Starting a company is not a simple matter. You can’t just find a buyer and start supplying them with a product, nor can you outright start hiring people and assign them tasks before they are legally in your employ. All of this can be incredibly confusing for young entrepreneurs and with so many legal aspects of a business to adhere to, it’s fairly easy to lose your way. This is why we’re going to present you with a short list of basic legal precautions that you have to take when starting a new company.
Picking an available name
The first issue you have to consider is the one regarding the name of the company you’re just starting. Finding a great and available name is not a small feat, yet, it’s also that should be regulated as soon as possible. By waiting for too long, you’re just giving people an opportunity to register their company under that name as soon as possible.
On the other hand, just because the name is already used doesn’t make it unavailable. Think about it, most trademarks are regional (state, country or continent-based). This means that you might still be able to use it. Example of companies that go by a different name in a foreign country is limitless and the reason is always the local unavailability. The best example of this is Burger King, which goes under the name Hungry Jack’s in Australia. For a similar reason, Wendy’s was denied the right to work under that name in Europe.
Setting a business structure
Depending on the ownership and responsibility structure of your business, it can be a sole proprietorship, a partnership or a limited liability company (LLC). This affects more than its form or even structure of power, due to the fact that it also decides the scheme under which you pay your taxes. This is a legal matter with serious legal consequences.
For instance, a lot of new entrepreneurs enter the business world as sole proprietors. This is because they don’t have to separate their personal from their business finances. Sadly, this is a double-edged sword, as well as a decision that they soon come to regret. Why? Well, because this also means that there’s no safeguard when things start going south. Soon, you might find yourself out on the street, without any exaggeration.
Safety and compensation
The next thing you need to keep in mind is the fact that no workplace can ever be 100 per cent safe. Think about it, accidents happen even in the safest of offices, while even some of the most hazardous construction sites go weeks and months without an injury. This doesn’t mean that everything’s up to chance (far from it), it only means that you need to take safety and compensation into consideration long before you actually have to deal with them.
For starters, you need to write a safety statement, which should act as a manual for your employees and inform them of the simplest, safest way to handle tasks and materials around the office. Just in case, you should have a legal team on your retainer (and on your speed dial). In the age of digital conferences and online consultations, one might assume that it’s irrelevant where your legal team is from, alas, this is not the case. Safety laws depend on the country, state and even municipal regulations, this is why you should always go with local. For instance, if starting a company in NSW, hiring Sydney lawyers should be your first choice.
The issue of succession
Accidents happen and people die unexpectedly every single day. In case where you run a business together with your partner or several partners, it’s vital that you have a clear line of succession. For people who are not just trying to make some money but are also worried about creating a legacy, the issue of succession needs to be resolved as soon as possible.
Now, speaking of small companies, about two-thirds of them are family businesses. Nonetheless, without a formal succession planning, chances are that this business may not be sustainable in the long run. To support this figure, we have an estimate that as little as half of these businesses get successfully passed on to the second generation (let alone third). Fortunately, with just a bit of planning, you can handle this issue as effortlessly as possible.
While exaggeration may seem like a standard part of marketing, keep in mind that so many companies have fallen in the past due to the accusation of false advertising. To avoid this, you might want to have a legal expert examine your ads and marketing campaign, in general, before going out with them in public. Sometimes, an action that’s as simple may save you from a world of trouble later on. This is especially simple if you already have a versatile team on your retainer, which is something that we’ve already discussed.
Protecting your ideas
Earlier on, we’ve discussed something similar to this (in a section about corporate names), still, this is not all that you have to protect. Your patents, slogans and brand, in general, are your intellectual property. As such, they need to be safeguarded from others who would use them to their benefit, thus getting rich off your great ideas. Moreover, in the era of the internet, cybersquatting is a serious problem, which is why you need to find an efficient method to deal with these malicious parties. All in all, you have a tough job ahead.
By taking just these six simple steps of precaution, you can easily avoid some of the most common legal issues that startups face early on. Aside from this, handling the issue of insurance and even exploring the option of surety bonds might be a good idea. Tending to this will ensure that your business is covered on all fronts, which means that you can go into your first year as a business without any unnecessary stress.