Is Your Business Operating Legally?

Written by Wesley Henderson

December 2, 2021

A friend called the other day with a simple question: “Do I need to do anything to make sure my business is legal?” I explained I wasn’t sure until I saw her legal documents. She responded, “What documents? I’m a photographer. I capture moments, I don’t do paperwork.” My friend has been a photographer for almost a decade and owned her own business for the past three years. She has spent that time honing her craft, gaining customers, creating a fantastic Instagram page, and staying abreast of the latest trends in the industry. She knows the latest trends, equipment, and precise lighting for each shoot, but when I asked about her LLC, she looked like a deer in the headlights. Focusing on building your business is a good thing, but like my photographer friend, there are some business matters you can’t neglect. Here are the five essential elements to setting up your business legally.

1. The Name

From a legal perspective, finding the right name is more than thinking up something clever or picking a name you like. The first rule is making sure your business name is not infringing on another company’s trademarked name. Learn more about understanding trademarks here (there’s a very helpful download to grab that will walk you through picking a name).

2. LLC and Tax ID Number

Every business needs a corporate form. The most flexible business entity is an LLC (but you can also setup your business as a corporation or partnership). In most states, simply visit the Secretary of State’s website and file for the LLC. The main reason for having an LLC is to provide your company with liability protection. You will also need to visit the Internal Revenue Service (IRS) website and set up a Tax Identification number – so the government knows where to send the tax bill.

3. Operating Agreement

An operating agreement is simply a contract between business owners. It spells out how the business will operate, each owners’ responsibilities, what happens if an owner wants to leave, how money will be shared, and various other terms by which the business will operate. Even if you are the solo owner, you should still have an operating agreement that shows you own 100% of the business.

4. Business License

Most counties require a business license, which is determined by your local government. It’s a way for the county to know what businesses are active, but also regulate certain types of businesses and collect taxes. Every business must make sure it complies with business licenses.

5. Trademark

A registered trademark helps protect your business name or logo. If you own a registered trademark, then you can prevent other businesses from using your mark in the future. Keep these five business essentials in mind and you will be ready for success.


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