Running a business is filled with excitement and thrill. There’s a sense of fulfillment and accomplishment every time your business achieves its milestones, and success that requires celebration isn’t all that rare. That’s why entrepreneurship is such a goal for many: it’s both lucrative and fulfilling.
Despite that, there are layers to running a business that’s easy to miss from the outside. Any experienced business owner knows the hundreds of preparations needed to successfully run a business. From marketing to operations, from employee management to coordinating with suppliers, there’s a lot of unseen work underneath. Among the most important yet highly invisible is the legal side of running a business. There’s a lot to be discussed there, especially with the world’s
Business Owners Need to Know the Law
First and foremost, entrepreneurs need to know business law to avoid overstepping their boundaries. There might be moments when you might suddenly need arbitration and mediation services due to disagreements among business partners or when a breach of contract happens. In such a scenario, you always want to make sure that the law is on your side. The only possible way is by knowing the law, even before you pull the trigger on your business idea.
Business law covers a lot of topics, and a deeper look and study is required. Generally, every facet and area of running a business has a body of law that imposes rules and structures over it. Below are among the most critical ones, and sorting them out helps you in the long run.
Ownership Protection and Business Formation
A business is essentially its own legal entity and, in the eyes of the government, is subject to many of the similar rules that govern citizens (similar, but not the same). As such, it’s critical to establish the type of structure for your business. Will you be going for a limited liability company (LLC) with your partners, or will it be a single proprietorship situation?
Sorting out your business formation is critical to establish which individuals have control over the company. Particularly in the case of selling the business or a parting of ways, laws surrounding business governance will help the business better manage the split and allocation of resources.
Employees are integral to any business, but you also need to establish the borders of what they have. The law heavily guards the coverage of their job description and compensation package. It’s critical that this aspect of your business is covered legally. This isn’t just to protect your business but to protect your employees as well.
Creative Products and Intellectual Property
Many people have a common misconception that as long as you’re not dealing with creative content, you don’t have to worry about intellectual property. However, every business has its own intellectual property. Product design, service structures, customer and clientele list, and even marketing materials with a specific design, these fall under intellectual property.
Another important thing to remember is your brand. Since your brand has everything to do with your company’s image, reputation, and recall, it’s a good idea to trademark it.
Agreements and Contracts
When you make agreements and deal with other business providers or clients, your agreements will be bound to a contract. How those contracts and agreements are made and interpreted is an integral part of the industry. Even matters like a bill of sale, work agreements, the terms of services, and similar policies fall into contract law.
It’s both a double-edged weapon. Should you fail to meet your end, your business will be in trouble. Of course, no self-respecting establishment will undercut its partners or clients. But if you are the one on the receiving end, having a solid grasp of contract laws will help you be on the right side of the law.
Licenses and Regulation
You need to think about the licenses and regulations to make your business legal to operate. Register with your local government, as it varies from location to location, and check whether your type of business requires extra licenses. Some industries require a safety and operation license, and it’s best to make sure you’re covered in that aspect as well. Sort out your tax ID as well — you don’t want to meet legal troubles anywhere.
The legal side of running a business is rarely talked about but is always among the most important. Never neglect this aspect. Doing so might result in encountering major problems later, problems that are avoidable. You need to meet the requirements beforehand.