Fifteen years into the new millennium, the time is better than ever to set yourself on a new course by starting your own business. You have the idea, you have the experience, you have the determination–what else could you need?
Well, a bit of advice on the plethora of legal concerns, for one.
Fortunately, others have blazed the path ahead of you and help is never far away if you know where to look. (You can turn to us, for example!) Below are the ten essential points you should factor into your start-up plan.
Choose the Business Structure that’s Right for You
Often, entrepreneurs aren’t in it only for themselves. They have a family they love and want to see only the best for. That’s why it is vital that any personal assets receive the protection they deserve. If you start your business as a sole proprietorship, as do the majority of average entrepreneurs, that leaves you personally liable in case of any legal conflict or simple lack of success.
There are ways to shield your assets from such threats: organizing as a limited liability company (LLC) or incorporating as a corporation. Your business liabilities will be just that, business. As an added advantage, they can offer tax advantages.
Reduce Risk by Insuring Your Business
You are likely not going into the business of transporting nuclear waste or juggling chainsaws, but that doesn’t mean your business should skirt by without insurance. No matter how big or small, the potential for lawsuit is ever present, and sometimes from unexpected sources.
A Contract is Worth Far More than the Paper it’s Written On
No matter the level of transaction, make it obligatory that all deals and agreements be documented and signed. This will protect your business and help establish a solid working relationship.
Partnering Up? Include Provisions for Getting Out
A partnership entails a wealth of benefits, including a diverse set of skills and additional startup capital. Be absolutely sure, however, that you are both covered should the other become disabled, die, or simply desire to leave. Consider setting up a buy-sell agreement if this applies to you.
Get to Know Your Local Employment Laws
Getting a handle on the variety of different regulations on employment, from the federal-level on down, can be daunting for the first-time entrepreneur–to say nothing of dangerous. Particularly if you depend on the work of independent contractors, make sure that everything fits into how the law differentiates contractors from employees. Otherwise you risk serious problems with the IRS and state regulatory agencies.
Keep Up Your Business’s Documentation
Do you like that asset protection offered by your LLC or corporation? You’ll have to work to maintain it. Make sure you follow all legal formalities required and maintain a record of everything: your organizational records, contracts with vendors and employees, confidentiality agreements, etc.
Keep Intellectual Property (IP) on Your Mind
Intellectual property laws make two demands of you. First, that you take the necessary effort to avoid infringement of others’ IP. Though the court system is adapting to counter the impact of the so-called “copyright trolls” and “patent trolls”, a real infringement could land your business in seriously hot water.
Secondly, protect your own IP. There’s nothing worse than watching another person make a mint off your idea, without any way to take a piece of the pie.
Have Employees? Flesh Out a Comprehensive Employment Agreement
Your employees will benefit greatly from the work you provide them, but be sure not to let their intimate experience with your business and clients be a weapon against you once they’ve gone their own way.
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Turn to an Expert
Don’t wait for when you’re in doubt–good legal and financial advice could save your business from a world of pain for a fraction of the cost. An experienced business attorney, in particular, is an invaluable resource for picking out the obstacles on the road ahead.
We can help you avoid costly legal disputes through proactive business planning, including crafting agreements and procedures to ensure you comply with state and federal law. To learn more about our personal approach to business planning, call us today at 612-206-3701 or via our online contact page to schedule a small business consultation session.
Image Courtesy of Suat Eman | FreeDigitalPhotos.net