When you’re an entrepreneur, there’s a lot of things you need to keep in mind to have a successful business. One aspect that can be difficult to approach corresponds to legal issues, which are not always as straightforward as you might wish. Here are some basic considerations and tips you should keep in mind when it comes to the legal details of being a self-made entrepreneur.
Personal Insurance for Entrepreneurs
One of the benefits of working for someone else is that your employer usually covers your insurance. However, this shouldn’t dissuade you from starting your business. All you need to do is get some personal insurance that will protect you and even your income. However, if you’re hurt, be it work-related or not, you should look for a personal injury attorney nearby who can inform you about your options.
There are different types of personal insurance. One of the most popular ones among independent workers is income protection. This allows you to continue to perceive earnings for a time even if you are injured or sick. There are also short-term policies that protect you in case of an accident and can offer diverse benefits, including mortgage payments.
Other types of insurance include critical illness insurance, life insurance, and private medical insurance. If you’re hiring employees, then you should learn more about offering insurance to them, which should be part of their benefits.
Knowing your type of business
This might seem like something easy to determine, but it often happens that a business owner is unclear on the terminology pertinent to each type of business. This is going to determine how you register it and future legal issues.
The main business structures are sole proprietor, limited liability company (LLC), S Corporation, and C Corporation. This will determine what your tax obligations will be, something that’s instrumental to be in good standing with the law.
An important aspect of being a business owner is having everything on-record. If you are holding meetings with another shareholder or you have created a board, these meetings need to be recorded. This means that as a corporation, you’ll need to keep minutes of what has been discussed at all meetings, as is required by state law.
Legal Tips to Keep in Mind
Clarity in Contracts
Whether you are hiring an employee or entering an agreement with an independent contractor, everything in the contract must be perfectly clear. This means that both parties involved fully understand the terms and goals of the contract. If this clarity is not present, you might find yourself in the middle of legal issues that will cost you time and money.
In short, never sign anything if you’re not clear on the details of what you’re signing. A good way to draft a contract is finding examples online and adapting them to the specific needs of your business. However, the failsafe way to get a good contract drafted is by checking with an attorney.
Knowledge of Regulations
Even before opening your business, you should know all about national, regional, and local regulations. This knowledge is what’s going to lead to a business facing as few complications as possible when it comes to compliance with the law. Furthermore, you need to be able to adapt to changing regulations, especially if your business is in constantly developing areas such as tech.
Include Legal Expenses in Your Budget
While you might want to keep your legal expenses to a minimum, this doesn’t mean you should keep this out of your budget. This is instrumental during the first year of your business but it continues to be important later on. Lawyers can be very expensive and you want to make sure covering their fees won’t break your bank. Also, you can always negotiate any legal fees, as well as propose payment plans that adjust to your possibilities.
Most Common Legal Mistakes
Lack of Clarity with Partners
If you have any partners or investors, you should make sure the terms of any agreement are as clear as possible. We mentioned clarity before, but it’s necessary to emphasize this when it comes to any partnerships. The legal issues that might come from a misunderstanding at this stage can be devastating.
Choosing the Wrong Company Name
It might seem like something that shouldn’t be such a big deal. However, registering a trademark is a big issue if your company enters into conflict with another trademarked company or a previously existing website. This can lead you to costly and long legal issues as well as the cease of activities of your business while the issue is resolved. Plus, this might make it difficult for potential clients to identify your business and brand.
Starting your business is an exciting moment in your life, but this can quickly become more stressful than the usual process if you don’t keep in mind the legal considerations. Learning about regulations at all levels and in the different areas of your business is instrumental. And remember to plan for legal expenses in your budget and choose the right type of company to avoid intermingling between your business and your personal assets.