When starting a business there are many legal considerations you as a business owner need to make. Understanding how to protect your business legally and isolating yourself from lawsuits should be one of your top priorities.
1. What form of business structure will you use?
Critically thinking about what form of business structure your business will use is something that is often overlooked by eager and young entrepreneurs, once legal action is taken against your business it is too late.
Curious what forms of business structure exist? The Small Business Association provides guidance and explanations for each business structure. Ensuring you comprehend all types of business structures and the differences between them can help establish a potent legal foundation for your business and is something every business owner should understand.
Key things to consider when selecting a business structure are:
- How much personal liability you will have
- How you and your business will pay taxes
- The number of owners and employees
2. Are you in compliance with your federal, state, and local regulations?
Before starting a new business, you should conduct thorough research to ensure your business will follow, or already does follow all the applicable local, state, and federal regulations regarding your area of business. There are a plethora of licenses, permits, and other compliance-related considerations that business owners need to be aware of.
The Small Business Association provides a list of federally regulated industries that require federal licenses and permits. What licenses your business needs will depend upon its location and will vary from state to state, county to county, and city to city.
Other compliance considerations are disclosures, warnings, statements, and general due diligence. Implementing correct and targeted statements, disclosures, and warnings can help your business avoid certain legal liability.
A classic example of this is when restaurants ask if anyone at a table has food allergies, or displaying posters stating which menu items contain certain ingredients. These small actions can help insolate businesses from liability.
3. Have you thought about protecting your intellectual property?
You can have the best business idea in the world, but if you don’t protect your brand, products, and services, your hard work may be erased or diluted.
You might receive a crushing cease and desist order in the mail after years of growing your business, or perhaps someone replicated your product or copied your branding, logo, and taglines. If you haven’t taken the necessary steps to protect your intellectual property, all of these scenarios are possible.
There are four types of Intellectual property:
- Trade Secrets
Knowing how and when to protect your trade secrets, file trademarks, copyrights, and patents helps further insolate your business from liability.
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