No small business owner likes thinking about legal needs. But like it or not, the law can have a major impact on your small business. From protecting your creations against copycats to negotiating the best deals with vendors, getting the legal side right is crucial for your business’s success. In the long run, investing in legal advice in the following areas can save you time and money.
The following is a basic list of seven legal issues every business should make sure to consider.
- Corporate Organization: Form and State of Organization
As a business owner, you want to minimize your liability. To shield your personal assets from being subject to the company’s creditors (for example, if the company takes on debt or is the subject of a lawsuit), you may choose to incorporate or form an LLC. If business doesn’t go quite as planned, the so-called “corporate veil” can help insulate you and your personal assets. A lawyer can also help you choose which corporate form (S-Corporation, C-Corporation, LLC, LLP, PLLC, etc.) and state of formation that will be the most appropriate for you.
- Internal Agreements
For your business to thrive out in the world, you should make sure that everything is clear and settled on the home front. What this means is that you should formalize agreements with your co-founders, other principals and any investors. By memorializing business processes and agreeing on what happens if one of the cofounders or principals has to leave the business for any reason, you can save yourself a lot of time, money, headache and drama in the long run.
- Intellectual Property: Trademarks, Copyrights and Patents
Your intellectual property is at the very core of your business, so protecting it is of the utmost importance. A trademark protects your business’s brand — including your logo, name, slogan and product names. You need to perform due diligence to ensure that you will not be infringing on anyone else’s intellectual property, and then register a federal trademark or trademarks. Copyrights protect original works — of art, writing or software code, to name a few. You may need to file for copyright protection or license copyrights for your business. Patents protect inventions, including business methods. You should talk to an attorney to figure out whether you need to file for a patent. The right attorney can streamline what would be a lengthy filing process and manage the important steps and details of the intellectual property protection process.
- Real Estate: Location, Location, Location
Whether it’s a storefront or other commercial space, you need a lawyer to negotiate your sale or lease to secure a great deal for your business and make sure there’s nothing in the lease that could cause your business problems.
- Regulatory Issues
Certain types of products (medical, alcohol, food, insurance, etc.) and certain types of transactions (securities, international, banking, etc.) are heavily regulated by state and federal rules. An attorney can help evaluate whether your business falls into one of these categories and strategize about how to handle compliance, before you run into any difficulties.
- Employment Matters
If you have any employees or contractors, you must comply with federal and state employment laws. At a bare minimum, you will need a contract between you and your employee or independent contractor and an employee handbook of company policies. You might also need an attorney to help you ascertain whether a contractor is actually an employee, whether employees are exempt or not and to safeguard your company’s confidential information.
- Tax Concerns
You may need advice on how best to structure your company to minimize your tax obligations and on what tax requirements your business must meet, including whether your business is required to pay sales tax (especially in light of recent changes).
A good lawyer can help you strategize about how to address these seven areas for your unique business — and building a relationship a good lawyer early can be extremely helpful in the future in case anything does go awry.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
Image credit: CC by Alex