Once you launch your small business, every ounce of mental and physical energy goes to making sure you’re turning a profit. A company’s startup phase is the most tenuous, though, for a host of legal reasons. Tacking the most important legal issues ahead of time can help you grow your business with confidence. We’ve outlined several of these considerations below.
1. Licensing and compliance issues. Every state has certain requirements for companies wishing to conduct business within its boundaries. There may be additional requirements imposed by a county and/or municipality. After you form your business, you will have to file one or multiple documents on a regular basis (annually, quarterly, etc.). The type of business you may also impact the compliance requirements for your enterprise. Many professionals are required to hold a state-issued license.
2. Keeping the limited liability for personal finances. The C-corporation and limited liability company (LLC) business structures are designed to shield a business owner’s personal money and assets from judgments against the business itself. These legal structures formally create a separate legal entity. However, simply forming a limited liability business requires ongoing maintenance to make sure you are receiving that protection. A previous blog of ours addressed this topic in-depth.
3. Registering trademarks and other intellectual property. Too many businesses consider the time and money involved in registering intellectual property as too much, especially in the beginning. The truth is that your brand’s identifiers (logo, color scheme, motto) need all the legal protection you can get. Without federally registering your trademarks, other companies—including your competitors—might profit off your brand’s goodwill.
Conversely, you might be using a mark that infringes on an existing mark without knowing it. Intentional or not, though, trademark infringement can be quite costly for the infringer. Even if you are not sued, the cost of having to rebrand will be substantial. That is one of many reasons conducting a trademark search is important.
4. Communicating expectations of employees. Employee handbooks are not typically required, but they are always useful. Within the handbook for your employees, you need to communicate work hours, job duties, and non-disclosure of trade secrets. To avoid a wrongful termination suit, clearly list the reasons employment at your business would be terminated. You should also have contracts for employees to sign once they leave the company.
5. Recordkeeping. There seems to be no shortage of records that employers are required to keep. The Fair Labor Standards Act (FLSA) requires employers to keep certain documents years after an employee leaves. Other documents, like proof of tax deductions, invoices, receipts, and bank statements, should be kept. Implementing a comprehensive record-keeping system should be of paramount importance.
Conclusion
There are plenty of universal considerations for businesses, but yours will almost certainly have unique matters that require the help of a business attorney. If you don’t take care of these issues at the beginning, they can mushroom into costly legal disputes that threaten the wellbeing of your company. Contact our firm today to set up a consultation.