Legal to-do's For Your Businesses Starting Day

Starting a new business can often place quite a number of responsibilities on your shoulder, some of which include managing employees, dealing with customers, building and growing your brand, and much more. This can, of course, be quite a challenging time for a new business owner. However, with all these things that the business owner has to deal with, one thing that has the potential to cripple the entire business if not properly dealt with, are legal issues.

The complexity of the law, the relatively little knowledge that lay people have about the law, the high cost of hiring business lawyers, are some of the reasons why business people and most people, in general, like to keep lawyers at arm’s length, except only when they are absolutely needed.

Having said that, there are some aspects of starting or running a business that if not handled properly, will not only necessitate you needing to get a lot of lawyer time, but it could very easily spell doom for your business later on.

Here are 5 of the most important legal things you must get done in the early days of your business.

1. Draw up a Solid Business Formation Contract

It is critically important that your business or company’s foundation is well grounded on a solid contract or other legal documents that legally recognizes its formation and existence, whether it is a sole proprietor, partnership, not-for-profit, or an LLC.

A properly written contract of formation document, which should preferably be written by a business contract attorney, is essential to help prevent certain issues with the business that may crop up in future, or be ensuring that if or when those issues do arise, there is a clear path and guideline on how to resolve them.

This is perhaps especially relevant to partnerships, who can often have disagreements, but with no clear way on how to resolve them.

2. Get Your Business, Domain, Product Name Checked

Even if you do not yet have the money to register a trademark, you need to be sure that you are not infringing on another person’s trademark. Search for registered trademarks at the database of the trademark office and also use Google to look out for common usages of the name you want to use for your business or product.

3. Choose Which Business Entity Will Work For You

If your business is a small one run by just you and you do not have any employees, running a sole proprietorship is obviously the way to go. If, on the other hand, you have or plan to hire employees or your business has many owners, it becomes important to form an appropriate entity in order to protect you from being responsible for the mistakes of other partners. Doing this will also help to get your company ready for any possible challenges it might face in the future, such as facing bankruptcy.

The choice between being a corporation or a Limited Liability Company will depend on your tax situation, your plans for the future of the business as well as the state where you are running your business. It is also important to talk these options over with your business legal advisor.

4. Get a Business Licence

This is for even if you are a virtual business. When you are a virtual company, it is quite really easy to forget that you are still a company physically existing somewhere.

However, if the state or country you are working in requires a business license, you will need to go get one.

This is because if you do not, when that state or country or city syncs their records with databases of business registration or taxes, you may be penalized and you certainly don’t want that.

5. Get Your Business Financials Done

It is important to put a number of basic financial systems in place even if you are starting very small. This will help you to keep track of your expenses and your income for the purpose of planning and taxes. It is also important that you have an entirely separate account for your business that is, a business bank account. You should also have a good bookkeeping system in place for your business. This will help you to separate business money from personal money.

If you have employed workers, you then obviously need to have a payroll system like Gusto or QuickBooks to help you make calculations and fill out forms correctly.

Getting all these legal structures put in place for your business will definitely take quite some resources, but they are however important if you want to head off potential future headaches for you and your business.