Starting your own business is an exciting endeavor that may end up becoming a huge part of your life. It’s a time when you’re working hard to pursue a dream and make your own way in the world. The last thing you want is a number of legal problems holding you back and keeping you from achieving your goals. Unfortunately, there are quite a few legal issues to consider when setting up your company. Although we’re not lawyers and can’t give legal advice (for that, be sure to consult an attorney), take a look at the following list, and maybe you’ll save yourself some time and headaches.
Business Structure
The first thing you need to think about is how you’re going to legally structure your business. This can have long-term consequences down the road, so it’s important to understand the options that you have in front of you. The three main choices are to operate as a sole trader or sole proprietor, incorporate as a limited company, or establish a partnership. A sole trader structure is the easiest to establish, but you may be taking on more personal risk than you would like. You should carefully consider each option and their potential benefits and risks.
Intellectual Property
When you first start out, you might not be that worried about people infringing on your intellectual property. After all, you’re a small business, and you have plenty of time for that down the road, right? Don’t fall into that trap. Make sure you have your intellectual property covered with whatever protection applies—whether that’s trademarks, copyrights, patents, or trade secrets. It’s better to be prepared if an issue does arise somewhere down the road.
Finances
Many entrepreneurs are focused on their product and getting their business started. It can be easy to gloss over financial issues when you start out. This is a bad idea. Make sure you have proper bookkeeping and accounting infrastructure in place from the very beginning, and you can save yourself a lot of trouble—and a lot of money.
Employee Classification
A lot of businesses are hiring independent contractors instead of full-time employees because it saves them money on benefits and in other areas. There is actually a very strict definition for an independent contractor, and you can wind up taking on significant risk if you’re incorrectly classifying employees. Again, do your homework and find out when you can use independent contractors, and when you should be hiring full-time employees.
Licenses
At the very least, you’re going to need a business license and tax registration, but you also might need a special license depending on what type of business you’re operating. You should also look up zoning laws when you’re choosing a location for your business. Don’t just assume that the building is properly zoned for the type of business you’re running. Trust us, you’ll be glad you complied with any regulations for your new business.
It can be easy to get ahead of yourself when you’re doing something as exciting as setting up your company, but don’t forget about all the legal issues surrounding your business. Those are the details that will eventually help make your business a success. If you have more questions about taking an idea for a product and turning it into a reality, then contact Pivot today.
