Building a solid legal foundation for a business
Protection in the eye of the law is a necessary part of business. From nowhere, you can be hit with a lawsuit for minor infractions to major scandals.
Guilt or innocence is often a subjective term in business. Where your adversaries see wrongdoing, you may genuinely believe you were right. Yet it is for the courts to decide, so cushion the blow with a solid legal foundation.
You need a solid legal team
First and foremost, you need access to reputable legal counsel. The cost of a legal team should be worked into your budget, and having one on retainer offers the best defence if you need it. A retained legal team will know your business intimately and can come to your aid immediately.
As a new business, however, funds might be limited or restricted. Fortunately, you have access to more of the best startup lawyers than ever before because of the boom in the number of new businesses. A startup lawyer can help with the required building blocks, such as IP protection.
Secure your trademarks, patents and copyrights
No matter your sector or service, there are items of interest you need to protect. Your lawyer can help you do this. And examples of IP you need to protect include trademarks, patents and copyrights. A trademark is a word, name or symbol that describes and is associated with your business.
Copyright, meanwhile refers to the protection of original work such as a logo, written works, musical composition or even a process such as the development of ruby chocolate. And a patent is an invention registered exclusively to the owner and grants sole rights thereof.
Get to know the law
You don’t need to become a law student when running a company. However, you will have a competitive and intellectual edge with an understanding of the law concerning your specific business. For example, as a construction contractor, it helps to know hazardous waste regulations.
Understanding regulations inside your sector will help you make better decisions and act based on knowledge rather than opinion or guesswork. Additionally, you can keep costs lower by not having to call upon a potentially expensive lawyer every time you make a decision.
Perform due diligence
As a company owner, manager or director, you will make decisions all day. And any one of your decisions could have possible legal ramifications if it goes wrong. These could include overlooking safety concerns, illegal access to funds or personnel impact.
Yet you can avoid most legal troubles by performing your due diligence before making actionable decisions that impact others or your business. It helps to take every step necessary to gather the data required before acting. This relates specifically to business, where commercial assets are the focus.
Develop legal documentation
Keeping records is a significant part of doing business. From timesheets to dividends, everything should be recorded. Yet some documentation is more important than others. Legal documentation, in particular, can help you and others stay informed. These include:
- Terms of service: legal agreements between you and those using your service.
- Privacy policies: explain how personal data will be handled according to GDPR etc.
- Non-disclosure agreements: specifically outline confidential data, not for public domain.
- Founders agreement: states the ownership of assets and equity among owners.
- Articles of incorporation: name all founders and specific laws relating to your business.
These documents are some of the first you should draft when establishing a business. They cover and protect your company should any confusion or disputes be brought against you. Terms of service and privacy policies relate specifically to the customer/client relationship.
Get to grips with taxes
The big one in business and life, in general, is your taxes. To run a business, you don’t need to become a tax lawyer or accountant. But it helps to understand the basics of how business taxes work in relation to your company. This way, you can avoid potentially harmful situations costing your company dear or even holding you liable for unpaid taxes.
If you aren’t sure about anything or feel you don’t have the confidence to tackle business tax, it is advised you hire an accountant. They can file tax returns on your company’s behalf, and it’s not worth the penalties.
Know your contractual obligations
The bulk of business is centred around contracts. Contracts are highly beneficial because they clearly state each party’s obligations, so there is no confusion. A typical contract outlines expected services, costs, and liability.
Additionally, it must outline penalties and procedures for breaching the agreement. It’s almost always necessary for a qualified legal representative to obtain, scrutinise and finalise a contract in business. However, you need to be aware that other things can seal the deal, such as a text, a signed piece of paper and even a verbal agreement.
Obtain licences and permits
Depending on your business, there will be licensing and permits you need to obtain before you can legally commence work. Building permits are a perfect example. Without these, a construction company cannot break ground.
But there are also licences you must obtain. Some of these are mundane but required by law nonetheless. Examples include driving permits for employees. Bit also child care services, HGV goods haulage and import/export services. Without necessary licences, you risk hefty fines and a ruined business before it even starts.
Insurance, health and safety
The list of insurance policies is almost endless. And while there are policies that cover just about anything, you might only need a handful. Especially when starting out. Despite the vast number of policies available, there is only one you need by law; Employer’s Liability Insurance.
This covers the cost of an employee who becomes sick or injured due to working for you. Without EL, you are breaking the law and will be personally responsible for compensation. Other helpful insurance business policies include Public Liability and Business Interruption.
Business Interruption insurance steps in to mitigate financial losses caused by unexpected events such as natural disasters or equipment breakdowns, covering expenses like lost revenue, ongoing operational costs, and relocation expenses to ensure the continuity of your business despite disruptions.
On the other hand, public liability insurance shields against claims from third parties for injury or property damage that occurs on your premises or as a result of your business operations, offering financial protection against legal expenses and compensation payouts.
Make sure you protect your new business
You can protect your new business by building a solid legal foundation as a platform from which you can launch with minimal disruption. Consulting with a reputable legal team is an excellent start. From there, you need to protect your intellectual property and trademarks. You must also draw up required legal documentation and obtain relevant licences.
