Running a business is a challenge because you need to do a lot. From managing operations to handling your team, staying a step ahead of customer expectations, and keeping track of finances, the list never ends. The business landscape is competitive, but the challenges extend beyond staying ahead of the competitors. You also need to follow the law to ensure that your business does not have to face legal hassles at any point.
It makes sense to understand the business laws, but it is easier said than done. You have to stay ahead of the ever-evolving legal statutes, pay attention to tax law, and stay on the right side of criminal law. The best approach is to build a legally sound business from scratch because there are fewer chances of going wrong if you implement the right measures at the early stages. Here is some helpful expert advice you can rely on.
Get your basics right
Most entrepreneurs go wrong with the basics because of a sheer lack of knowledge. The consequences of not having a written contract with the founders can be daunting because it can lead to a big dispute eventually. Going without a founders’ contract sounds easy if you know them well, but things may turn sour at any point in the future. Similarly, not having proper agreements with your vendors, suppliers, employees, and clients can land you in a fix. You also need to be careful about the language and clauses in these agreements. If you get these basics right, there are good chances that your business will not get on the wrong side of the law.
Choose the business structure wisely
When it comes to building a strong legal foundation for your company, you cannot overlook the significance of choosing its structure wisely. Sole proprietorship sounds like the simplest option, but it isn’t the best from a legal perspective as you may end up being personally liable for the business. You may consider partnership if you have co-founders on board, but it is also not a viable choice. Corporation and Limited Liability Company are the best business structures if you want to avoid trouble with the law in the long run. Discuss the options with a lawyer to get an idea about the one that would be right for you.
Understand tax implications
Staying on the right side of tax laws is essential for building a legally sound business. Missing out on deadlines and not complying with the requirements can expose your company to unanticipated fines and penalties. It is the last thing that any business owner will want to face at any point. The preparation starts early, as you need to understand the tax implications for your corporate entity. At the same time, you must stay ahead of the records and filing deadlines to avoid trouble with the tax authorities. It is easy to get into trouble even unintentionally when you lack knowledge or just miss out on deadlines due to a complacent attitude.
Hire the right lawyers
You need lawyers to handle contracts and check their legal language. But there is a lot more they can do to strengthen the core of your company. A majority of businesses come across lawsuits at some point. You can face personal injury suits, employee claims, and even criminal lawsuits for employee frauds and breach of contracts. It is best to find the right lawyers according to your needs. You must pick someone who specializes in a specific field and knows the law of the jurisdiction. For example, you will have to collaborate with someone who has expertise in corporate law to cover the basics like drafting, reviews, negations, and formation. You will need a specialist to deal with employee disputes, slip and fall, and product liability cases in court.
Maintain proper documentation
Many companies fail to maintain corporate and employee-related documentation they need to have to stay compliant. You may think it to be a frivolous task, but it can raise red flags eventually and get you in a legal fix. It is vital to have corporate documents such as board resolutions and minutes, corporate contracts, founder agreements, and proof of payment in place. Further, you cannot go slack with HR documentation because they are crucial for legal compliance. Maintain updated records with resumes of hired candidates, offer letters and employment agreements, compensation and bonus history, benefit plans, termination notices, and severance agreements.
Avoid IP issues
It is easy to ignore intellectual property issues, but doing so has legal implications beyond what you can imagine. You must focus on several things when it comes to protecting your brand, marketing assets, and unique business ideas. The best thing to do is covering them legally with patents, trademarks, and copyrights to prevent infringement. You need to be equally careful about not infringing the Intellectual Property of other businesses because they can also implicate you legally for the action, even if it is unintentional. Having proper NDAs with employees and vendors also helps you stay safe from hassles.
Comply with relevant health and safety laws
Another legal aspect that deserves your attention as a business owner is the responsibility for the health and safety of your employees. It becomes even more crucial right as companies need to go the extra mile to create a safe, healthy environment at work amid the pandemic. You also have the responsibility to ensure the safety and well-being of clients and visitors visiting your business premises. Understanding the health and safety compliance requirements is a good place to start. You must also conduct a risk assessment to identify the threats for employees, clients, and visitors. At this stage, you need to have a plan for risk mitigation to avoid mishaps and resultant lawsuits.
Building a legally sound business is easier than you think. Just knowing the law and complying with it gets you in a good place. Further, having the right guidance from a professional who knows business laws can save you from a lot of trouble.