Why are legal issues important?
Owning a business has a lot of responsibilities, but do you need to know business law to own and run a business? If you’re a business owner and not a lawyer, Why is it important to study business law? Business law does the same thing for businesses that basic laws do for all of us: It defines unacceptable behavior, provides certainty and stability, protects the public, the employees, and the company. Business law provides a mechanism for businesses to settle disputes in the best way possible.
Owning and running a business is challenging, exciting, frightening, and rewarding all at the same time. When it comes to owning and running a business, it is important to know what is business law like and get things right. The excitement is being a business owner. The challenges can vary from finding the right premise to operate from to have legitimate contracts that protect you with your customers, employees, suppliers, business partners. These are the things that make having a business law background or somebody on your side that does can come in handy. Which can explain business law is hard. There are so many variables. Knowing the differences between business law vs business ethics, which is more important to know both and which one to run your business by.
What are some examples of legal issues?
Every industry is distinctive, and every business within every industry is unique. There are several legal issues that every company will face at some point. Some examples of these legal issues are:
- Type of Entity: A business owner must choose the type of entity he will create for his company. Choices like limited liability or limited partnership, and once that is decided, which forms are needed and how are they filed? Knowledge of business law is helpful in this decision.
- The Business Name: When you sit around dreaming of having your own business, names are flying around in your mind. When it comes down to it though, it may not be as simple as you might think. The first step is not to choose a name that is like or almost like any entity that is on file with the secretary of state office, this is something that is protected by business law. Is a name that reflects the owner’s name a good choice? Or choose a name that matches the phone number? Maybe a name that reminds the company’s products or services?
- Contract Labor or Employees: The next choice is if you will use contract labor or hire employees. For many companies, contract labor can be attractive, but there are caveats the business owner needs to consider that choice. Then there is the need to draw up contracts for employees or contract labor that will protect the business, another reason that having a knowledge of business law is helpful.
- Business Space: Many businesses can be operated from home, but many need office space for a business presentation, a warehouse, and maybe factor space. conducted out of a home, companies must have office or warehouse space. There are contracts and leases to be signed, and the business needs to make sure they are as protected as the building owner and are in line with business law that protects both parties.
- Acquiring Equipment: Equipment is needed for any business, like office supplies, office furniture, phones, computers, copiers, printers, etc. These can cost from the hundreds and up to the thousands. Should the equipment be purchased outright with the owner self-financing or is taking a startup loan wise? Maybe acquiring the equipment through leases? Is maintenance going to be covered either way? Facets of business law can provide the knowledge that protects the business.
- Interests Insured: Protecting your business interests with insurance is basic business law 101. Professional liability insurance for a professional or product liability insurance for a manufacturer. Before a building owner will sign a lease, they will require that liability insurance to be in place and proof provided.
- Employee Incentives: If your business is growing, keeping the employees that helped you get there is important. Following the business laws set forth, offering equity in the business as an incentive is one way to do this. One option would be phantom stock entitlements.
- Shareholders: As your company grows in size and value, you need to have a plan in place in case of death, disability, or divorce. Having shareholders or members with interest can be your saving grace and business law basics will have this explained.
- Records of the Business: Any size business needs to keep records and keep them in order and up to date. From expenses to earnings and more. The type of entity you choose to operate under will determine what records need to be in place. There are specifics within business laws that detail this information.
- An Exit Strategy: While you’re starting your business, creating an exit strategy may seem unnecessary, but following the text of business law, it is understandable why this is recommended. If you choose to groom an employee to take over, or will it be handed over to a family member, or simply sell the company?
How do businesses deal with legal issues?
Unless you have a background and education in business law, before starting a business, you might hire an attorney or a business manager with a background in business law. This will come in hand in the very beginning, as we stated earlier when deciding the type of entity that you’ll operate under. The forms to complete and file can make having a person familiar with business law worthwhile.
You can hire an attorney to be on a retainer or have a one-time fee, both have advantages and disadvantages. It will be worth your time to research the two options and decide if your business is one that may need frequent legal advice and guidance. There are issues like licenses, permits, adhering to zoning regulations and more to consider if you’ll need expert help or not.
What are some legal issues entrepreneurs should be aware of when starting a business?
Issues that an entrepreneur may not consider when starting up a business that lacking any knowledge of business law could help:
- Trademarks: Infringement on another company
- Non-Disclosure: Anyone that has anything to do with your business should sign one
- Vesting: Important if you have partners
- Intellectual Property: Protect your investment financially, time, copyrights, patents, trademarks, and trade secrets
- Accounting and Finance: Accounting and bookkeeping are an important part of business infrastructure
- International Trademarks: Your ownership is secure in the U.S. may not be overseas
It is energizing to start a new business. It is also scary. This article has furnished information that can guide you in the right direction. Finding a person with business law knowledge is essential.
When you need help with business legal services, turn to HELP Legal Plan. Call us today at 888-667-6150!