Small business owners are busy people. There are often hundreds of task you need to complete a day to get your business going. What small business owners may not consider are legal requirements, which often have a great impact on the business itself. What are the legal steps that you need to take to ensure your business is legally protected?
3 Legal Steps Small Businesses Need to Take:
Forming a legal entity
This may be an obvious step for some businesses where a traditional storefront or an office is required. However, forming a legal entity is one of the most important steps for smaller business, such as consultants or sole proprietorships as well. Even if it is a one-man operation, a formal legal entity may still be needed to provide liability protection.
Without a legal entity in place, the business owners can put their personal assets at risk of being claimed by creditors. Similarly, in case of lawsuits, your home, car, bank accounts, and other assets can also be at risk.
Trademark or copyright infringement can be an expensive mistake, especially for small business with limited capital. One of the most important legal steps is to secure appropriate protection for your trademark and other intellectual property. Before naming your business or a new product, be sure to check for name availability. Take the necessary step to register a federal trademark before launching your business or product.
Correctly classify independent contractors and employees
When your business hires staff, they can get on board as independent contractors or employees. The classification of your staff can affect your business tax deduction for compensation and benefits. Therefore, business owners need to understand the wage laws and applicable regulations in order to classify their staff correctly as contractors or employees.
As a new business, you will also need to develop a proper employment agreement for all of your employees. For independent contractors, draft an appropriate contract. These documents should clearly define the rights and responsibilities for both parties and what is expected on both sides.
When starting out, small businesses may not have enough resources dedicated to legal concerns. Some forego consulting a legal expert and choose the DIY route to save on fees. However, legal mistakes are often costly and these legal steps need to be addressed properly.
The good news is that there are resources available for small businesses at a lower cost. LegalShield, for example, is a good source for small businesses and individuals to obtain legal advice at an affordable cost. To consult an expert on any of these legal steps to start your business, contact a LegalShield consultant today.