Starting a business is a daunting but exciting adventure. As you embark upon this journey, it is important to operate in a manner that protects you and your business legally. In this post, we provide you with (in no particular order) 6 top legal tips for starting your business.
1. Choose the correct legal structure for your business
You have to choose how your business will be structured in the eyes of the law and government. The nature of your business, its funding needs and the risk of liability are all factors in choosing which legal structure you will adopt. Choosing the structure that suits your business allows you to have the proper legal protections and reduces unnecessary expenses. We have written a blog series on the matter of choosing the correct legal structure for your business. To read the first post click here.
2. Keep all agreements and contracts in writing
Avoid doing business on a handshake or through verbal agreements. Having no written record means that it is difficult to prove the details if anything goes wrong. It is also hard to clarify a verbal agreement. Written contracts provide a great record of what was agreed upon and gives all parties a better understanding of their rights and obligations. Even simple agreements are good to record in writing. Transmitting the details of what you have agreed upon via email can be helpful.
3. Protect your intellectual property
Intellectual property (IP) is defined as creations of the mind. IP can be a business name or logo, an invention or creative content, among other things. Every business has intellectual property of some sort. It is what makes your business unique and plays a huge role in your business’s success. There is a legal process that must be followed to protect your intellectual property. Copyright protects written and artistic content, trademarks protect logos and slogans while patents protect inventions. If you have some IP aspect of your business truly worth protecting, then do so. If you don’t, someone else might misappropriate your IP and potentially even your business.
4. Choose the correct attorney for the specific task
When carrying out a specific task that involves a specialised legal component, it is a good idea to choose an attorney with specialisation in the relevant field. Because they know the ins and outs of the law applicable to your task, their work on the matter can provide you with a long-term solution that is more cost-effective and protects you years down the line. Choosing an attorney not specialised in the field could cost more in the long run. For example, choose a conveyancer for matters regarding purchasing business premises, but hire a patent lawyer for your IP needs.
5. Keep your financial matters organised
Keep your business accounts and credit separate from your personal accounts and credit. If you do not, a court could find that your business is not a separate legal entity. This can have various negative implications, for example, you being personally liable for any debts accrued by your business. Also, understand the taxes you will be required to pay. Finally, get insurance as an extra layer of financial protection.
6. Implement an effective record-keeping system
From the beginning, it is wise to set up an effective record-keeping system for your business. Keep records of minutes of meetings, financial statements, payroll documentation and the like. This way, right from the outset, you have the necessary structures in place to record all important information that you might need in the future for whatever reason. If any issue arises, you will have the information you need to act appropriately.
Top legal tips for starting your business: need help?
We hope you have found these top legal tips for starting your business helpful! If you require any assistance in a matter regarding any of the above, please do not hesitate to contact us at [email protected].