misunderstandings and future disputes with clear contracts and agreements.
Must-haves:
- Operating Agreement (LLC) or Bylaws (Corp)
- Partnership Agreement (if you’re not solo)
- Service contracts with clients
- Non-disclosure agreements (NDAs)
- Independent contractor agreements (if you hire freelancers)
💡Have a lawyer review templates before using them with clients or partners.
12. Build an Online Legal Presence
Set up your business’s digital footprint in a compliant way.
✅ Buy your domain name
✅ Create a website with Privacy Policy, Terms of Use, and cookie disclaimers
✅ Add business details to Google My Business and directories
This not only legitimizes your brand but helps you rank locally in search results.
Bonus: Ongoing Compliance Requirements
Starting is just the beginning. Many states require annual filings, reports, and renewals.
- File an Annual Report or Statement of Information
- Renew business licenses
- Maintain registered agent service if you used one
- Keep meeting minutes and tax records organized
Missing deadlines can mean fines or even involuntary dissolution of your business entity.
Final Thoughts
Starting a business in 2025 is an incredible opportunity — but legal missteps can create costly problems later. By taking these 12 legal steps, you’ll build a solid foundation for growth, protection, and long-term success.
✅ Quick Legal Startup Checklist
- Choose structure (LLC, S-Corp, C-Corp)
- Register with your state
- Check name availability + trademarks
- Get an EIN
- Apply for licenses and permits
- Open a business bank account
- Set up bookkeeping
- Understand your taxes
- Get insurance
- Hire legally
- Use contracts
- Stay compliant annually